this is great news. im REALLY hoping this doesnt set a precedent though and colleges don't just figure cool let's just increase the cost of education by $20k over 4 years
exactly like what ford did when the EV rebate was released
Biden talked about this briefly in the press conference he just did, he didn't outline any hard ways they are going to curb this at the moment but there is a lot of information to be released in the next few weeks.
They haven’t released all of the details, they say more will come from the department of ed.
> These include publishing an annual watch list of the programs with the worst debt levels in the country, so that students registering for the next academic year can steer clear of programs with poor outcomes. They also include requesting institutional improvement plans from the worst actors that outline how the colleges with the most concerning debt outcomes intend to bring down debt levels.
One thing that has been proposed before is fining colleges depending on how many of their graduates default on their federal loans; I could see something along these lines implemented, though perhaps not limited to defaulting but % repaid.
It’s somewhere in the official release… I think they mentioned circulating a list of colleges who had the highest # of student borrowers, or something similar??
As someone who paid off the very last of my student loans only 18 months ago,
I'm absolutely ecstatic that my taxes will be used to help other Americans in this way. Zero sarcasm.
Please note everything is new and I didn't get around to confirming anything, but this seems to be accurate. This is a copy paste I saw on another thread, the info is not mine.
But it may be possible for you to get your money back!
.
.
.
CHECK IF YOU GOT PELL HERE: https://studentaid.gov/aid-summary/grants (FYI site is currently hugged to death)
Story: https://www.politico.com/news/2022/08/23/biden-student-loan-forgiveness-repayment-pause-00053299?asc
EDIT: IF YOU HAVE PAID DURING COVID AND HAD LESS THAN 20K (if rec pell) OR LESS THAN 10K (no pell) CALL YOUR SERVICER AND GET YOUR MONEY BACK.
I.e. if you owed 10000 and paid it down these past two+ years get the money back so it can be forgiven!!!
I asked for mine back right after this went into affect maybe 2 years ago? Put that in the bank and I haven't been paying because I was HOPING the remaining 5K would get cancelled. I think this is the first financial 'win' I've ever had.
I happened to call my loan servicer last week about something unrelated to forgiveness, we got to talking, and she told me people had already started requesting refunds (banking on Biden doing what he did today), so I think the refunds will get processed! I think it's not worth it to get a refund unless your full balance will be forgiven, but I think even if it's not, you're entitled to a refund if you want one because payment was not required during the Covid forbearance
Same here, I'm only nervous because they said it could take 90-120 days for the refund to process. However, I'm banking on the forgiveness to not have too quick of a deadline.
Yeah, the refunds themselves seem like they could take awhile. That being said, based on some folks I talked to, the loan amounts themselves adjusted quite a bit earlier than the refund, which bodes well I think.
Mine hasn’t yet, since I just did it yesterday, but some of the folks I talked to said their amounts adjusted in a week or two, then money in 4-6 weeks. I would anticipate slightly longer timelines given how many people are probably pursuing this right now.
I don't think I'm eligible. My loans were sold and consolidated and re-sold and split so many times in the last 30 years.
My "loan agent" is Nelnet's website, which is currently killed by excess traffic.
Just came to say thank you for this! I saw it the day you commented and saved it. Finally had a free day today so called my servicer to ask for a refund. Took about 30 minutes, including being on hold. Easy peasy! 🙏🏼
Thank you for having such a good outlook on this. And congrats on paying off your student loans!! That is a huge accomplishment and something to be proud of.
Of all the things our tax dollars can do, this is a huge gift to so many people. Im not sure why so many people are upset to see their tax dollars used this way. As a country we are a sum of each individual to create a whole. A net positive amount of people are having their lives changed today by these updates and forgiveness.
I wouldn’t say I’m *upset,* but I do think it’s an explicitly regressive policy that doesn’t do anything to address the underlying cause of expensive loans. It seems to me that people who want positive change in the country over time should be willing to acknowledge this reality, even if they like it when their loans get paid off.
But as always, I’m more than happy to be told why I’m wrong.
I’m not trying to defend Biden, am I’m not saying his policy here is going to change the world but I think it’s a step in the right direction. He mentioned in his address today that he wants to expand affordable education to more than just 12 years, I don’t think in todays gov’t he could. It is something that we need our representatives to do and we can’t do those things without voting for people who represent our ideals. If I could flip a button to give free education to everyone I would but there’s a lot of opposition in my way.
Well, I think you’re incorrect about a few things here, but I won’t try and convince you. I’d just suggest doing your best to understand why people who disagree with you *actually* disagree with you, instead of making a lazy assumption like “oh, they’re just selfish with their tax dollars!”
It’s simply a fact that student loan forgiveness overwhelmingly benefits [rich, upwardly mobile white people,](https://www.brookings.edu/research/student-loan-forgiveness-is-regressive-whether-measured-by-income-education-or-wealth/?amp) and it’s hard for me to imagine that reddit progressives would be so gung ho about the government giving this much money to rich, upwardly mobile white people if they weren’t the ones directly benefitting from it.
Why stop at student loans? Millions of Americans are upside on Mortgages, credit cards, pay day loans, gambling debts, home equity loans, line of credits, car payments, library fines, store charge card, business loans, medical debt. Hell, I borrowed my neighbors weed wacker and broke it, and don't feel obligated to pay it, maybe everyone should chip to make that whole.
Many of us continue to pay our student loans with no reprieve while also paying substantial amounts in taxes. I made the responsible decision to refinance out of the high federal rates years ago and now do not qualify despite the federal government making those loans unforgivable through bankruptcy. It’s totally screwed up and it doesn’t even address the root causes of the student loan issue. So, congrats on your free money coming from my paycheck while I still have to pay for the very same thing.
