Please stop me from panicking student loan reform

[karinothing]

Obama's budget includes new proposals for student loans. This includes changes to IBR and PSLF. If this changes go into effect I will have a heart attack and likely will not be able to afford the child I have let alone another one. Please tell me I would likely be grandfathered in???! PLEASE

www.edcentral.org/obama-administration-announces-major-reforms-income-based-repayment/


If they no longer allowed married borrows to file separate my loan payments will jump from $480 to $2000. If they only forgive 57k that is 1/4 of my debt. I can't handle it. I really hope this doesn't get passed and if it does I am grandfathered in.

[justjen]

From what I hear, there is NO WAY Obama's budget will pass.

[karinothing]

Yeah, I figure it won't pass. I guess I just don't like the idea that those proposals are out there. I don't think the GOP is too keen on PSLF so I worry that it will get included in some budget somewhere. But I guess no one ever passes a budget anyway ...it is just hard not to worry!

[Deleted]

Is 2k really only 15% of your household income? I thought IBR was capped at 15%.

[Brie]

I'm panicking with you. If we have to list our income jointly my payment will be 5X what it is now. And I have a lot more than 57k in debt too.

[karinothing]

Mar 6, 2014 20:59:00 GMT -5 @buckybells said:

Is 2k really only 15% of your household income? I thought IBR was capped at 15%.

Income-based repayment caps monthly payments at 15% of your monthly discretionary income, where discretionary income is the difference between adjusted gross income (AGI) and 150% of the federal poverty line that corresponds to your family size and the state in which you reside.

I just told this to DH and he suggested if this passes we get divorced until I am done paying loans.

[karinothing]

Mar 6, 2014 21:11:12 GMT -5 @kirkette said:

Mar 6, 2014 20:42:48 GMT -5 karinothing said:

Noooo! 
We're talking to our CPA on Saturday about going to Married Filing Separately just so I can qualify for IBR. 
When are they voting, or when would it take effect? I wanted to wait until this kid was born, and our taxes had been completed before sending in my application paperwork. 

Hopefully there will still be enough time to be  grandfathered in to the program. 

They aren't voting any time soon. These are just proposals and I don't think Congress has passed a budget in like 10 years....but you never know.

[Deleted]

I still don't get where 2k a month comes from then, unless you guys are very high earners. I make just over 50k and if I was on IBR the calculator thing on the PSLF page says I'd pay something like $370 a month.

ETA: and I'm just 1 person with no kids. I assume a larger household would mean a low percentage of your AGI.

[karinothing]

Mar 6, 2014 21:21:30 GMT -5 @buckybells said:

I still don't get where 2k a month comes from then, unless you guys are very high earners. I make just over 50k and if I was on IBR the calculator thing on the PSLF page says I'd pay something like $370 a month.

Well, it would be like 1900 Our household income is over 200K. I am not sure how it is all calculated. I just know when I put my debt in the calculator with both our incomes that is what it gave me. That is with a spouse and 1 kid.

@koshball - I started with 197K. Since I have basically been paying very little due to IBR (BECAUSE I WAS COUNTING ON PSLF!) I know owe 248K

[karinothing]

Mar 6, 2014 21:33:30 GMT -5 @starry said:

The federal government seems to be pretty "good" about grandfathering things in, so I would try not to worry.

Overall I think this program is unsustainable (ultimately I imagine the government / taxpayers pay off the balance of the loans), but based on how public employee retirement reform and similar things have worked, I think it would be political suicide to not do some pretty widespread grandfathering. I think going back on PSLF for existing partcipants would violate a sense of fairness to most people in the public.

That is what I would like to think, but who knows. I mean people are going to start getting forgiveness this year. I don't know how unsustainable the program is. You know I MIGHT be willing to let some of this slide if they want to reduce my interest rate from 7.25% to 1%. lol. I am just going to keep praying the budget doesn't get passed.

