Loan forgiveness

[NorthTexasPharmacist]

Didnt Trump sign an exe order to extend loan forgiveness until end of the year? Does that apply to everyone? Whats the update? I googled but nothing substantial is showing up.

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[JustFillIt]

Didnt Trump sign an exe order to extend loan forgiveness until end of the year? Does that apply to everyone? Whats the update? I googled but nothing substantial is showing up.

It applies to all federal student loans. Not private loans. Call your loan service provider

 

[NorthTexasPharmacist]

It applies to all federal student loans. Not private loans. Call your loan service provider

Just got an email this morning about it which stated no payment until end of December and no interest will accrue. I wonder where theyll get the money for it.

 

[JustFillIt]

Just got an email this morning about it which stated no payment until end of December and no interest will accrue. I wonder where theyll get the money for it.

They just push buttons at the federal reserve is all

 

[confettiflyer]

Just got an email this morning about it which stated no payment until end of December and no interest will accrue. I wonder where theyll get the money for it.

Short answer: since no one is challenging the order, we will never know if POTUS actually has the legal power to extend the zero interest/no payment provisions without an act of Congress.

 

[NorthTexasPharmacist]

Short answer: since no one is challenging the order, we will never know if POTUS actually has the legal power to extend the zero interest/no payment provisions without an act of Congress.

Well, as we all know from insurance companies and PBMs that certain lines are very very blurry when it comes to profit in massive amount. haha.

 

[confettiflyer]

I remember posting about this 5-ish years ago when we were going through the finer points of PSLF and the legislation that authorized it. The senate bill had a $65,000/yr income cap on loan forgiveness, the house bill did not. The House passed the bill 273-149 with 47 republicans joining the 226 democrats. The Senate passed the bill 78-18.

I finally got around to reading the senate transcripts and found this lovely gem from then Sen. Jeff Sessions (R-AL):

Congressional Record

www.congress.gov

Items in bold are of interest to SDN members who have debated, off and on, through the past decade, the PSLF program.

Amendment No. 2333

Mr. SESSIONS. Mr. President, the education bill before us is
troubling in the fundamental ways that Senator Judd Gregg, the ranking
Republican on the Budget Committee, has pointed out, in that it
utilizes our reconciliation process to, instead of containing spending
and helping to balance the budget, actually increase spending
substantially for a lot of new programs. I wish to talk about one of
those programs today that I think should not be a part of this
legislation. So I have offered this amendment to strike that provision.
It is an idea that sounds good. It is something about which I have had
at one time or another individuals ask me to support, always for their
particular business, their particular agency of Government, and I have
felt that I could not support it. One reason was, how can we justify
supporting one agency of Government over another? So I guess, in one
sense,

[[Page S9557]]

this legislation fixes that problem and covers everybody, and more. Let
me tell my colleagues what it does.
The idea is, if a person pays their loan debt and they are part of a
direct Government loan program, that after 10 years they could get a
large part of that debt forgiven. That sounds good, but let me discuss
why I think this is bad public policy, why it is a new Government
program we should not start, and why it is absolutely inevitable that
it will grow and cost more and more as time goes along.
Let me show how broad this program is. There would be a student loan
forgiveness program that would provide forgiveness of loans to public
emergency management employees, government employees, public safety,
public law enforcement--these could be State, county, or local, I
presume--public health, public education, public early childhood
education, public childcare, social work in a public child or family
service agency, public services for individuals with disabilities,
public services for the elderly, public interest legal services, public
library services, public school library sciences, or other public
school-based services, or those on full-time faculty at a tribal
college or university. That is what is included. That is a big deal. It
eliminates one of my concerns of why pick and choose Government
agencies; it just covers them all.
Let me express why I think there are some good principled public
policy concerns and objections and why I do not think this is a good
step for us to take.
For example, there is no limit in this legislation on the total
amount of loan forgiveness, which creates a discrepancy between the
rich and the poor. Graduates of expensive schools with a lot of debt
would receive quite a sizable benefit under this program, while
students who work their way through college, go to a community college,
would receive nothing if they didn't have any debt.
The National Association for College Admission Counseling reports
that the average cost of a community college is less than half of that
for a public college and one-tenth of a private 4-year college. So who
is being helped here? Half of low-income students attend community
colleges while only 1 in 10 high-income students attend community
colleges.
Further, the lowest priced colleges are 2-year public colleges in the
West, for example, with average tuition fees of $1,300. The highest
priced colleges in the country are 4-year private colleges in New
England with average tuition fees of $28,000.
Section 401 then creates a perverse incentive to take out the maximum
amount of student loans. Rather than encouraging better public policy,
I submit, that would encourage students to work their way through
college and families to help them make their way through college
instead.
Instead of moving in that direction, this bill would clearly move us
in the direction that one would borrow more money and have the
expectation that the Government will help them pay it off at some point
later on.
Also, I ask why we would single out public service Government workers
for this kind of benefit--there are millions of Government workers--and
exclude productive citizens working in low-income jobs in the private
sector who could also benefit from a similar program? Why are they left
out? What principled argument is there for that? Certainly, most people
working in private businesses don't have as good a retirement plan or
health care plan as Government employees do. Now we are going to help
them pay their tuition from taxpayers' money that comes from people in
the private sector who are not getting these benefits.
Why should a public employee be elevated to a higher class of
treatment of loan forgiveness than those in the private sector, those
hard-working American taxpayers who are not lucky enough to have an
air-conditioned office and a Government-sector job?
Public service is an honor, and as public servants, I don't think we
need to ask or should think to ask to elevate our number to a higher
status than that of average working Americans.
There are many hard-working Americans in the private sector who
contribute to society and who would benefit from the program. I think
about attorneys who need help. What about small town attorneys working
hard to start a practice, or nurses, educators, inventors, small
business employees, a cook who has gone to college to try to get a
financial business degree so they can one day run a restaurant,
department store managers who want to be CEO's one day, electricians or
plumbers who want to establish their own businesses and go back to
college and work their way through and keep their debt down? These
people pay taxes that benefit a Government worker who has a lifetime
job, probably making more than they are, certainly with a lot more job
security than they would have, and countless others around the
country. Why should we benefit one and not the other? These are people
paying taxes too. I haven't seen that we have difficulty getting people
to take Government jobs. They are pretty attractive out there, the
truth be known.