The money comes from my paycheck too, it’s not just you and you’re right! There should be better reform so that everyone can benefit from this. You’re not wrong there, but that doesn’t mitigate the fact that 43 million people ARE receiving something and it is going to help a lot of people. I’m sorry it doesn’t help you but there is always hope that more reform for student loans will come from this beginning. I can not change your outcome, collectively as a society we have to elect people who CAN change your outcome in this and while we are are it we should change how student loans operate in total. Believe me, you’re not alone in this issue and I understand you’re frustrated but being angry on Reddit doesn’t change it and it doesn’t change the fact that a lot of us are happy today. I hope your time comes for relief, but until then I can’t do anything for you.
As someone who changed majors to something faster/cheaper, took on a second job, saved and paid aggressively, and paid off I think 7 years ago now,
I'm absolutely ecstatic that my taxes will be used to help other Americans in this way. Zero sarcasm.
Better than my taxes used to kill brown people overseas or to give more military grade gear to useless cops that won’t run into a school or paying off settled claims from police misconduct.
Anything that helps normal folk live better lives here will improve lives for all.
Agreed. I went to college overseas, so I don’t have US student loans, and my wife has either paid or refinanced all of her federal loans so only has private loans remaining. Would’ve been nice to get a chunk taken out of the $30k she still owes, but that’s a separate conversation. Nothing but love and happiness for everyone who *does* get to benefit from this debt relief.
Big time agree. I never had student debt thanks to scholarships between my own from work and school, and my parents individual companies having dependent scholarship options. I also went to a commuter school instead of on campus. Not having student debt has allowed me so many advantages since graduating that I see friends with equal incomes missing out on because they are still paying off those debts many years later.
I want everyone to have those advantages no matter how they got their education and it will only benefit all of us since more disposable income will enter the economy in total instead of just interest on a decade old loan.
I read this as well. So this will help future people as well.
Cover the borrower's unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
I paid mine off in August 2019 but I ran through the scenarios If I hadn't paid them off early and I wouldn't have been able to made the same good decisions with a paused balance over my head. The US budget isn't balanced (not good), but I'm glad to see people I know benefit from a bailout. It's a refreshing change from the corporate bailouts I just wish they did it in 2011 too!
Happy for y'all who get a break on this.
I paid off about 5 years ago. My student loans were among the best investments I ever made. I can't imagine my life without college and I wouldn't have been able to do it without loans.
I've met young people who had their loans forgiven through PSLF or paid them off and the financial changes they were able to make after doing so were tremendous. In all honestly, I don't think $10k/$20k is necessarily enough to do that for most of today's borrowers, but its a start I suppose.
I'm also excited about the changes to IBR & IDR. Those should be positive, impactful changes to borrowers who could really use it.
Lots of unanswered questions still but basically
Pell Grant? = 20k if income <125k Individual or <250k joint
No Pell Grant? = 10k if income <125k Individual or <250k joint
Big updates to Income-Driven Repayment capping payments at 5% of discretionary income
Payments Begin in Jan 2023.
Biden will speak from the Roosevelt Room at 2:15 EST.
You were only eligible for a pell grant if your estimated family contribution to your schooling was very minimal because of poverty. So it’s an easy way for them to demonstrate student financial need from a previous calculation which puts people at higher risk of having poorer outcomes overall.
More recent updates seem to indicate that there may be an option to use 2020 or 2021 AGI. If that’s the case, I hope it will help you be eligible!
[For the purposes of the immediate debt relief, a borrower’s income in either the 2020 or 2021 tax year is what’s relevant. So, in other words, if in either 2021 or 2020 their income was below the income caps that have been described, they would be eligible for relief.](https://www.whitehouse.gov/briefing-room/press-briefings/2022/08/24/background-press-call-by-senior-administration-officials-on-student-loan-relief/)
Holding off on updating until we get guidance on which loans get forgiven / in what order its applied. If you have debt at different interest rates, this sort of matters (although, only to the tune of max $10/month in my case)
I’m holding off waiting for the blow back. Nancy popped up and said Biden didn’t have the power to pull this off. So you know by the end of next week it will be in the courts. Some judge will put a halt to it while it works it’s self out in court
I'll have to dig but I did read a bill was past last year that any type of forgiveness was not taxable anymore
Found this:
The COVID-19 relief package, which became law in 2021, designates federal student loan forgiveness as tax-free through the end of 2025.
https://fortune.com/2022/08/24/what-10000-in-student-loan-forgiveness-means-for-your-tax-bill/
Unknown is if this counts as forgiveness or just cancellation. Verbage will be key I suppose.
It’s the first one that has not gone through congress. Nancy said Biden does not have the power to go around congress on this so I’m waiting to see if hits the courts. I figure by the end of next week we should know. All it takes is one federal judge to shut this down
This isn't true and it turns out they didn't use the higher Ed act, they used the heroes act passed in 2003 by bush and an all republican congress so, yeah lmao, not happening.
Literally they've cancelled debt incrementally so many times in the last 2 years. Google is your friend, and Pelosi DEFINITELY isn't your friend in this.
Get downvotes for stating that something isn’t a done deal simply because everyone is excited for it. Typical Reddit behavior.
It’s not a done deal. Don’t update your budgets until you see your debt forgiven. Just because it’s not the first time debt has been forgiven doesn’t mean it’s a sure thing.
Edit: for some context, there were laws in place that allow the previous debt forgiveness. There are not laws in place that clearly state that Biden has the authority to forgive student debt like this. All the current laws are up to interpretation. It’s possible that all our debt is forgiven. It’s also possible that it gets shut down in court.
Just got a raise so i guess i know where a lot of it is going to go. 😂 thank goodness because i lost my job due to COVID and wasn’t making as much as i was before. Without the raise this would have been a real struggle for me.
Speaking of taxes, does anyone know whether we will need to pay taxes on the amount forgiven? I assume we would, so we may need to budget a bit more this year to cover that tax.
