Income Based Repayment & Income Contingent Repayment (H.R. 2492)

For more information on income based repayment please go here:

http://www.ibrinfo.org/

They have a cute video and also a loan repayment calculator that will show you how much you will pay under IBR. Repayment is based on your income and the size of your family rather than the size of your loan. Persons going into public service jobs or who work for a nonprofit get the entire balance of the loan forgiven after 10 years no matter how much it is. Like other forms of loan forgiveness for public service, its is tax free. Public service jobs include everything from fairly low paying positions in community mental health to tenure track positions at public universities to positions in the Veterans administration.

My understanding is that this legislation was initially designed to encourage lawyers from top (read expensive) schools like Duke or Emory or Harvard to spend time in public service or civil rights advocacy jobs. Currently these folks graduate with $200,000 in debt and up. So what they (and we) can do is combine IBR with a stint in public service and end up only paying off a small amount of the total debt owed. Only government backed loans like Stafford loans will qualify however.

Past Webinars on this type of loan forgiveness can be accessed on links at http://www.equaljusticeworks.org/resources/student-debt-relief/student-debt-relief-webinar-series These recorded webinars are targeted at law students but there is a lot of good "nuts and bolts" information here.

letter sent!

support public $ for public service!

To clarify this legislation mentioned by T4C would extend the tax free status of loan forgiveness to individuals who are not in public service positions and who have been paying for 25 years. Currently, non-public service related loan forgiveness balances are taxed as income. Hey if Wall Street gets a break, why don't we.

I agree with Mark (though I doubt anyone is surprised by that).

Have to disagree.

Colleges and universities cost money to run, just as does the VA. The VA pays salaries that are much higher than most other positions, and they generally also have a nice loan repayment option (similar to the Loan Forgiveness program discussed on this thread).

Markp, since you are interested in VA work (from your posts, i believe you are currently at a VA or interested, right?) I can only assume that you are returning a portion of your salary so that you are not "overly compensated" compared to similar work within the field. Likewise, I would assume that you have turned down the generous loan repayment programs offered through the VA.

Obviously, you are doing this - as the VA is funded with public funds, similar to the Public Loan Forgiveness Program. I know you would not use "money taken (forcefully) from others to promote the welfare of" yourself. After all, using public money to pay higher than market salaries or loan repayment would not be good, as "success is punished and mediocrity is rewarded through schemes like these".

On a more serious note, I do believe these sort of programs are necessary. Public institutions need competent workers. With such high debt burdens many experience in graduate school, people that are interested in public service often seek more lucrative private positions so that they can pay off their loans, raise families, etc. Since public institutions want high quality professionals, they have to enact policies that promote high quality professionals entering public fields. This is one such program, which uses market forces (financial incentive of loan repayment), to facilitate high quality individuals entering our public institutions.

Markp said:

I'm sorry, I am ashamed of government welfare programs like these.

The whole point of getting an education is to become more valuable to society, not to be less valuable. The whole scheme stinks, because it should be the responsibility of colleges to provide education at a cost that is affordable and sustainable. What this really amounts to is welfare for educational institutions that are not providing enough value for their product.

What's worse is that most people look at it as free money. It's not free money, it's money taken (forcefully) from others to promote the welfare of college institutions. Success is punished and mediocrity is rewarded through schemes like these.

Wake up. It's not public $$$ for public service, the government cannot provide resources to people without taking them from someone else first.

Mark

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I am not a constitutional lawyer or anything of the sort (did teach history for 2 years through Teach for America), but I do NOT think the constitution specified a military that spends more than every country in the world combine, operates a budget that is higher than the gross national product of a majority of the countries in the world, or that has occupied countries for years (and for that matter, operates over 800 military bases around the world). For my argument on that, I would cite Article I Section 8 of the US Constitution:

Article I, Section 8 - "To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; To provide and maintain a Navy"

Regardless, I am glad that you are well compensated for your hard and dedicated work. It would be nice if all other public institutions were able to compensate psychologists as well as the VA. Unfortunately, for a variety of political reasons, that is not the case. Providing debt relief is one legislative method that has the potential to improve the quality of mental health care within public institutions. This is comparable to the VA, who provides six-figure salaries and debt relief in order to recruit (much needed, in my opinion) highly competent psychologists who might otherwise seek employment elsewhere.

