Re:Student Debt Payback Far Worse Than Believed
by wtvanhest on Thursday January 19, 2017 @02:45AM
(#13433908)
In order to qualify for those deferals you still need to pay 10% of your income. This means factually that all of those people cannot cover their interest with 10% of their income. In my opinion, that should be considered a loan in default.
They can get out from under the loan in 10 years, we still have to pay for it.
It is failed policy to allow college to get to expensive due to inflation of prices through loose lending. IMO, that is the real bubble.
Re:Student Debt Payback Far Worse Than Believed
by projektfu on Thursday January 19, 2017 @07:52AM
(#13435333)
It's 10% of discretionary income, which is the amount that excess 150% of the federal poverty level. Nonetheless, the law also allows for hardship forbearances that allow people to stop paying without defaulting. Personally, I think the law is a backdoor subsidy done in the worst way. It increases stress on families who can't afford the tuition for 20 years to give a subsidy to the university. It incentivizes high tuition and keeping students on the treadmill, with no concern for quality. I don't particularly mind if tax money helps pay for an esoteric major, but I expect it to produce a capable scholar in that field.
Re:Student Debt Payback Far Worse Than Believed
by rosser on Thursday January 19, 2017 @02:44AM
(#13433894)
> That is, for better or worse, public policy of the United States; it seems weird to conflate that with default.
Unless the conflation is deliberate, intended to suggest that the folks pursuing those deferments and forgivenesses are as parasitic as the deadbeats.
I think this might be a matter of framing -- "failed to pay down at least $1 on their debt" might include students with a deferment who are planning on having the debt forgiven. That is, for better or worse, public policy of the United States; it seems weird to conflate that with default.
For example, if you have a Perkins Loan, you can defer during a period of service at any employer where 10+ years would get you loan forgiveness. That list is... rather expansive?
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
Would I expect people graduating from e.g. a teaching college to largely make principle-decreasing loan payments given that this is our policy? No, I would not; it would require that they receive terrible financial advice.