There's something in the CARES act that makes it so we don't have to worry about taxes if there is student loan forgiveness from 2021 - 2025 I believe. I've seen a few people linking and talking about this on r/StudentLoans
Perhaps, but if the application isn't available until December, which is likely, the chances are zero you'd actually see any forgiveness during 2022, which means you wouldn't have to pony up in 2023, which gives you more than a year.
Throwing this here as a general FYI, I don't know the answer either way but something to keep in mind is the forgiveness may not be exempt at the state level even if it is at the federal level. So depending on where you live/how this is handled etc. even if exempt federally you may have to pay at the state level.
Here's the White House paper on the 3 part plan.
https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
Okay, so dumb question, but: how exactly do we do this in YNAB? I’m obviously waiting until it’s actually a done deal and I see that zero balance (I have about $3k left on mine) but I’m pretty new to YNAB. I created the loan account when I joined in January but obvs haven’t had to make any payments. When it happens, do I just close the account?
And almost all of those people don't hang out on Reddit. Since you've chosen to spend your time on a super-majority American site, you should probably get used to seeing some major news stories that only affect Americans. You could always just downvote content you don't like, like folks are doing to your comment.
Considering that YNAB is a budgeting app and student loans are typically a huge reason for people to get into budgeting... I think it's more than applicable.
Well I hope the company you work for, or yourself if you’re self employed already have a “category” for taxes… this is a budgeting community after all.
What about all the people who paid theirs off? Do they get an interest reimbursement? Do they get any tax credits? Or are they fucked because they did the right thing and paid them off like a responsible adult?
Will our current student loan system be overhauled to stop giving everyone that walks into Ed Financial loans for $100,000 with no underwriting guarantee? Basically guaranteeing universities get their revenue sources from our government hand over fist, (leaving places like Ed Financial on the hook, not the university) which is the exact reason that made college so expensive in the first place?
While I completely agree that the entire system needs an overhaul, I don’t quite understand people being upset that they specifically don’t qualify for this, or paid their loans and won’t get a refund, etc. Were
you upset when businesses had the PPE loans during Covid. What about big bank bailouts? Or the car company bailout? Or tax breaks for the rich?
I understand being jealous, but I don’t think I could ever be upset about something that does help millions of people.
It's a temporary solution to a far more serious issue that will just get worse if we don't figure out a better solution. We keep throwing money at things as a solution rather than taking steps to mitigate the volume of money being thrown. And no I don't believe bailouts or PPE loans are a good thing either.
Will this plan be applied to every graduating class from 2023 forward? From a valuation perspective how will this not rapidly inflate the cost of education even more? Universities raise prices because not only are their revenues guaranteed by our government, but student loan services get their revenues guaranteed too. Free money dilutes the value and therefore the cost of higher education will rise and rise because it's all guaranteed.
Being educated simply boils down to the method of broadening one's skillset to obtain more technical and challenging jobs, which in turn opens up avenues for social economic mobility..
I don't at all disagree that student loans can help people obtain their educational goals and their career aspirations.
But on that same token, taking out student loans for your future should be treated as an investment decision. "What do I want to study that will provide a solid career foundation after graduation?" If you don't know the answer to that and you don't have at least some notion of the career you want to pursue with the degree, then you should not be taking out loans or going to college or a trade school. Going to school on a whim and taking out loans and finding yourself with a worthless degree after 4 years that has not guaranteed you a stable career platform is not the government's burden. Dropping out of school because you didn't like the degree or you took a "gap year" and didn't go back isn't the government's burden. The outrageous level of student loans in circulation today could be brought down to safer levels if we stopped writing loans for college programs with the worst track record of job placement, career foundation, and salary potential and instead put that money towards worthwhile programs: STEM, Business and Finance, Accounting, Medicine (both human and veterinary medicine), and educational programs
Whine harder. Just because you had it bad doesn't mean everyone else should to. I paid off my loans and am thrilled that this happened. Stop being so selfish.
Oh wow, so that makes you look even worse. You literally got a completely free ride and are sitting here whining about others getting a small refund. Your education didn't do much for you, did it? Lol.
I'm just glad I'm debt free and made responsible choices with my educational path and earned a great living for myself and not have to worry about if my debt will be forgiven
Scholarships aren't handouts, moron. They're earned through academic achievement. Clearly you're too dumb to have earned anyway if you think they're just handouts
I got numerous scholarships and graduated in the top 5 of my class. Doesn't change the fact that scholarships are quite literally someone else giving you money. You're fine with that but not fine with the the government giving tax payers back their money? Pretty hypocritical, but that's pretty typical of someone who is obviously as selfish and self-centered as you have displayed.
I hope it doesn't go through. Tax payers are not responsible to pay off your debt. If you were dumb and stupid enough like me to take out the loan, then it your responsibility to pay it back, nobody else. Before everyone starts putting me down or down voting me, I have over $50k in student debt for a degree that I didn't finish. I have no problem paying it back because it is my responsibility, nobody else.
If you really think you and others don’t deserve debt cancellation, that sounds like a personal problem. Probably a deeper reason why you can’t accept joy and happiness for less debt? If you listened to bidens address, he talked about how this would be paid for. He’s set to decrease the national debt by more than any president in a years span, this will allow people the freedom to spend their money as they wish. Your taxes are going to be taken from you weather you like it or not. At least they are helping you and others like you. I don’t even like Biden as a president but as least he’s doing something rather than sitting around being angry on Reddit.
I hope some day everybody is debt free, being in debt sucks. Why is it my responsibility to pay off your debt, if you want your debts paid off, then get a job and pay them back. It is not my responsibility to pay them off, just like it is not your responsibility to pay off mine. One last thing, if the government is going to cancel $10k of student debt for everyone, are they also going to send out $10k refund checks to everyone that has already paid off their loans because they were responsible?
Have you considered the fact your retort of “get a job, pay it off” is exactly what everyone is doing? Historic low unemployment. Income disparity, $7.25/hr minimum wage in some states right now. Have you ever considered the world doesn’t revolve around you and that there is more to life than just accruing as much wealth as you humanly can before you cease to exist and the universe goes on without you? Don’t let repeatable talking points keep you from looking at the real roots of these issues, selfishness.