So somebody goes off to a big expensive college and gets a big
expensive degree and owes $75,000 or $100,000. Well, the Government is
going to help them pay that back but not help the guy out there on the
street corner trying to make a living to pay his back--the same person
who is paying the taxes that are paying not only the salary now for the
Government employee but now will pay their education costs. There is no
principled basis that justifies them to be entitled to loan repayments
more than there would be for someone in the private sector.
There is no means test for this program. It doesn't matter under this
program if the public employee has millions of dollars in the bank. If
you had millions of dollars in the bank, and you knew you were going to
get a job where the Government was going to help you pay back the loan,
why wouldn't you borrow the money to go to college instead of paying
for it yourself? This incentivizes people, I suggest, perversely, to
borrow money to go to college rather than working their way through or
utilizing the millions of dollars they may have.
Let me say this. I am not against assisting people to pay for a
college education. But we are spending billions of dollars on higher
education through direct benefits to colleges and universities, loans,
subsidies, and grants. Total student aid, including grants from all
sources, plus loans, work study, and tax benefits from the Federal
Government, increased by 95 percent in inflation-adjusted dollars over
the decade from 1995-96 to 2005-06. So we are spending more to help our
people go to college, by putting more Pell grants and loan money out
there.
I think Senator Kennedy's concern about abuse of the private loan
program is valid. I was inclined to support the Burr amendment, but I
am of the view that the program was subject to too much abuse and we
needed to fix it. But I will note this about this amendment: It creates
an unequal footing between the Direct Loan Program and the Federal
Family Education Loan Program--Senator Alexander was referring to those
programs--because the only people to get benefits under this loan
repayment program would have to go through the Direct Loan Program. The
competition between these two programs, it has generally been held, and
the Senate believes, will benefit students, and that is why we didn't
eliminate the private loan program even in this bill we are passing.
So allowing loan forgiveness solely through the Direct Loan Program
is not principled, I think, at all. It will undoubtedly give an
advantage to the Direct Loan Program as students have no other route in
which to receive loan forgiveness than to borrow under the Direct Loan
Program.
Let me say this--and I didn't realize this until recently: 82 percent
of the schools in my home State of Alabama do not use the Direct Loan
Program but participate in the Federal Family Education Loan Program.
Students graduating from my small alma mater, Huntingdon College, a
liberal arts college, would not be eligible because Huntingdon is not a
direct loan school. Schools choose FFELP because the private sector
offers the better services, they think, and saves them money.
Nationally, this statistic is around 80 percent. So 80 percent of the
colleges and universities in our country are not in the Direct Loan
Program, and under this plan you wouldn't benefit unless you were in
it.

