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Obama again proposed changes to IBR/PSLF. Estimated cost for these programs jumped!
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Nah brah, Obama is going pay for all my $300k+ student loans brah. I got a plan, IBR, brah. PSLF 10 year plan. I read about it on the interwebs. And my guidance counselor said so. She said pharmacy is still really in demand. Just gotta finish my PGY-3 first.
From reading the article it looks like he is going to enact these changes without Congress. I for one agree that those taking out huge student loans and never plan on paying them back is wrong. I also think the current tuition by the majority of colleges is wrong. None of that matters to the fact that a benefit that has been accepted as being granted to borrowers who have already started repaying should not be able to change the rules. I am especially not happy about using the spouses income. It is ridiculous that as a high earner we cannot deduct our student loan interest and fees. You pay 20k a year in loans plus 30k plus in taxes, its a joke.
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I read the 2016 Obama budget this morning, found nothing substantially new about IBR. We've known about the "cost" increases as a function of more enrollment for some time now.
More vague stuff about affordability. The 2015 proposal was dead in the water.
Call me when something specific hits committee. :
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More vague stuff about affordability. The 2015 proposal was dead in the water.
Call me when something specific hits committee. :
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http://www.edcentral.org/key-questions-2016-highered/
Income-Based Repayment: The president’s budget includes the same set of proposal to limit benefits in the income-based repayment program (IBR) for student loans that the president included last year. These changes, many of which New America proposed several years ago, would reduce the benefits that graduate students can collect through the program’s loan forgiveness provisions. These changes roll back some of the changes the administration made to IBR in 2010. Specifically, borrowers with larger loan balances would need not qualify for loan forgiveness until 25 years of payments, rather than 20 years under current law; married borrowers could not exclude their spouse’s income from the calculation by filing separate taxes; and Public Service Loan Forgiveness would be capped, not unlimited as is the case under current law. It would also add a new benefit by forgiving half of any unpaid interest each month.
Last year, the budget showed that that these changes would reduce the cost of IBR by $627 million per year once fully in place. This year the budget shows $1.5 billion in savings per year. What explains such a large increase in savings from the initial estimate? Did the administration underestimate the degree to which borrowers – mainly graduate students – would benefit from the changes the administration made to IBR in 2010? What new information has come to light?
Income-Based Repayment: The president’s budget includes the same set of proposal to limit benefits in the income-based repayment program (IBR) for student loans that the president included last year. These changes, many of which New America proposed several years ago, would reduce the benefits that graduate students can collect through the program’s loan forgiveness provisions. These changes roll back some of the changes the administration made to IBR in 2010. Specifically, borrowers with larger loan balances would need not qualify for loan forgiveness until 25 years of payments, rather than 20 years under current law; married borrowers could not exclude their spouse’s income from the calculation by filing separate taxes; and Public Service Loan Forgiveness would be capped, not unlimited as is the case under current law. It would also add a new benefit by forgiving half of any unpaid interest each month.
Last year, the budget showed that that these changes would reduce the cost of IBR by $627 million per year once fully in place. This year the budget shows $1.5 billion in savings per year. What explains such a large increase in savings from the initial estimate? Did the administration underestimate the degree to which borrowers – mainly graduate students – would benefit from the changes the administration made to IBR in 2010? What new information has come to light?
Tuition is high because of an unlimited, easy access to student loans.
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I don't ever put LOL in posts because I think it's stupid, but I literally LOL'ed at this... sitting here chuckling...
Honestly sometimes I think it's all a scam for the gov to milk money out of grad students and graduates. The problem is skyrocketing tuition and high interest on the student loans. Neither of these ever really get addressed. In my case going to a private school close to home was my cheapest option versus going to my state school and taking out additional loans for living expenses. In the end I'll graduate with ~240k for my PharmD and 4 years undergrad with the interest that built during my time. I got scholarships and a PELL grant in undergrad so my loan amount for my 4 year bachelors was only 22k.
The interest on loans as high as a mortgage have double the interest rate, cannot be washed away with bankruptcy and the government having the power to dip into wages and remove licenses for delinquent payments. I believe after you pass 75k income per year you can no longer deduct your student loan interest on your taxes. The government will make roughly 110k off the interest of my loans if I pay them all off in 10 years, they make double that if I go with a 20 year repayment option. They'll also tax me in a higher tax bracket due to a higher income.