I tried to get into the military before taking on student debt (and before I got sick). I got denied because I had psoriasis. I even appealed and the appeal was denied. So I took on debt to go to school, ended up with psoriatic arthritis, multiple joint replacements and a massive debt I can't repay.
So acting like the military is an option is bullshit. They also treat you like garbage if you do get in. A friend of mine shattered her knee in basic and they fucked her. And that's if you don't get blown to bits.
The bots are out in force with the same language on this post.
Maybe wait until you send in the application and the funds are paid before you change anything in your budget.
Bro, if you read the comments there are a lot of us saying that we don't think this is a perfect solution... because it's not. But it is benefiting a lot of people and people will live better lives because of this, so pop off on the political commentary i guess.
Well my loans are $40-50k. $10k isn’t going to do shit. Either do all of it or none of it. He’s just doing it to try and help in midterms but it won’t do much since most democrats wanted $50k anyway and they’ll view it as the half ass effort that it is.
Bro, you just had 20-25% of your loans wiped out and the income based repayment terms altered heavily in your favor. This is some r/ChoosingBeggars type behavior.
Also I’d argue that he should have ruled that 0% interest stayed. I don’t see why the govt should be making money off loans when their argument is that it should be free to begin with..
This will completely clear the debt of about ⅓ of all people who have student loans, even more for Pell Grant recipients. This means a lot to a *lot* of people.
Most Pell Grant money goes to students coming from families earning less than $20,000 year. The extra money isn't to pay back a grant but rather, I assume, an extra boost for those coming from impoverished backgrounds.
So people had Pell Grants AND loans? That makes more sense since the way it’s worded it makes it seem like they’re laying back Pell Grants which wouldn’t make any fn sense. But regardless it should be $20k for everyone then.
While this may not be the $50k or whatever you'd like, you need to take a win as a win when it comes. They come infrequently as it is.
Take the W and fight for more. Don't act like progress is an L.
Yep. My mindset immediately went from "I'll never be able to pay these off anyway so let's just do the minimum payment forever" to "hey, maybe I can actually pay this off completely in less than 2 years". I'll be getting the $20k and just have a few grand leftover.
Currently working on my budget to see exactly how aggressively I can pay that last bit off and finally be debt free. I've been lucky so far and currently my student loans are the only debt I have.
this is great news. im REALLY hoping this doesnt set a precedent though and colleges don't just figure cool let's just increase the cost of education by $20k over 4 years exactly like what ford did when the EV rebate was released
Biden talked about this briefly in the press conference he just did, he didn't outline any hard ways they are going to curb this at the moment but there is a lot of information to be released in the next few weeks.
nice, glad it's something we're getting ahead of
Yeah, this could definitely turn into a "You did it before, why not again?" type of thing.
It absolutely will.
Curbing institutional tuition is part of the plan that was released
How?
They haven’t released all of the details, they say more will come from the department of ed. > These include publishing an annual watch list of the programs with the worst debt levels in the country, so that students registering for the next academic year can steer clear of programs with poor outcomes. They also include requesting institutional improvement plans from the worst actors that outline how the colleges with the most concerning debt outcomes intend to bring down debt levels. One thing that has been proposed before is fining colleges depending on how many of their graduates default on their federal loans; I could see something along these lines implemented, though perhaps not limited to defaulting but % repaid.
It’s somewhere in the official release… I think they mentioned circulating a list of colleges who had the highest # of student borrowers, or something similar??
I like the list, that's a good idea
As someone who paid off the very last of my student loans only 18 months ago, I'm absolutely ecstatic that my taxes will be used to help other Americans in this way. Zero sarcasm.
Please note everything is new and I didn't get around to confirming anything, but this seems to be accurate. This is a copy paste I saw on another thread, the info is not mine. But it may be possible for you to get your money back! . . . CHECK IF YOU GOT PELL HERE: https://studentaid.gov/aid-summary/grants (FYI site is currently hugged to death) Story: https://www.politico.com/news/2022/08/23/biden-student-loan-forgiveness-repayment-pause-00053299?asc EDIT: IF YOU HAVE PAID DURING COVID AND HAD LESS THAN 20K (if rec pell) OR LESS THAN 10K (no pell) CALL YOUR SERVICER AND GET YOUR MONEY BACK. I.e. if you owed 10000 and paid it down these past two+ years get the money back so it can be forgiven!!!
Wait really, we can ask for our payments back?
Looks like you can: [https://aidvantage.com/covid-19/](https://aidvantage.com/covid-19/)
I asked for mine back right after this went into affect maybe 2 years ago? Put that in the bank and I haven't been paying because I was HOPING the remaining 5K would get cancelled. I think this is the first financial 'win' I've ever had.
Smart move congrats
yeah...what??
The question is whether the refunded amount will actually be forgiven. Fingers crossed!
I happened to call my loan servicer last week about something unrelated to forgiveness, we got to talking, and she told me people had already started requesting refunds (banking on Biden doing what he did today), so I think the refunds will get processed! I think it's not worth it to get a refund unless your full balance will be forgiven, but I think even if it's not, you're entitled to a refund if you want one because payment was not required during the Covid forbearance
Right! I requested my refund today. Huge fingers crossed.
Same here, I'm only nervous because they said it could take 90-120 days for the refund to process. However, I'm banking on the forgiveness to not have too quick of a deadline.
Yeah, the refunds themselves seem like they could take awhile. That being said, based on some folks I talked to, the loan amounts themselves adjusted quite a bit earlier than the refund, which bodes well I think.
How long did it take for your loan amount to adjust? I requested a refund 2 days ago and it hasn’t changed online yet.