On a related note, assuming that you oppose public debt relief because you consider yourself a libertarian (what I assume to be your perspective, Markp), I consider libertarianism to be quite similar to being a socialist (though on opposites ends of the spectrum) - both sound great in theory, but neither is practical or realistic in the real world in the full sense of either perspective due to both human motives (i.e. inherent desires of individuals makes socialism impractical) & the current social power structure (i.e. influence of corporations in the political process makes libertarian viewpoint meaningless, as government is (sadly) the only bulwark against the power of the corporation).

Markp said:

No, I am active duty Military. If you feel that I am not earning my keep in the military you can certainly lobby congress to decrease military pay. I happen to feel that my service to my country is fairly compensated when you consider the fact that I am willing to go anywhere at any time to serve the needs of this country in any way that I am required.

Do you feel that Sailors, Soldiers, Marines, or Airmen are overly compensated considering the nature of our jobs? 75% of all Navy psychologists have deployed to a combat zone in the past few years. I will likely be one of them soon enough.

Yes, money is being taken forcefully to pay for the defense of this country. It's one of the things that the constitution of the United States actually authorizes congress to fund. In principle, I agree with you, there may be no need for the VA to offer a public loan forgiveness program provided that they are paying a competitive salary. So yes, I agree, the VA or other government service should not be authorized these programs... UNLESS no one will work for these institutions without it. Then it's another form of compensation. The VA needs to be competitive with the private sector, but it does not need to provide compensation that is out of step with the private sector unless it is because it cannot fill its positions and provide the services that they are required to provide.

Now as for my "overcompensation", no, I don't plan on giving any more of it back to the government. I provide services for the government for which I am being compensated. I have paid my fair share of taxes, to the tune of more than $120,000 in one year alone. You are right, I have taken full advantage of the opportunities to provide for myself. I had other options and I elected to accept the best deal possible. I would never chastise someone for taking advantage of a great opportunity, they should! Whether the government should be offering that opportunity is another situation altogether.

If they are offering pay below that commonly provided in the private sector, I have less of a problem with these programs, but when the combination of these programs and the LRP program exceed the benefits commonly provided in the private sector, then yes, I think that these programs are wasteful. When both public and private sector pay is too low to pay for the educational costs is where I have a problem. A perfect example of this is Psy.D. debt, even with a private sector job, many Psy.D. graduates cannot afford their debt and are forced to either become insolvent or work for a non-profit or government agency. This only rewards the Psy.D. programs for their inefficiency.

Then why are they not paying the prevailing market rate? Seems like that would be the way to resolve the problem, without the overhead of managing another make work program.

Mark

PS - T4C, don't get me started on the bailouts I was always against those.

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Nevermind.

Actually, I'll PM you.

Again, you never addressed the "public" money the VA provides. You seem to enjoy the benefits that VA affords (a salary very comparable to the best in the private field; plus tuition reimbursement) and accept them readily. Yet they are basically the same as what is being offered through the Public Loan Forgiveness Program. The only difference is that most public programs pay LOWER salaries than the VA. So, in effect, you are having your cake (better salary) and eating it too ( loan forgiveness).

Your absolutely right in that "Resources are not created by the government, we (those who are either represented or controlled by our respective governments) empower these entities to re-allocate" the resources. That is the whole thrust of government. Rather than allocate billions of dollars annually to tax breaks for corporations, for example, I would like to see my public institutions at home strengthened. Therefore, I gladly allow these "entities", as you call them, to work to bolster our public instititutions by allowing more individuals who WANT to work in the public fields do so.

Are you serious? You wrote "It seems amazing that we are considering federal health care when we don't even have portability of licensing and credentials. How insane is that?" To some of us, our personal licensure issues take a back seat to the 50 million uninsured or the thousands of people die prematurely because of the lack of health care.

On to the main topic at hand.

You write that "My concern, and I believe it to be justified, is that in many cases federal loan repayment programs encourage an unjustified increase in tuition costs and that these cost increases don't represent the value transmitted by the granting institutions."

Huh? Most colleges and universities don't even know about these programs. I went down to the financial aid office this summer to inquire about the loan forgiveness or IBR, and the financial aid people had just received some basic information about it. They knew little to nothing about the program.