Bottom line. Grad schools typically = higher income for the individual resulting in interest profit from loans being repaid as well as higher tax revenue from higher earners. Why jeopardize their cash cow? What interest does the gov have in reducing grad student loan burden or trying to make things more affordable? Your debt is their profit. This isn't just limited to PharmD students either. Med schools, law schools, PT schools, vet schools, etc... there are lots of high dollar grad programs out there (with some being in worse shape than us).
The interest on loans as high as a mortgage have double the interest rate, cannot be washed away with bankruptcy and the government having the power to dip into wages and remove licenses for delinquent payments. I believe after you pass 75k income per year you can no longer deduct your student loan interest on your taxes. The government will make roughly 110k off the interest of my loans if I pay them all off in 10 years, they make double that if I go with a 20 year repayment option. They'll also tax me in a higher tax bracket due to a higher income.
Bottom line. Grad schools typically = higher income for the individual resulting in interest profit from loans being repaid as well as higher tax revenue from higher earners. Why jeopardize their cash cow? What interest does the gov have in reducing grad student loan burden or trying to make things more affordable? Your debt is their profit. This isn't just limited to PharmD students either. Med schools, law schools, PT schools, vet schools, etc... there are lots of high dollar grad programs out there (with some being in worse shape than us).
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You are exactly right about the cash cow. I emailed my senators when Elizabeth Warren was trying to pass a bill that allowed graduates to refinance their interest rates with what the government was currently offering students. He said he couldn't support it due to it would increase the deficit. So instead of making 1 billion (made up number) off student loans something the govt shouldn't even be involved in you'll make 500 million. Deficit is caused by spending more then you make not by making less money (it is the failure to reduce your spending that causes the deficit not reduction of income) It is ridiculous they are using student loans as a profit scheme and then they reduce interest rates and have different payment plans all depending on the year you take out the loans. Luckily drb started letting pharmacists refinance with them and I got 3.5%.
^ I disagree with you that the government will make a profit. I actually think the government will loss a boat load of money.
Even with income based repayment, a significant number of borrowers are still defaulting on their loans. This tells me they don't have any intention of paying it back. They will die with their debt.
All of these loans are not secure which means if you refused to pay back your loans, the government can only try to garnish your wage or social security. It can't take away your house or put you in prison.
Where in the world are you going to get 300 k in unsecure loans? Only the government will give loans to just anybody who applied regardless of their credit history or their ability to pay it back. Add that to expanding loan forgiveness the government is promising. This tsunami is coming and the taxpayers will eventually have to pay for this disaster.
Even with income based repayment, a significant number of borrowers are still defaulting on their loans. This tells me they don't have any intention of paying it back. They will die with their debt.
All of these loans are not secure which means if you refused to pay back your loans, the government can only try to garnish your wage or social security. It can't take away your house or put you in prison.
Where in the world are you going to get 300 k in unsecure loans? Only the government will give loans to just anybody who applied regardless of their credit history or their ability to pay it back. Add that to expanding loan forgiveness the government is promising. This tsunami is coming and the taxpayers will eventually have to pay for this disaster.
I read that to mean: "Government is finally paying for higher education like it should be doing in the first place."
I think the government will always profit when you take into account salary and increased tax burden over your lifetime of earning. If the average household makes about 45k a year and a pharmacist makes say 110k a year their tax burden over their lifetime of working will be significantly higher, they'll likely get more money from you than the average person even if they erased student loans. Either way, I would be completely fine with an interest free loan where I pay off the principal to provide back the money the government lends me. Having a 6-7%+ interest rate really only serves them and makes them money. Although the loans are unsecure they also cannot be taken away with bankruptcy and they do have legal power to dip into your wages, remove your licenses and take from any tax refund you might get. I think it would be hard to believe that they are making a net loss when looking at all loans and the profit from interest. Then again, I don't have any concrete numbers on that, I just don't see them losing out. It's a revenue source for them, not a public service for students in higher education.
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The government does make a profit off of student loans. They can lend money to Wall Street and banks with tiny interest rates but they lend money to students with 7.6% interest.