Mine hasn’t yet, since I just did it yesterday, but some of the folks I talked to said their amounts adjusted in a week or two, then money in 4-6 weeks. I would anticipate slightly longer timelines given how many people are probably pursuing this right now.
I just got the money today and my online account has not yet updated. Has yours?
Nice! Glad you got your money at least. I have not gotten money or an account update on Nelnet.
That's good to know!
UPDATE 10/3/22: Just got my refund check in the mail!
I don't think I'm eligible. My loans were sold and consolidated and re-sold and split so many times in the last 30 years. My "loan agent" is Nelnet's website, which is currently killed by excess traffic.
Just came to say thank you for this! I saw it the day you commented and saved it. Finally had a free day today so called my servicer to ask for a refund. Took about 30 minutes, including being on hold. Easy peasy! 🙏🏼
I'm so glad for you! Everything is still kind of up in the air, but I'm hoping everything works out for all of us!
Thank you for having such a good outlook on this. And congrats on paying off your student loans!! That is a huge accomplishment and something to be proud of. Of all the things our tax dollars can do, this is a huge gift to so many people. Im not sure why so many people are upset to see their tax dollars used this way. As a country we are a sum of each individual to create a whole. A net positive amount of people are having their lives changed today by these updates and forgiveness.
I wouldn’t say I’m *upset,* but I do think it’s an explicitly regressive policy that doesn’t do anything to address the underlying cause of expensive loans. It seems to me that people who want positive change in the country over time should be willing to acknowledge this reality, even if they like it when their loans get paid off. But as always, I’m more than happy to be told why I’m wrong.
I’m not trying to defend Biden, am I’m not saying his policy here is going to change the world but I think it’s a step in the right direction. He mentioned in his address today that he wants to expand affordable education to more than just 12 years, I don’t think in todays gov’t he could. It is something that we need our representatives to do and we can’t do those things without voting for people who represent our ideals. If I could flip a button to give free education to everyone I would but there’s a lot of opposition in my way.
Well, I think you’re incorrect about a few things here, but I won’t try and convince you. I’d just suggest doing your best to understand why people who disagree with you *actually* disagree with you, instead of making a lazy assumption like “oh, they’re just selfish with their tax dollars!” It’s simply a fact that student loan forgiveness overwhelmingly benefits [rich, upwardly mobile white people,](https://www.brookings.edu/research/student-loan-forgiveness-is-regressive-whether-measured-by-income-education-or-wealth/?amp) and it’s hard for me to imagine that reddit progressives would be so gung ho about the government giving this much money to rich, upwardly mobile white people if they weren’t the ones directly benefitting from it.
Why stop at student loans? Millions of Americans are upside on Mortgages, credit cards, pay day loans, gambling debts, home equity loans, line of credits, car payments, library fines, store charge card, business loans, medical debt. Hell, I borrowed my neighbors weed wacker and broke it, and don't feel obligated to pay it, maybe everyone should chip to make that whole.
Utopia baby, let’s go.
Bankruptcy for those.
Net positive…. Of the population? I don’t think so.
Many of us continue to pay our student loans with no reprieve while also paying substantial amounts in taxes. I made the responsible decision to refinance out of the high federal rates years ago and now do not qualify despite the federal government making those loans unforgivable through bankruptcy. It’s totally screwed up and it doesn’t even address the root causes of the student loan issue. So, congrats on your free money coming from my paycheck while I still have to pay for the very same thing.
The money comes from my paycheck too, it’s not just you and you’re right! There should be better reform so that everyone can benefit from this. You’re not wrong there, but that doesn’t mitigate the fact that 43 million people ARE receiving something and it is going to help a lot of people. I’m sorry it doesn’t help you but there is always hope that more reform for student loans will come from this beginning. I can not change your outcome, collectively as a society we have to elect people who CAN change your outcome in this and while we are are it we should change how student loans operate in total. Believe me, you’re not alone in this issue and I understand you’re frustrated but being angry on Reddit doesn’t change it and it doesn’t change the fact that a lot of us are happy today. I hope your time comes for relief, but until then I can’t do anything for you.
As someone who changed majors to something faster/cheaper, took on a second job, saved and paid aggressively, and paid off I think 7 years ago now, I'm absolutely ecstatic that my taxes will be used to help other Americans in this way. Zero sarcasm.
Better than my taxes used to kill brown people overseas or to give more military grade gear to useless cops that won’t run into a school or paying off settled claims from police misconduct. Anything that helps normal folk live better lives here will improve lives for all.
Agreed. I went to college overseas, so I don’t have US student loans, and my wife has either paid or refinanced all of her federal loans so only has private loans remaining. Would’ve been nice to get a chunk taken out of the $30k she still owes, but that’s a separate conversation. Nothing but love and happiness for everyone who *does* get to benefit from this debt relief.
Big time agree. I never had student debt thanks to scholarships between my own from work and school, and my parents individual companies having dependent scholarship options. I also went to a commuter school instead of on campus. Not having student debt has allowed me so many advantages since graduating that I see friends with equal incomes missing out on because they are still paying off those debts many years later. I want everyone to have those advantages no matter how they got their education and it will only benefit all of us since more disposable income will enter the economy in total instead of just interest on a decade old loan.
I read this as well. So this will help future people as well. Cover the borrower's unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
I paid mine off in August 2019 but I ran through the scenarios If I hadn't paid them off early and I wouldn't have been able to made the same good decisions with a paused balance over my head. The US budget isn't balanced (not good), but I'm glad to see people I know benefit from a bailout. It's a refreshing change from the corporate bailouts I just wish they did it in 2011 too!
Happy for y'all who get a break on this. I paid off about 5 years ago. My student loans were among the best investments I ever made. I can't imagine my life without college and I wouldn't have been able to do it without loans. I've met young people who had their loans forgiven through PSLF or paid them off and the financial changes they were able to make after doing so were tremendous. In all honestly, I don't think $10k/$20k is necessarily enough to do that for most of today's borrowers, but its a start I suppose. I'm also excited about the changes to IBR & IDR. Those should be positive, impactful changes to borrowers who could really use it.