[[Page S9558]]

They say: Well, you could consolidate your loans under the Direct
Loan Program and, therefore, then you could get repayment. But isn't
that a tilting of the scales and a perverse benefit to the Direct Loan
Program, which is supposed to be on a competitive basis to see who
offers the best incentive to the students to get a good loan program?
They get to choose now which they think is best. So I don't think that
providing this incentive to clearly favor the Direct Loan Program and
exclude the other is good public policy. I am not aware that those who
voted for it understood it might have done that.
Studies show that when you extend your loan, sometimes you end up
paying more interest than going on and paying them off. The Federal
Family Education Loan Program is far more popular than the Direct Loan
Program at present because they have tended to offer lower interest
rates and quality service, but I think there are some abuses, too, and,
hopefully, this bill will tighten that up.
I will conclude on this matter by saying this is the kind of program
that truly, colleagues, should strike fear in the heart of anyone
concerned about the expansion and growth of Federal spending and
Federal programs. It will create a new Federal bureaucracy. Next year,
I predict--since this bill says you have to be regular in your payment
of your student loan to qualify for this program--I will predict next
year we will be providing exceptions to those who have lost their jobs,
who have had an illness or who have had other kinds of problems; or we
will be having lawsuits and administrative hearings over whether this
or that person qualifies to have part of their loan forgiven based
simply on the fact they work for some Government or public agency.
If we want to help public employees, let us do it in a more direct
manner. Why should we provide a benefit program that helps those who go
to some expensive college, maybe don't work while they go to college,
and end up with a big debt? Let's say two individuals are working at
the county health department or the EMA and one of them ran up a big
debt and the Government helps them pay it off; while the other one, who
worked their way through college, doesn't get anything. That is not a
good way to help people, in my view.
It is also, again I submit, bad public policy because it encourages
and incentivizes people not to pay their way through but to borrow
money. We would like to have a different incentive. Good public policy
should do that. I also see no principled basis to provide this benefit
solely to the Direct Loan Program and not to the other loan programs.
It is a clear tilt from one side to the other when 80 percent of the
American colleges and universities are not in the Federal Direct Loan
Program.
So I would say, first of all, the way it is structured today it will
not be a huge, costly program for our country, but it is not based on
good principles, No. 1; No. 2, it is going to be expanded, you can be
sure, in the future; and No. 3, it will create another bureaucracy,
another Government program, when we already have Pell grants and loan
programs that we are pumping more and more money into every year.
I suggest if we have ideas about helping people with their loans, we
focus on existing loan programs and not create this one that is
unprincipled in its results.
Mr. President, has Senator Kennedy had an opportunity to think about
that other amendment I was going to call up?
Mr. KENNEDY. If the Senator will be kind enough to let me examine it.
That is dealing with the alternative minimum tax and deductibles that,
quite frankly, as I was thinking about it, the Finance Committee deals
with, and they would probably be the most valuable to try to address
this. If we could deal with this first issue first, and then, if I
might, try and get some member on the Finance Committee to come over
and respond to the Senator's question because I think it deals with the
alternative minimum tax.
I am not trying to delay, but I see the Senator from Maryland is here
and would like to speak. I will be glad to respond to the Senator's
presentation and move ahead in a timely way.
Mr. SESSIONS. Mr. President, reserving the floor--I believe I still
am recognized--I know Senator Kennedy has never offered a finance-
related amendment on a bill that hasn't cleared the Finance Committee.
I am teasing a little bit because we all knew this bill is open to
this kind of amendment, I think, and that is why I wanted to offer that
AMT fix. We have voted on it before. It is something that I think we
need to be more educated about and that is the reason I wanted to offer
that.
I will not offer it at this time, if Senator Mikulski wishes to speak
on the education amendment, but I hope that will not bar me from
getting the floor a little later and seeking to call up that extra
amendment.
I yield the floor.

I'm going to pull out this quote:

"I will predict next year we will be providing exceptions to those who have lost their jobs,
who have had an illness or who have had other kinds of problems"

Funny how prescient this quote is. Sen. Sessions was off in his timing--we didn't provide PSLF exceptions in 2008--but he was spot that this is exactly what we did in 2020 for COVID. I still am pro-PSLF, but this argument was valid then and valid today, and it is 13 years old.

By the way, his amendment was to completely remove PSLF from the legislation. It failed 42-55 (with 6 republicans joining democrats in dropping the amendment). The conference report, which removed the income cap, was subsequently approved by the senate 79-12.