More to the point, to my knowledge, this is the first national federal loan forgiveness program. Please cite past examples of loan forgiveness programs that have led to "encourage an unjustified increase in tuition costs"

Moving on, you state that
"If the Federal government is providing cash in exchange for education in colleges, and then indenturing those receiving the education into government service, while forgiving the debts paid directly to the colleges. Something smells funny about that, seems like the real stakeholder loses perspective. There is little incentive to seek better values in education because a third payer is accepting the responsibility. This in my mind is not a good system."

Again, huh? No one is saying anyone has to work in the public sphere. It is an option afforded to those who actually have some desire to work in the public sphere. I recommend reading about the Loan Forgiveness program. No "debts paid directly to the colleges" are being forgiven. Colleges are not even in the equation (the loan forgiveness is only for federal government loans; universities are only peripherally involved in the process, as a student has to be enrolled in a college to take out the student loans). Again, I recommend you read the Loan Forgiveness program.

I think loan forgiveness is exactly what is needed to help individuals enter the public realm. It is not easy to get - you have to work full-time for 10 consecutive years in a non-profit field, and have to make ALL repayments on time over that 10 years to qualify. 1 missed payment and you do not qualify for the loan forgiveness, or 1 month working full time in a private and for profit area, and you are out of the program.

Lastly, the "indentured servant" thing - again, NO ONE is tied down to getting loan forgiveness. However, I would have to disagree with you. THis program actually, in my perspetive, removes the "indentured service" idea. Now, people with high debt burdens are free to hold ANY job they wish in the public realm. That means a lawyer who accumulated $200,000 in debt is now liberated and can work in government or a non-profit job instead of only seeking out a high paying private job (so that he or she can pay off there huge debt levels).

{QUOTE=Markp;8796220]Maybe you WEREN'T paying attention. I don't enjoy the benefits the VA provides with regard to money. I am active duty military. The VA does not pay my salary, and I am NOT eligible for ANY military loan repayment program. I go to USUHS, which is a military medical school (and has a clinical psychology program.) I do get a salary, and I don't pay tuition, but it has NOTHING to do with the VA.}

This posting wasn't directed against you personally in any way (and I hope it wasn't taken as such). Let us just suppose we are addressing this towards any psych who takes a position with the VA - would that individual turn down the generous salary (more generous than most available in private or public fields) or the debt repayment? Likely not.

{There are a variety of ways to go about this, but tax breaks are not the absence of taxation. These corporations are paying taxes, the question is, are they paying enough taxes? Regardless of how many tax breaks a corporation might get for behaving in a government sanctioned manner, they still have a baseline tax burden. If the government was less inclined to exercise control over taxation some of this silliness wouldn't exist, additionally the backroom deals and favors that politicians write into law are another form of pandering that should not be happening. This however is a whole different discussion. In effect, I agree, some of what is happening with regard to taxation is abhorrent.}

I would agree with you, in that if our tax structure was fairly structured there would be no need for debt repayment (as colleges and universities would not charge the outrageous tuition rates they charge). Unfortunately, we live in the world we live in. Most corporations do not pay there fair share in taxes. This is largely in thanks for our politicians who have written so many loopholes into our tax system that most corporations are smart enough to avoid paying them (through write-offs, exemptions, etc.; and, I would definately agree that politicians from both of our political parties are responsible for this). Regarding corporations paying there fair share - they don't. See this article, for example, which details how about 2/3 of corporations paid $0 total in income taxes. The burden of funding society is increasingly falling on the middle class and our future citizens (federal debt). Until our corporations pay there fair share, I am not opposed to this sort of 'tax break' (i.e. public service debt forgiveness), if you would, for individuals who work in a dedicated way for the public good. How many individuals do you know who regularly pay $0 in income taxes? See article here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/13/MNC4129OFL.DTL

{Many of the "50 million" uninsured are uninsured primarily by choice, not by the fact that they cannot afford it. However if you assume that 12 million uninsured who cannot afford it, that's still a sizable number. First you have to ask, is health care a right? Some believe that it is, others do not. However to suggest that licensure should take a back seat when we have the ability to address these issues in parallel is absurd. So yes, I am serious. }

Totally disagree. Perhaps we come from different social classes/backgrounds (that I do not know). All I know is that I know many people who do not have health care because they can not afford it. If I were not receiving free healthcare right now and had a job that paid what I currently make, I would not be able to cover health insurance for myself (and there are, sadly, too many who work far more than I work and earn the same pittance I earn). Most countries - by most I mean the entire industrialized world plus dozens of other, poorer and less developed countries - do consider health care to be a universal, human right. I believe it is. Perhaps our views on this differ, so I will end discussion here.