Also, if the gov. can spend trillions on a single war, they can provide 100% free education for their citizens.
http://business.time.com/2013/05/10...ents-should-get-the-same-rate-as-the-bankers/
http://strikedebt.org/how-far-to-free/
http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/
http://www.usatoday.com/story/news/...ent-loan-rates-will-feed-fed-profits/2696241/
Also, if the gov. can spend trillions on a single war, they can provide 100% free education for their citizens.
http://business.time.com/2013/05/10...ents-should-get-the-same-rate-as-the-bankers/
http://strikedebt.org/how-far-to-free/
http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/
http://www.usatoday.com/story/news/...ent-loan-rates-will-feed-fed-profits/2696241/
And one time government backed Feddie May and Frannie Mac were also making record profits.
Sounds good and all until we talk about increasing taxes. That is the whole problem. We want to give everybody a chance to get a doctorate degree, regardless if they have earned it and regardless if there is a need for it, but we sure don't want to pay for it.
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http://www.forbes.com/sites/jasondelisle/2015/02/03/obama-student-loan-defaults/
"The president’s fiscal year 2016 budget out this week is projecting fantastic economic growth over the next decade, but one piece of the puzzle refuses to fit — student loan defaults.
The Department of Education’s budget documents project that 25.3 percent of undergraduate Stafford loans (measured by dollars, not numbers of loans) issued next year will default at some point during the borrower’s repayment term. That is up a full 2.5 percentage points from what the agency projected last year for the previous cohort of loans. And it is a large uptick given that those projections typically don’t move much from year to year.
Every other student loan category also shows an increase in projected default rates. For Parent PLUS loans it is 2 percentage points higher, now at 10.6 percent. On the graduate student side, while the Obama administration seems to be accounting for the fact that many more graduate students will take advantage and reap the benefits of the generous terms of Income-Based Repayment and Public Service Loan Forgiveness, default rates for graduate Stafford and PLUS loans are still projected to increase.
The Obama administration has not explained what is behind these new numbers. Meanwhile, trends that might help explain the projected increase are actually pointing in the other direction. The maximum Pell Grant for low-income students will reach its highest level ever in 2016. Enrollment in affordable repayment plans such as Income-Based Repayment are increasing rapidly as the administration continues to aggressively promote them. Interest rates on loans issued in 2016 will likely be lower than those issued the year before. Even the favorite whipping boy for student loan ills, the for-profit college industry, will take in the smallest share of federal student loans in years, according to the president’s budget.
Maybe analysts at the Department of Education see trends in the way older loans are performing that suggest defaults on new loans are likely to come in higher, despite a rosy economic outlook, generous federal grants, tax benefits, and loan repayment terms. It may be that we are entering a new era of high default rates on student loans regardless of the strength of the economy or the size of government benefits."
"The president’s fiscal year 2016 budget out this week is projecting fantastic economic growth over the next decade, but one piece of the puzzle refuses to fit — student loan defaults.
The Department of Education’s budget documents project that 25.3 percent of undergraduate Stafford loans (measured by dollars, not numbers of loans) issued next year will default at some point during the borrower’s repayment term. That is up a full 2.5 percentage points from what the agency projected last year for the previous cohort of loans. And it is a large uptick given that those projections typically don’t move much from year to year.
Every other student loan category also shows an increase in projected default rates. For Parent PLUS loans it is 2 percentage points higher, now at 10.6 percent. On the graduate student side, while the Obama administration seems to be accounting for the fact that many more graduate students will take advantage and reap the benefits of the generous terms of Income-Based Repayment and Public Service Loan Forgiveness, default rates for graduate Stafford and PLUS loans are still projected to increase.
The Obama administration has not explained what is behind these new numbers. Meanwhile, trends that might help explain the projected increase are actually pointing in the other direction. The maximum Pell Grant for low-income students will reach its highest level ever in 2016. Enrollment in affordable repayment plans such as Income-Based Repayment are increasing rapidly as the administration continues to aggressively promote them. Interest rates on loans issued in 2016 will likely be lower than those issued the year before. Even the favorite whipping boy for student loan ills, the for-profit college industry, will take in the smallest share of federal student loans in years, according to the president’s budget.