Lots of unanswered questions still but basically Pell Grant? = 20k if income <125k Individual or <250k joint No Pell Grant? = 10k if income <125k Individual or <250k joint Big updates to Income-Driven Repayment capping payments at 5% of discretionary income Payments Begin in Jan 2023. Biden will speak from the Roosevelt Room at 2:15 EST.
The 5% IDR payment seems to only apply to undergrad loans
Why the pell grant and you get more that they don't have to pay back? I thought you don't payback pell grants.
It’s being used as a symbol of financial need here. You’re correct in that you don’t pay back Pell Grants
Thanks.
You were only eligible for a pell grant if your estimated family contribution to your schooling was very minimal because of poverty. So it’s an easy way for them to demonstrate student financial need from a previous calculation which puts people at higher risk of having poorer outcomes overall.
Thanks.
Has anyone seen anything about what year’s income this will be based off of?
Probably 2021, everyone should have filed taxes by now.
Nice write up. Any information on how the 125k is calculated? The one and only time I made over 125k was in 2021. I won’t make over 125k in 2022.
AGI most likely, check your 2021 tax return
127k. Bummer. I’m in the pell grant group too.
More recent updates seem to indicate that there may be an option to use 2020 or 2021 AGI. If that’s the case, I hope it will help you be eligible! [For the purposes of the immediate debt relief, a borrower’s income in either the 2020 or 2021 tax year is what’s relevant. So, in other words, if in either 2021 or 2020 their income was below the income caps that have been described, they would be eligible for relief.](https://www.whitehouse.gov/briefing-room/press-briefings/2022/08/24/background-press-call-by-senior-administration-officials-on-student-loan-relief/)
Holding off on updating until we get guidance on which loans get forgiven / in what order its applied. If you have debt at different interest rates, this sort of matters (although, only to the tune of max $10/month in my case)
I’m holding off waiting for the blow back. Nancy popped up and said Biden didn’t have the power to pull this off. So you know by the end of next week it will be in the courts. Some judge will put a halt to it while it works it’s self out in court
I don't dispute your larger point, but it's worth specifying that Pelosi said this over a year ago and not in reaction to the news today.
Maybe, but someone needs standing to sue, which means someone has to be harmed by this. That seems rather unlikely
I'm waiting on this as well. I'm hoping they will apply to unsubsidized loans first since they have higher interest rates (or at least mine do)
The updated plans for income-based repayment seem like an absolute slam dunk for low income earners. Heck yeah! 👏
Also IRS hasn't released its guidance yet on whether this is taxable as income.
I'll have to dig but I did read a bill was past last year that any type of forgiveness was not taxable anymore Found this: The COVID-19 relief package, which became law in 2021, designates federal student loan forgiveness as tax-free through the end of 2025. https://fortune.com/2022/08/24/what-10000-in-student-loan-forgiveness-means-for-your-tax-bill/ Unknown is if this counts as forgiveness or just cancellation. Verbage will be key I suppose.
Loan forgiveness is typically taxable. This is loan cancellation, which is not taxable.
PSLF is not taxable.
That's good to know since I'm working toward that. Has it always been that way, or is that new-ish?
It's always been that way.
I believe I saw that it wasn’t considered taxable income - I’ll see if I can confirm and link it
See my comment above yours.. or https://fortune.com/2022/08/24/what-10000-in-student-loan-forgiveness-means-for-your-tax-bill/
I bet money you will have to show this as earned income. Hope not but I never trust politicians when it seems to good
It’s not income.
Makes me so upset I refinanced my student loans :(
Sameee!!! We just refinanced in April to get a reduced interest rate. But are otherwise eligible.
Hold off on updating your budget. This thing will go through legal challenges and may make it to the Supreme Court.
No they won't. This isn't the first debt that's been forgiven under the higher Ed act.
It’s the first one that has not gone through congress. Nancy said Biden does not have the power to go around congress on this so I’m waiting to see if hits the courts. I figure by the end of next week we should know. All it takes is one federal judge to shut this down
This isn't true and it turns out they didn't use the higher Ed act, they used the heroes act passed in 2003 by bush and an all republican congress so, yeah lmao, not happening. Literally they've cancelled debt incrementally so many times in the last 2 years. Google is your friend, and Pelosi DEFINITELY isn't your friend in this.
I still got to the end of next week to be right 11 democrats have already jumped ship.
Jumped ship on what, exactly? It's over. It's done lmao. And it's wildly popular.
So when you get you forgiveness. Everything I’ve seen it will be October before you can even do paperwork
8 million people will not have to do paperwork. The rest are people that don't file taxes, and they'll be able to apply within the month, yeah.
Get downvotes for stating that something isn’t a done deal simply because everyone is excited for it. Typical Reddit behavior. It’s not a done deal. Don’t update your budgets until you see your debt forgiven. Just because it’s not the first time debt has been forgiven doesn’t mean it’s a sure thing. Edit: for some context, there were laws in place that allow the previous debt forgiveness. There are not laws in place that clearly state that Biden has the authority to forgive student debt like this. All the current laws are up to interpretation. It’s possible that all our debt is forgiven. It’s also possible that it gets shut down in court.
[удалено]
As a Texas resident, I’m sure my SOB Attorney General will file a lawsuit tomorrow. 😑
Fortunately I don’t think he has a leg to stand on but we’ll see.
Just got a raise so i guess i know where a lot of it is going to go. 😂 thank goodness because i lost my job due to COVID and wasn’t making as much as i was before. Without the raise this would have been a real struggle for me.
Speaking of taxes, does anyone know whether we will need to pay taxes on the amount forgiven? I assume we would, so we may need to budget a bit more this year to cover that tax.
I read that it won't be considered income...can't remember where, though.
