Chances this applies to medical students? Will incoming students be excluded if they have not received any loans yet? Should current students with <10k debt take out more loans now?
Biden maybe canceling 10k student debt
- Thread starter Skarl
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Chances this applies to medical students? Will incoming students be excluded if they have not received any loans yet? Should current students with <10k debt take out more loans now?
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Wouldn’t count on this being available to us in the medical field.
I've heard residents/students may be eligible if their income last year falls below the threshold of $150k.
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No way to know for sure until rules are announced, but the smart money will be on you needing to be in repayment (i.e., not currently enrolled in school) to be eligible. That would mean that residents will get a break, attendings will exceed the income cutoff, and students will miss out since they cannot be in repayment while in school. As a result, no one will be able to game this by borrowing more ahead of it taking effect.
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I agree it'll likely only apply to people in repayment.
The "big if" is if they put in an income cap/job exclusion. It's smart to say you're not "forgiving the debt of Harvard-educated doctors and lawyers," but the reality is it's complicated to exclude people. It's very easy to just blanket forgive everyone $10k. It's very complicated to have everyone submit an application for forgiveness, hire a bunch of people to verify that, staff people to answer the inevitable questions applicants have etc. And obviously a significant portion of the people being most targeted (poor who were taken advantage of by predatory colleges) may not have the resources to even be aware of the program, able to complete the application online, etc.
I'd be willing to bet it would save the gov't more to blanket forgive everyone $10k than to do the second scenario, given the complexity/staffing needs.
All that would have to be done because the IRS can't just share your tax info with everyone, including other branches of the federal government.
I find the whole thing comical. With my/my wife's $400k in debt, Biden/Trump's interest freeze has saved us over $50k. So why there's such a big deal about $10k for all us rich doctors is kind of funny. It's even funnier because the interest freeze "forgiveness" is tax free because we're just not being charged interest. That $10k in forgiveness may very well be taxable.
Whether any of this is/was a good idea is a whole separate debate obviously.
The "big if" is if they put in an income cap/job exclusion. It's smart to say you're not "forgiving the debt of Harvard-educated doctors and lawyers," but the reality is it's complicated to exclude people. It's very easy to just blanket forgive everyone $10k. It's very complicated to have everyone submit an application for forgiveness, hire a bunch of people to verify that, staff people to answer the inevitable questions applicants have etc. And obviously a significant portion of the people being most targeted (poor who were taken advantage of by predatory colleges) may not have the resources to even be aware of the program, able to complete the application online, etc.
I'd be willing to bet it would save the gov't more to blanket forgive everyone $10k than to do the second scenario, given the complexity/staffing needs.
All that would have to be done because the IRS can't just share your tax info with everyone, including other branches of the federal government.
I find the whole thing comical. With my/my wife's $400k in debt, Biden/Trump's interest freeze has saved us over $50k. So why there's such a big deal about $10k for all us rich doctors is kind of funny. It's even funnier because the interest freeze "forgiveness" is tax free because we're just not being charged interest. That $10k in forgiveness may very well be taxable.
Whether any of this is/was a good idea is a whole separate debate obviously.
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Don't know about this specific plan, but almost every student debt relief proposal I've seen specifically excludes medical school debt.
As noted above, residents and physicians with debt shouldn't care as much about this as continuing the interest freeze. For the average medical school debt, at say 6% interest, an additional year of interest freeze will do more than knocking $10,000 off today.
As noted above, residents and physicians with debt shouldn't care as much about this as continuing the interest freeze. For the average medical school debt, at say 6% interest, an additional year of interest freeze will do more than knocking $10,000 off today.
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This plan is a general federal student loan plan. The carve-out involves income ($150K single/$300K couple), not professions like medicine. Assuming it goes through, it will help residents, not attendings and not current students. The interest/payment freeze will certainly end soon in any event.
Of course, anyone receiving a 2+ year interest freeze on $100K+ in debt already received a >$10K benefit, but one thing has nothing to do with the other, since the interest/payment freeze was related to the pandemic, and this $10K gift is related to the student loan crisis.
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Don't hold your breath. There are a lot of reasons this is unlikely to happen or matter for the average med student.
Unclear whether this will include graduate debt and especially debt taken on for professional programs. The rationale in the past has been that professional programs will set you up for a high-earning career (which is true for medicine) and therefore debt relief is less urgent. So they might very well restrict it to undergraduate debt so that your med school debt wouldn't be covered.
It would be quite easy to only apply this towards undergraduate and not graduate debt so as to specifically exclude professional programs.
Also, it would likely be taxable so the true value will likely be less than the full $10k.
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deleted1100659
The irony is if this was based on income, I would have easily qualified a year ago when I was a resident. Now as an attending, if theres an income cap I wont qualify for sure. Makes total sense. Pandering for votes at the cost of 10k a voter, lol.
My biggest concern is biden wanted to impose limits on PLSF forgiveness to 10k a year for 5 years, so 50k total. I am strongly hoping that if this ever gets changed, its only for newcomers to plsf as I already have 5 years down..That would be a huge blow to a lot of physicians.