Maybe analysts at the Department of Education see trends in the way older loans are performing that suggest defaults on new loans are likely to come in higher, despite a rosy economic outlook, generous federal grants, tax benefits, and loan repayment terms. It may be that we are entering a new era of high default rates on student loans regardless of the strength of the economy or the size of government benefits."
I'm sitting on a beach crunching these numbers, but basically the government loans me $230k, I'll pay back maybe $120k under IBR/PSLF then I pay maybe ~$16k more in federal taxes per year x 30 year career = $480k. Total paid in $600k.
Interest rates are irrelevant for the gov't because of a virtually unlimited pool of free/low cost money it can borrow from.
And if you've been paying attention, every proposal has been dead on arrival.
Focus on high income earners with a republican congress? Lol.
But no I agree there will be changes, uncapping IBR payments, counting spousal income, and capping total interest that can accumulate. The only reason the current system has to exist as-is for current borrowers is because of IBR payments not meeting interest, so balances increase. It's unpalatable to claw back provisions like forgiveness when you've set up a whole cohort of borrowers to have ballooning balances.
It's subprime all over again except the release valve is forgiveness, not foreclosure.
It's subprime all over again except the release valve is forgiveness, not foreclosure.
Too bad the republicans don't care for couples making 200 k a year especially when they borrowed money from the government. They only protect those who are making a million dollar a year.
Seriously, when was the last time the republicans protected healthcare professionals? All I hear is cutting Medicare. Remember the sequester cuts?
True, but then I ask...when was the last time Congress helped a bunch of lawyers? Seeing as that's the most popular profession in both houses, I don't see any plans to limit them. Seeing as health professionals and lawyers are functionally the same for student loan purposes here (high debt, good income if you can get it, poor job prospects), we get herded in with the rest of the cattle.
Lawyers? are you kidding me? Lawyers hate other lawyers
Here is a taste of what the republicans want to do with the federal employee loan forgiveness program:
"If the GOP takes over the Senate in November, they will have carte blanche authority to push through a series of damning proposals that have been successfully blocked for the past two years,” said J. David Cox Sr., president of the American Federation of Government Employees. He cited proposed cuts in retirement benefits, workers compensation and student loan forgiveness."
http://www.washingtonpost.com/polit...32bd8a-53da-11e4-892e-602188e70e9c_story.html
"If the GOP takes over the Senate in November, they will have carte blanche authority to push through a series of damning proposals that have been successfully blocked for the past two years,” said J. David Cox Sr., president of the American Federation of Government Employees. He cited proposed cuts in retirement benefits, workers compensation and student loan forgiveness."
http://www.washingtonpost.com/polit...32bd8a-53da-11e4-892e-602188e70e9c_story.html
What they want to do and the political realities of lobbying are completely different. Shoot, Obama has wanted to do lots of things...doesn't mean it'll happen. I think Bush wanted to privatize social security...didn't happen.
I don't put too much stock in what politicians *want* to do. Again, call me when something actually reaches a committee and not some 3rd party think tank website.
So in deference to BMBiology's opinions, this is what I think will end up happening to solve this student loan crisis. It's basically the Warner-Rubio proposal all over again:
Student loan program survives, IBR 10% is the standard payment plan. No more caps on payment, spousal income counts. Forgiveness at 25 years with tax bomb removed. Cap of 50% of balance for interest (so borrow $100k, max interest that accrues is $50k, once that is reached, no further accumulation and future payments would reduce balance).
No more PSLF as we know it, but I'm bullish that a graded grant provision gets thrown in (like each year you work in government, get a flat amount $10k payment toward student loan, max $100k in 10 years or something).
I still believe this will not be retroactive because of all the moving parts. Effective date July 1, 2016. This would satisfy most parties: monthly payments are low enough to not hobble the economy, a release valve for uncollectable debt is there at year 25, high income workers pay more without the cap and removes the incentive to borrow more.
Thoughts, sir?
Student loan program survives, IBR 10% is the standard payment plan. No more caps on payment, spousal income counts. Forgiveness at 25 years with tax bomb removed. Cap of 50% of balance for interest (so borrow $100k, max interest that accrues is $50k, once that is reached, no further accumulation and future payments would reduce balance).