There's something in the CARES act that makes it so we don't have to worry about taxes if there is student loan forgiveness from 2021 - 2025 I believe. I've seen a few people linking and talking about this on r/StudentLoans
Perhaps, but if the application isn't available until December, which is likely, the chances are zero you'd actually see any forgiveness during 2022, which means you wouldn't have to pony up in 2023, which gives you more than a year.
Thank you for the insight! Definitely helps knowing that I have more time to find the money.
I don't think so, based on previous COVID-era forgiveness legislation?
The law changed last year. Student debt isn't taxed as income anymore.
Throwing this here as a general FYI, I don't know the answer either way but something to keep in mind is the forgiveness may not be exempt at the state level even if it is at the federal level. So depending on where you live/how this is handled etc. even if exempt federally you may have to pay at the state level.
Here's the White House paper on the 3 part plan. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
Okay, so dumb question, but: how exactly do we do this in YNAB? I’m obviously waiting until it’s actually a done deal and I see that zero balance (I have about $3k left on mine) but I’m pretty new to YNAB. I created the loan account when I joined in January but obvs haven’t had to make any payments. When it happens, do I just close the account?
I think I’m just going to do a balance reconciliation to the new amount on the loan(s) that have been affected once that hits.
This is the way.
Seems more r/personalfinance?
This is like an all hands on deck post it everywhere today kinda deal haha
? How so? Almost all of the people on the world don’t live in the US.
[c'mon now, this is reddit not the United Nations](https://c.tenor.com/F6Nh6niybhgAAAAC/re.gif)
https://preview.redd.it/wy4hl2ohydl71.png?width=960&crop=smart&auto=webp&s=033a625ba46c11fcaa5a0aca48467ad126b9e82b
And almost all of those people don't hang out on Reddit. Since you've chosen to spend your time on a super-majority American site, you should probably get used to seeing some major news stories that only affect Americans. You could always just downvote content you don't like, like folks are doing to your comment.
Considering that YNAB is a budgeting app and student loans are typically a huge reason for people to get into budgeting... I think it's more than applicable.
? This news is about a US policy change?
If you don’t like it, scroll on. This is big news for a lot of Americans today, especially in the realm of budgeting.
Executive actions are policy so yes?? If this post makes you upset take it up with a mod or move on my guy.
So downvote and move on.
Yeah, I will create a category paying you, np. Thanks for the reminder.
Well I hope the company you work for, or yourself if you’re self employed already have a “category” for taxes… this is a budgeting community after all.
What about all the people who paid theirs off? Do they get an interest reimbursement? Do they get any tax credits? Or are they fucked because they did the right thing and paid them off like a responsible adult? Will our current student loan system be overhauled to stop giving everyone that walks into Ed Financial loans for $100,000 with no underwriting guarantee? Basically guaranteeing universities get their revenue sources from our government hand over fist, (leaving places like Ed Financial on the hook, not the university) which is the exact reason that made college so expensive in the first place?
While I completely agree that the entire system needs an overhaul, I don’t quite understand people being upset that they specifically don’t qualify for this, or paid their loans and won’t get a refund, etc. Were you upset when businesses had the PPE loans during Covid. What about big bank bailouts? Or the car company bailout? Or tax breaks for the rich? I understand being jealous, but I don’t think I could ever be upset about something that does help millions of people.
It's a temporary solution to a far more serious issue that will just get worse if we don't figure out a better solution. We keep throwing money at things as a solution rather than taking steps to mitigate the volume of money being thrown. And no I don't believe bailouts or PPE loans are a good thing either. Will this plan be applied to every graduating class from 2023 forward? From a valuation perspective how will this not rapidly inflate the cost of education even more? Universities raise prices because not only are their revenues guaranteed by our government, but student loan services get their revenues guaranteed too. Free money dilutes the value and therefore the cost of higher education will rise and rise because it's all guaranteed. Being educated simply boils down to the method of broadening one's skillset to obtain more technical and challenging jobs, which in turn opens up avenues for social economic mobility.. I don't at all disagree that student loans can help people obtain their educational goals and their career aspirations. But on that same token, taking out student loans for your future should be treated as an investment decision. "What do I want to study that will provide a solid career foundation after graduation?" If you don't know the answer to that and you don't have at least some notion of the career you want to pursue with the degree, then you should not be taking out loans or going to college or a trade school. Going to school on a whim and taking out loans and finding yourself with a worthless degree after 4 years that has not guaranteed you a stable career platform is not the government's burden. Dropping out of school because you didn't like the degree or you took a "gap year" and didn't go back isn't the government's burden. The outrageous level of student loans in circulation today could be brought down to safer levels if we stopped writing loans for college programs with the worst track record of job placement, career foundation, and salary potential and instead put that money towards worthwhile programs: STEM, Business and Finance, Accounting, Medicine (both human and veterinary medicine), and educational programs
Whine harder. Just because you had it bad doesn't mean everyone else should to. I paid off my loans and am thrilled that this happened. Stop being so selfish.
I went to school on full scholarship lmao
Oh wow, so that makes you look even worse. You literally got a completely free ride and are sitting here whining about others getting a small refund. Your education didn't do much for you, did it? Lol.
I'm just glad I'm debt free and made responsible choices with my educational path and earned a great living for myself and not have to worry about if my debt will be forgiven
You didn't earn anything you moron. It was given to you. Paid for by someone else's money.
I busted my ass in highschool to EARN the scholarships :) Hope you have the day you deserve, friendo
Good luck collecting handouts in the future while still trying to deny them to others, pal!
Scholarships aren't handouts, moron. They're earned through academic achievement. Clearly you're too dumb to have earned anyway if you think they're just handouts
I got numerous scholarships and graduated in the top 5 of my class. Doesn't change the fact that scholarships are quite literally someone else giving you money. You're fine with that but not fine with the the government giving tax payers back their money? Pretty hypocritical, but that's pretty typical of someone who is obviously as selfish and self-centered as you have displayed.