{We have a health care system that is unsustainable and will continue to be unsustainable. Mandating coverage will not fix the problem, it's a bad band-aid and it will eventually drive up costs because the consumer is not a stakeholder in the economic cost of health care. Until the consumer has a stake in health care and tort reform is accomplished the system will continue to spiral out of control as it has over the past 40 years.}

I agree that our current system is unsustainable. However, I do believe that mandating coverage will keep costs down. I base this on the experience on comparable countries around the world. It works in the rest of the world. For example, we are 37th in terms of longevity, smack in between the stalwart countries of Cuba and Saudi Arabia. Individuals in every other industrialized country in the world live longer than us Americans, in spite of the fact that we are wealthier per capita than all but 4 countries and in spite of the fact that we actually spend far more in total dollars than any other country in the world for healthcare (about 150% of what most European countries spend on healthcare).

The stakeholder is a MAJOR holder in the economic costs - how do you think universal coverage will be provided? It will be provided through the same avenue that our military, roads, police, social security, and so many other services are provided--- namely, through our tax dollars. Tell a senior citizen that they are not a stakeholder in medicare or a parent that they are not a stakeholder in there child's publicly provided education. So, I have to say I disagree with your assessment that individuals will not have a stake in universal health coverage.

FYI....you cited tort reform as a major problem regarding the outrageous price of healthcare. Tort reform plays a minor role in health costs, 2% - 3% of all U.S. healthcare spending at most. Tort reform would be good in many respects, but it is nowhere near being a panacea for healthcare costs.

See article on tort reform here:

http://www.latimes.com/business/la-fihiltzik1-2009oct01,0,7502095.column

{While I could not find specific data on loan programs, I don't have all night to prove that colleges will increase their tuition rates to adjust for a variety of factors including the availability of federal money.}

Most individuals do not go into public service. That is one reason this public service debt forgiveness was passed. I highly doubt it will be a motivator for individuals deciding where to attend school or why to attend school. If you have any evidence to the contrary that individuals will base there college decisions predominantly on achieving public service loan forgiveness, please do share

{Where do you think the money loaned to the student went? It likely (and primarily) went to college tuition.}

Among undergraduate students what you say is likely correct. I (and I assume) most of my colleagues enrolled in doctoral programs do not pay tuition. Loans I have taken out in graduate school have covered costs of living and the like. Perhaps that is different for individuals enrolled in the for-profit professional psychology programs. Regardless, this discussion is pointless - students enrolled in professional for-profit psychology programs (or psychology graduate programs in general) are a miniscule proportion of students who will be impacted by this program.

{That's called responsibility. You have to make your payments anyway. They are the result of borrowing resources that you did not have, and they are owed to someone else (in this case the federal government.) Honestly, I've worked for the federal government for 12 years, I have not missed a loan payment in the past 15 years, how is this "difficult"? You do the right thing and pay your bills on time... not a difficult thing to do.}

Its important to think outside oneself sometimes. Try raising a family on $50,000 while repaying hundreds of dollars a month on student loans. It can make things very challenging. Many people lose significant flexibility in life choices due to the debt. Again, in MY OPINION, if society was structured more equally, people would be able to complete the education they need and from there be able to take themselves in whatever path there interests, skills, and aptitudes take them. Unfortunately, that is not the case because many in our country (and I am certainly not only talking psych grad students here) are limited in what they can do or pursue due to holding the equivalent of a mortgage when they are just starting out their adult lives. While it is nice to say to "be responsible", life just doesn't work that way. A thing called life gets in the way for many.

{I could not find a reference that stated that you were out of the program if you worked 1 month full time for profit... only that 120 payments would need to be made while working in public service. Do you have a reference for that?}

Thank you for clarifying this for me. You are right. You have to make 120 payments while working in public service. Public service can be interrrupted, though you can not miss any payments. Here is a link where I found you were correct in this regards. Thanks again for bringing this point up -

http://www.ibrinfo.org/faq.vp.html#_How_does_Public