No more PSLF as we know it, but I'm bullish that a graded grant provision gets thrown in (like each year you work in government, get a flat amount $10k payment toward student loan, max $100k in 10 years or something).
I still believe this will not be retroactive because of all the moving parts. Effective date July 1, 2016. This would satisfy most parties: monthly payments are low enough to not hobble the economy, a release valve for uncollectable debt is there at year 25, high income workers pay more without the cap and removes the incentive to borrow more.
Thoughts, sir?
Exactly. A tax on college students, essentially. America.
In obscure data tables buried deep in its 2016 budget proposal, the Obama administration revealed this week that its student loan program had a $21.8 billion shortfall last year, apparently the largest ever recorded for any government credit program.
http://www.politico.com/magazine/story/2015/02/the-college-loan-bombshell-hidden-in-the-budget-114930.html
If you're planning on having the government pay for any frivolous degrees or certificates you better do it soon.
http://www.politico.com/magazine/story/2015/02/the-college-loan-bombshell-hidden-in-the-budget-114930.html
If you're planning on having the government pay for any frivolous degrees or certificates you better do it soon.
Thank you for posting this! And some people are still believing the government is making a profit from student loans. Look at the default rate for graduate stafford loans. I have been saying this for a while now. I will say it again, the only way for the Obama administration to save the student loan program is to make "high income" earners pay more into the system. Obama will force you to pay only the balance but also the interest over a 25 year period. Money will have to come from somewhere and I bet you it is not going to come from the artist who has 150 k in student loan but only makes 25 k year. It is going to come from the dentist, physician and pharmacist who makes 150 k a year but has 250 k in student loan.
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To be be fair to confetti--- one point he's always made has been: And because of a quirk in the budget process for credit programs, the department can add the $21.8 billion to the deficit automatically, without seeking appropriations or even approval from Congress.
Again, I agree with BMBiology and always have. The government will never forgive 100% of the JD/MD/PharmD/DDS loans over the 10 year PSLF. They will make the changes retroactive. I believe they will just cap the PSLF at the maximum Stafford loan amount, $57,500. State that was the original legislative intent. To help teachers and social workers. Not neurosurgeons or lawyers.
Now, I do agree that there will be a 25 year escape valve with IBR. That will give you the 100% forgiveness. It will be made tax free. It will be based on joint spousal income and no caps on income, blah, blah, blah.
I can even see the joint press conference now. "This bill will change the student loan process for the better. The students who were sold a bill of lies will not be crushed for the rest of their lives. The students who are successful will not be able to slip out of their word to repay the federal government who financed that opportunity." Boom. Game over.
Again, I agree with BMBiology and always have. The government will never forgive 100% of the JD/MD/PharmD/DDS loans over the 10 year PSLF. They will make the changes retroactive. I believe they will just cap the PSLF at the maximum Stafford loan amount, $57,500. State that was the original legislative intent. To help teachers and social workers. Not neurosurgeons or lawyers.
Now, I do agree that there will be a 25 year escape valve with IBR. That will give you the 100% forgiveness. It will be made tax free. It will be based on joint spousal income and no caps on income, blah, blah, blah.
I can even see the joint press conference now. "This bill will change the student loan process for the better. The students who were sold a bill of lies will not be crushed for the rest of their lives. The students who are successful will not be able to slip out of their word to repay the federal government who financed that opportunity." Boom. Game over.
The problem is... you still ensnare a lot of teachers and social workers by capping at $57.5k. There's a misconception that $57,500 is all you need to borrow to attend even cheap public schools. UC Berkeley fees alone are $12,972/yr, and UC is one of the cheapest public schools of that quality in the country. The only way a student can stay under that limit is if they live rent free, spend $0 on books, walk to school, and spend < $117/mo on food (and walking shoes, I hope).
There'll be people on here that say students should learn to live like students (i.e. like cockroaches) or lower expectations and attend community college, which is a fine opinion to have, but I'm not talking about that today.
You also forget that many social workers have an MSW, which costs a pretty penny at some institutions ($91k @ USC); the COA for the credential program for teaching at UCI is $30k.
It's interesting when you go back to the history of CCRA 2007. The senate originally wanted a $65,000 income cap for PSLF, the House did not. The house amendment carried forward in conference.