My biggest concern is biden wanted to impose limits on PLSF forgiveness to 10k a year for 5 years, so 50k total. I am strongly hoping that if this ever gets changed, its only for newcomers to plsf as I already have 5 years down..That would be a huge blow to a lot of physicians.
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Looks like they haven’t decided on whether to cancel or not yet.
There will almost certainly be another extension imo
www.reuters.com
There will almost certainly be another extension imo
White House says canceling student loans wouldn't drive up inflation much
The short-term impact on inflation of a possible decision by U.S. President Joe Biden to cancel some student loans is likely to be small, a top aide said on Tuesday.
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It might actually help more out, because then about 90% of residents would get PSLF credit for their time in residency and get $30-50k forgiven. As many of us aren't in PSLF-eligible jobs, that little bit of tax-free forgiveness is better than none.
I'd argue that's the better policy for the gov't to pursue if they plan to keep PSLF around. It's meant for social workers/teachers/etc who have lower incomes (and typically much lower debt burdens). It's not meant to forgive the debt of your DA's, judges, neurosurgeons, etc.
I don't have much faith however that Congress will actually fix the underlying problem, which is the cost of college. Some of us will benefit from whatever changes Biden announces, but the trust is almost any action he takes, while helping many of us out now (including many who truly need it), it's actually going to worsen the problem going forward. But at least it's an attempt to address the issue. Still, action really needs to start up-front with the cost of college, and not after-the-fact with the debt we owe.
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deleted1100659
If they do that then it is what it is, but I would argue that it should definitely not affect the current PLSF people. I work in a community healthcare setting that can not get competent physicians and I was the only board certified physician, let alone physician who actually did residency for what they're practicing medicine in, lol. To give the promise of loan forgiveness after 10 years, then 5 years in that gets dropped from under you seems a bit cruel. But I would think they would make it for future PLSF candidates, not those already in the program.
But honestly, I think if there is going to be loan forgiveness it shouldnt be income based, whether its plsf or not. For one, it doesnt solve the root of the problem, which is the cost of tuition. Second thing, no one forces people to choose the career path/degree they choose. If someone works hard, makes significant sacrifices and does all the right things, then why should preclude them from help, just because they made good decisions/worked hard?
The cost of tuition sets people up to fail along with the associated interest rate and people make bad decisions when they're young, but the cost of tuition is equally predatory to those who worked hard and did well.
Obviously something needs to be done but the government's response is pretty weak, seems like everyones just shuffling their feet or burying their heads in the sand.
Needs to be a cap on the amount a school can charge for tuition and I would argue that federal loan should factor in credit score to a degree. Don't deny someone with no credit, but if you have perfect credit, perhaps you should be entitled to the same interest rate you would get from a car or house loan. If you have a 200 credit score, then that's a different story. Teaching the younger generation about financial responsibility while also not setting them up to fail would be ideal.
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$10k is a rounding error, on the order of 0.1% of lifetime earnings.
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Fortunately (unfortunately?) many of us have undergrad debt that this could still go toward.
But 10k? Imagine making student debt one of the pillars of your campaign to pull this 2 years later.
But 10k? Imagine making student debt one of the pillars of your campaign to pull this 2 years later.
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deleted1100659
That is the part that gets to me the most. He did a 180 on a major platform he pushed. He talked about how corrupt student loans were. and hes done a few things here and there, but his response so far is pretty underwhelming compared to how he hyped it up. Im very moderate, but hes moderate to a point where he doesnt make any real decisions half the time...
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Just keep in mind that, whatever he ends up doing (or not), doctors are going to be unintended beneficiaries. His platform certainly did not involve having the American taxpayer provide debt relief to the 1%, or future 1%. If we get anything at all out of this, students, residents or attendings, it will only be because it will be too administratively burdensome to exclude us, not because Joe Six Pack doesn't want his doctor to have to repay his student loans. 🙂
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My theory is that the extensions will continue through November (Midterms).
Republicans don’t want student loans forgiven.
Biden and the rest of the Democrats want to campaign promise loan forgiveness more than they actually want to do it.
Republicans don’t want student loans forgiven.
Biden and the rest of the Democrats want to campaign promise loan forgiveness more than they actually want to do it.
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deleted1100659
agreed, its all a big act/vote buying. With bidens approval rating sucking, it would be a dumb move for him to restart loans.
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Politicians might be doing a lot of things
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The problem again is rising tuition. Its just not as simple as just forgiving 10k in loans.
This is just a bad move.
for some students, 350k in medical student loans- 10 k will not even leave a dent on it.
This is just a bad move.
for some students, 350k in medical student loans- 10 k will not even leave a dent on it.
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Limit interest rate of both federal and private loans to a max 3% or at a rate lower than current.
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For most with med school debt, the last 2 yrs of interest freezes is worth a whole lot more than $10k. 6-7% interest on $200k is already $24-$28k.
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deleted849476
I just did an excel sheet to answer this for my exact numbers and it saved me 35k as someone going into 3rd year right now
If it were to keep up for the next two years it would practically equal out to a savings of an entire year’s tuition