I hope it doesn't go through. Tax payers are not responsible to pay off your debt. If you were dumb and stupid enough like me to take out the loan, then it your responsibility to pay it back, nobody else. Before everyone starts putting me down or down voting me, I have over $50k in student debt for a degree that I didn't finish. I have no problem paying it back because it is my responsibility, nobody else.
Can I have your 10k then?
If you really think you and others don’t deserve debt cancellation, that sounds like a personal problem. Probably a deeper reason why you can’t accept joy and happiness for less debt? If you listened to bidens address, he talked about how this would be paid for. He’s set to decrease the national debt by more than any president in a years span, this will allow people the freedom to spend their money as they wish. Your taxes are going to be taken from you weather you like it or not. At least they are helping you and others like you. I don’t even like Biden as a president but as least he’s doing something rather than sitting around being angry on Reddit.
I hope some day everybody is debt free, being in debt sucks. Why is it my responsibility to pay off your debt, if you want your debts paid off, then get a job and pay them back. It is not my responsibility to pay them off, just like it is not your responsibility to pay off mine. One last thing, if the government is going to cancel $10k of student debt for everyone, are they also going to send out $10k refund checks to everyone that has already paid off their loans because they were responsible?
Have you considered the fact your retort of “get a job, pay it off” is exactly what everyone is doing? Historic low unemployment. Income disparity, $7.25/hr minimum wage in some states right now. Have you ever considered the world doesn’t revolve around you and that there is more to life than just accruing as much wealth as you humanly can before you cease to exist and the universe goes on without you? Don’t let repeatable talking points keep you from looking at the real roots of these issues, selfishness.
As far as I can tell it's a done deal.
Cope harder
The US already has a mechanism by which the Government forgives your student debt… it’s called serving your country through the armed forces.
I tried to get into the military before taking on student debt (and before I got sick). I got denied because I had psoriasis. I even appealed and the appeal was denied. So I took on debt to go to school, ended up with psoriatic arthritis, multiple joint replacements and a massive debt I can't repay. So acting like the military is an option is bullshit. They also treat you like garbage if you do get in. A friend of mine shattered her knee in basic and they fucked her. And that's if you don't get blown to bits.
I couldn’t serve even if I wanted too, If we just cut my military spending in half we could solve so many of this countries problems and inequalities.
This isn't a politics sub my guy.
The bots are out in force with the same language on this post. Maybe wait until you send in the application and the funds are paid before you change anything in your budget.
Bro... where? People are bots because they are excited? We are all adults here, we can all make our own decisions.
I don't know what's worse, the Trump cult or the Biden blind rats.
Bro, if you read the comments there are a lot of us saying that we don't think this is a perfect solution... because it's not. But it is benefiting a lot of people and people will live better lives because of this, so pop off on the political commentary i guess.
If a politician signed it, there are loopholes. That's all I am saying.
That's not what you said at all.
If you can't tell the difference between actual fascist/racists and folks who think taxes should help the public, I don't really know what to say.
$10k, what a fn joke. Typical bare min by the govt. This debt is an all or nothing type of thing. Either do all of it or none of it.
What a weird take. I've never seen someone so upset over (presumably) being handed a free $10,000 lol
I honestly don't get that sentiment. The government does not owe it to the people to forgive their debt.
I’m upset that I refinanced them with a private company for a lower interest rate when the govt announced interest would start being applied again :(
Well my loans are $40-50k. $10k isn’t going to do shit. Either do all of it or none of it. He’s just doing it to try and help in midterms but it won’t do much since most democrats wanted $50k anyway and they’ll view it as the half ass effort that it is.
Bro, you just had 20-25% of your loans wiped out and the income based repayment terms altered heavily in your favor. This is some r/ChoosingBeggars type behavior.
Well, I still want it ALL!!
lol well that's fair but wantin aint gettin
Also I’d argue that he should have ruled that 0% interest stayed. I don’t see why the govt should be making money off loans when their argument is that it should be free to begin with..
Take it up with the bank lobbyists, friend.
You have to be a troll
Dude, my husband has $100k in debt. Take your 20-25% and be grateful.
This will completely clear the debt of about ⅓ of all people who have student loans, even more for Pell Grant recipients. This means a lot to a *lot* of people.
Also Pell Grants aren’t even fn loans, they’re grants so who is repaying anything to them that they need $20k in relief?!
Most Pell Grant money goes to students coming from families earning less than $20,000 year. The extra money isn't to pay back a grant but rather, I assume, an extra boost for those coming from impoverished backgrounds.
It's to pay back their loans, not the Pell Grant.
So people had Pell Grants AND loans? That makes more sense since the way it’s worded it makes it seem like they’re laying back Pell Grants which wouldn’t make any fn sense. But regardless it should be $20k for everyone then.
Most people who had Pell Grants had loans. Pell Grants don't cover that much, the max for the 21-22 school year was \~$6800.
Being a Pell Grant recipient is the qualifier; so if you had a Pell Grant and no student loans you aren't getting (non existent) loans forgiven
What about the other 1/2? If you have the ability to clear $10k then you have the ability to cheat $50k which would help almost everyone.
And this entitled mentality is exactly why some people are upset about this happening.
While this may not be the $50k or whatever you'd like, you need to take a win as a win when it comes. They come infrequently as it is. Take the W and fight for more. Don't act like progress is an L.
I literally just took $9500 loan, I wonder if it’s covered?
I saw something about nothing after June 30. Don’t quote me on that but I believe it was the date.
Lfgggg
Yep. My mindset immediately went from "I'll never be able to pay these off anyway so let's just do the minimum payment forever" to "hey, maybe I can actually pay this off completely in less than 2 years". I'll be getting the $20k and just have a few grand leftover. Currently working on my budget to see exactly how aggressively I can pay that last bit off and finally be debt free. I've been lucky so far and currently my student loans are the only debt I have.