I almost forgot, lawyers got their own bonus loan forgiveness on top of PSLF (for those public interest lawyers) in The Higher Education Reauthorization and College Opportunity Act of 2008. Basically an extra $10k or $40k depending on what that lawyer is doing. After that, the lawyer is free to jump into IBR/PSLF for the remainder.
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Here's the problem, that was actually never the legislative intent. Here's the late Sen. Edward Kennedy's (D-MA) floor speech on HR 2669:
Edward Kennedy (D-MA) said:
Emphasis is mine. Even if one argues that it's public health doctors and public interest lawyers, they are still doctors and lawyers that need medical school/law school. That's the problem with the $57.5k argument, we're not amending an old law here per se, we're setting a new course and making a statement that oh, nevermind what we did 7 years ago, we really need to incentivize getting students through the undergraduate ringer instead.
When you look at the nay argument from Sen. Jeff Sessions (R-AL), he even makes an argument that private sector lawyers should theoretically be included and that public sector employees shouldn't be the only benefactors of preferential forgiveness:
Jeff Sessions (R-AL) said:
As a side note, he hits you & BMB's opinion about PSLF pretty much on the head, as well as the perverse incentives to overborrow. See his comments in the link below.
source: http://capitolwords.org/date/2007/07/19/S9534_college-cost-reduction-act-of-2007/
If you listen to his speech, he mainly spoke about public service when it comes to doctors and lawyers. However, his bill treats a cosmetic surgery resident working at Cedars in Beverly Hills the same as a family physician resident working on an Indian reservation.
Let's also be frank to where the money is going. It is not going to teachers or librarians. It is mostly going to graduate and professional students.
Changes are coming:
"Shaun Donovan , the president’s budget chief, said Thursday that the administration was taking a “broad range of steps to ensure” the government doesn’t see continued losses."
"The administration’s budget proposal for the fiscal year that begins in October proposed an overhaul to limit participation in the program so it helps borrowers with the greatest need. The administration estimates those changes, which would raise payments for higher-income borrowers than what current rules require, could save $14 billion over 10 years."
http://www.wsj.com/articles/u-s-boosts-estimated-cost-of-student-debt-forgiveness-1423174266
This is what happens when politicians try to buy votes. Now that the election is over, the same politicians are going back on their promise.
"Shaun Donovan , the president’s budget chief, said Thursday that the administration was taking a “broad range of steps to ensure” the government doesn’t see continued losses."
"The administration’s budget proposal for the fiscal year that begins in October proposed an overhaul to limit participation in the program so it helps borrowers with the greatest need. The administration estimates those changes, which would raise payments for higher-income borrowers than what current rules require, could save $14 billion over 10 years."
http://www.wsj.com/articles/u-s-boosts-estimated-cost-of-student-debt-forgiveness-1423174266
This is what happens when politicians try to buy votes. Now that the election is over, the same politicians are going back on their promise.
I don't think there was ever any question that grad students/high income earners were going to reap the most benefits (Jeff Sessions discusses this, but who's listening?).
But the discussion we're having is trying to discern the legislative intent of CCRA '07. Herein lies the problem: we have the public floor speeches that talk about doctors and lawyers in farmtown USA, and we have the private behind-closed-doors legislation writing.
The latter is unknowable...who knows, maybe a bunch of lobbyists from various law schools showed up and offered these people jobs in exchange for generous forgiveness terms? If this hypothetical case happened, you can make the argument that the "intent" of the bill was to support tuition increases at law schools all along.
That's the problem with discussing legislative intent, the lack of transparent knowledge.
They said this last year, nothing happened, not because they were "buying votes" (students don't vote, pssh), but because nobody wants to do Obama's bidding.
Who is talking about just college students? I am also talking about people in their 30s, 40s, 50s who will die with their debt and leave the burden to the tax payers.
As I had mentioned, as the cost dramatically goes up, there will be more and more pressure to do something about it.
The Obama administration is on board. Do you really think the republican controlled congress is not?
If Obama touches it, the Republicans won't want to have anything to do with it!
Obama should have used reverse psychology LOL
He should not have propose it and let the republicans accuse him wasting tax payers money, then jump in and save the day!
http://www.washingtonpost.com/blogs...nts-is-costing-taxpayers-billions-of-dollars/
Another article on the topic, a few highlights:
"$22 billion represents about 2 percent of the federal student loan program. That number is based on current and future cash flow over the life of the loan, so it's liable to change if borrowers repay faster."