 

[confettiflyer]

It took me a while to find this (not that I was looking in the past 5 years, hah), but here's that pivotal conference report I was referring to (then and now):

https://www.congress.gov/crec/2007/09/06/CREC-2007-09-06-pt1-PgH10168.pdf

TITLE IV—LOAN FORGIVENESS SECTION 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES The House bill (Sec. 132) amends the current Income-Contingent Repayment program in the Direct Loan program to provide loan forgiveness for public sector employees. The change provides that the Secretary shall forgive the remaining loan balance on a loan under part D of title IV for a borrower who has been employed in a public sector job and has made payments on such loan for a period of ten years. The Senate amendment (Sec. 401) creates a new loan forgiveness plan for public service employees. The plan provides that the Secretary shall forgive the remaining loan balance for a borrower who has been employed in a public sector job and has made payments on such loan for a period of ten years (which need not be consecutive). Such borrowers shall be eligible to have 1⁄10 of the remaining loan balance forgiven for each of the ten years in which the borrower earned $65,000 or less. The House recedes with an amendment to modify the definition of public service employees and eliminate the $65,000 income cap. The Conferees adopt the Senate amendment as amended by the House.

GEORGE MILLER, ROBERT E. ANDREWS, BOBBY SCOTT, RUBE´ N HINOJOSA, JOHN F. TIERNEY, DAVID WU, SUSAN A. DAVIS, DANNY K. DAVIS, TIMOTHY BISHOP, MAZIE K. HIRONO, JASON ALTMIRE, JOHN YARMUTH, JOE COURTNEY, Managers on the Part of the House.

TED KENNEDY, CHRIS DODD, TOM HARKIN, BARBARA A. MIKULSKI, JEFF BINGAMAN, PATTY MURRAY, JACK REED, HILLARY RODHAM CLINTON, BARACK OBAMA, BERNARD SANDERS, SHERROD BROWN, MICHAEL B. ENZI, LAMAR ALEXANDER, ORRIN G. HATCH, Managers on the Part of the Senate.

 

[NorthTexasPharmacist]

I remember posting about this 5-ish years ago when we were going through the finer points of PSLF and the legislation that authorized it. The senate bill had a $65,000/yr income cap on loan forgiveness, the house bill did not. The House passed the bill 273-149 with 47 republicans joining the 226 democrats. The Senate passed the bill 78-18.

I finally got around to reading the senate transcripts and found this lovely gem from then Sen. Jeff Sessions (R-AL):

Congressional Record

www.congress.gov

Items in bold are of interest to SDN members who have debated, off and on, through the past decade, the PSLF program.




I'm going to pull out this quote:

"I will predict next year we will be providing exceptions to those who have lost their jobs,
who have had an illness or who have had other kinds of problems"

Funny how prescient this quote is. Sen. Sessions was off in his timing--we didn't provide PSLF exceptions in 2008--but he was spot that this is exactly what we did in 2020 for COVID. I still am pro-PSLF, but this argument was valid then and valid today, and it is 13 years old.

By the way, his amendment was to completely remove PSLF from the legislation. It failed 42-55 (with 6 republicans joining democrats in dropping the amendment). The conference report, which removed the income cap, was subsequently approved by the senate 79-12.

I'm hoping you're off today... otherwise, how you got time to read all this brah? lol

 

[confettiflyer]

I'm hoping you're off today... otherwise, how you got time to read all this brah? lol

I read fast, especially when it's interesting material, like US Senate proceedings from 13 years ago that have, at-best, marginal historical and contextual meaning today

P.S. I read the entire thing, and man people throw in some random garbage as amendments. They tried to repeal the AMT while discussing CCRA, and were throwing out amendments related to Bill Clinton and I. Scooter Libby, oh and inmates at Guantanamo Bay. This other senator tried to make it illegal to execute a mother who was pregnant.

All of this.... in a college financial aid/student loan bill.

 

[NorthTexasPharmacist]

I read fast, especially when it's interesting material, like US Senate proceedings from 13 years ago that have, at-best, marginal historical and contextual meaning today

P.S. I read the entire thing, and man people throw in some random garbage as amendments. They tried to repeal the AMT while discussing CCRA, and were throwing out amendments related to Bill Clinton and I. Scooter Libby, oh and inmates at Guantanamo Bay. This other senator tried to make it illegal to execute a mother who was pregnant.

All of this.... in a college financial aid/student loan bill.

Well, I think National Community Pharmacy Association is trying to piggyback on the whole USPS mail in voting issue to kill PBMs mandatory mail-order pharmacy policy which I thought was interesting since I didn't you know you can do that lol.

 

[Dred Pirate]

It applies to all federal student loans. Not private loans. Call your loan service provider

not all federal loans - I have federal loans that don't qualify - long story short - prior to 2010 there were two types of federal loans, they worked the exact same way - your school and loan provider chose what type - mine chose wrong - but I only pay $17 a month in interest right now so I have bigger worries