"as graduates repay their loans over the next decade, the government is projected to yield $135 billion, according to the Congressional Budget Office."
(this is using current rules, assuming no further changes to the program)
Here's the Politico link from that article:
http://www.politico.com/magazine/st...hidden-in-the-budget-114930.html#.VNZS_fnF_mu
EDIT: sorry that's a repost, it's been linked earlier.
Another article on the topic, a few highlights:
"$22 billion represents about 2 percent of the federal student loan program. That number is based on current and future cash flow over the life of the loan, so it's liable to change if borrowers repay faster."
"as graduates repay their loans over the next decade, the government is projected to yield $135 billion, according to the Congressional Budget Office."
(this is using current rules, assuming no further changes to the program)
Here's the Politico link from that article:
http://www.politico.com/magazine/st...hidden-in-the-budget-114930.html#.VNZS_fnF_mu
EDIT: sorry that's a repost, it's been linked earlier.
Also from the same politico article:
"Several reports by Barclays Capital have warned that Obama’s generosity to borrowers could leave the student loan program as much as $250 billion in the hole over the next decade. And behind closed doors, officials in the White House budget office and the Treasury Department have criticized the Education Department’s loan models as overly optimistic, with some officials pushing internally for third-party audits."
The cost of IBR is not totally known yet but regardless, tax payers should not forgive debt to people who can actually afford to pay it off.
"Several reports by Barclays Capital have warned that Obama’s generosity to borrowers could leave the student loan program as much as $250 billion in the hole over the next decade. And behind closed doors, officials in the White House budget office and the Treasury Department have criticized the Education Department’s loan models as overly optimistic, with some officials pushing internally for third-party audits."
The cost of IBR is not totally known yet but regardless, tax payers should not forgive debt to people who can actually afford to pay it off.
Affordability is subjective. Can I live in a cave, not contribute to my retirement funds, and eat leaves all day and pay off my loans in 2-3 years? Yes. If this is your definition of affordable, then I meet it. Even if I increase standards of living to something less paleolithic with a pay off of 5-7 years, I'd meet someone's affordability test.
Using the government's own affordability calculations (a very liberal one where financial hardship occurs when 0.1 or 0.15*(AGI - 1.5x FPL/12) > standard 10yr payment of student loan balance), I have a "partial financial hardship."
I know I'm beating this point like a dead horse, but this distinction is important. You cannot have a hard income threshold baked into any of these laws (hence why the $65k/yr cap was tossed out by the House in conference for CCRA '07), you'd have to redefine affordability itself.
So what's your definition of "affordable?" What type of test would you write into legislation to ensure someone like me (who may or may not meet your definition of someone who can afford the loan)?
You have these options (assuming you can't throw the whole program out entirely):
1) Cap forgiveness at $57.5k, you'll snare high-debt/low-income borrowers, who will get their (now inflated) balances forgiven anyway
or
2) Reset the affordability equation, which will still theoretically allow someone who makes $500k/yr come up as "financial hardship" on a $2M loan balance depending on what your parameters are.
+/-
3) Uncap payments so they aren't subjected to the 10 year repayment schedule, which could close the gap in terms of how much the gov't has to eventually repay...but it wouldn't necessarily disincentivize people from overborrowing (the root cause of the overborrowing is limiting repayment to a finite period of time)
Everyone else having fun? 
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Stop dodging my question, senator. So we should leave these programs be, then?
I think you missed the point of this whole series of posts, I'll come back in a few days. Way to kill it!
This is how I would do:
Keep the current PSLF plan. Loan forgiveness after 10 years. However, I would make these public and non profit institutions apply for the program every year...kinda like the visa program. They need to demonstrate there is a need and the public would greatly benefit from their service. So places like Indian reservation would qualify but places like Cedars would not.
Keep the current PSLF plan. Loan forgiveness after 10 years. However, I would make these public and non profit institutions apply for the program every year...kinda like the visa program. They need to demonstrate there is a need and the public would greatly benefit from their service. So places like Indian reservation would qualify but places like Cedars would not.
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