[Deleted]

Mar 6, 2014 21:27:02 GMT -5 karinothing said:

Mar 6, 2014 21:21:30 GMT -5 @buckybells said:

I still don't get where 2k a month comes from then, unless you guys are very high earners. I make just over 50k and if I was on IBR the calculator thing on the PSLF page says I'd pay something like $370 a month.

Well, it would be like 1900 Our household income is over 200K. I am not sure how it is all calculated. I just know when I put my debt in the calculator with both our incomes that is what it gave me. That is with a spouse and 1 kid.

@koshball - I started with 197K. Since I have basically been paying very little due to IBR (BECAUSE I WAS COUNTING ON PSLF!) I know owe 248K

Yikes. I was hoping you were wrong and it would be less than that

I think the accrual of interest in the last few years would be the worst part. To owe more now because of this program would be truly ridiculous.

[laurenh]

We would be effffed. I'm going to pretend I didn't read this and just comfort myself with thoughts of this never ever passing.

[karinothing]

Mar 6, 2014 21:39:36 GMT -5 @starry said:

Mar 6, 2014 21:36:36 GMT -5 karinothing said:

That is what I would like to think, but who knows. I mean people are going to start getting forgiveness this year. I don't know how unsustainable the program is. You know I MIGHT be willing to let some of this slide if they want to reduce my interest rate from 7.25% to 1%. lol. I am just going to keep praying the budget doesn't get passed.

7.25% is completely insane. Seriously I am shocked that is the rates you have to pay!

Yeah, it sucks! DH's loans are at 1% (thank you Clinton!).

[chris]

Hey, if this passes it'll at least get me to put them bar dues to use while I handle my own divorce.

At least I could go back to being a stay at home dad.

Side benefit: I'd get to play single dad card...

[karinothing]

Mar 6, 2014 22:07:03 GMT -5 carrotsmakemefat said:

Oh shit. Can I confess? I haven't signed up for the forgiveness program yet. I guess I should ASAP? Omg.

I'm terrible.

Terrible MMer.

What's the link again? My loan co sent me a ton of convoluted crap a couple months ago. Way to make it easy to understand !

Eta: I pay the standard payment. I know they said that or IBR. Standard worked out to be cheaper for me.

If standard is cheaper for you then you won't qualify for PSLF will you? It forgives loans in 10 years and standard has them being paid off in 10.

www.asa.org/pdfs/federal/ibr_paye_icr-repayment-plan-request.pdf

studentaid.ed.gov/sites/default/files/public-service-employment-certification-form.pdf

[downtoearth]

Mar 6, 2014 21:27:02 GMT -5 karinothing said:

Mar 6, 2014 21:21:30 GMT -5 @buckybells said:

I still don't get where 2k a month comes from then, unless you guys are very high earners. I make just over 50k and if I was on IBR the calculator thing on the PSLF page says I'd pay something like $370 a month.

Well, it would be like 1900 Our household income is over 200K. I am not sure how it is all calculated. I just know when I put my debt in the calculator with both our incomes that is what it gave me. That is with a spouse and 1 kid.

@koshball - I started with 197K. Since I have basically been paying very little due to IBR (BECAUSE I WAS COUNTING ON PSLF!) I know owe 248K

I only lurk here on MM mostly, but just wondering, right now if you work for the feds, you can get loan forgiveness without a capped amount? How does that work? Also, does this work for state jobs too in public service?

And I'm guessing you have some sort of graduate degree with about $200k in loans, right?  Can you have loan forgiveness on undergrad and graduate loans?

So sorry about 7%...how did that happen?  I guess I was lucky to only have loans from undergrad when the rates were low. Mine are at like 3%.

[chris]

GFL. My borrower is fedloan and they are horribly useless.

The online IBR sign up form wants to determine my income from my tax filings from the past year. I didn't file taxes and there's no way to attach a pay stub so I call them and ask for a form I can submit it with. The person says yeah sure, I'll email it to you. The next day I get an email with a link to the application tool on their website.

So I call back and ask if I can have it mailed to me. The person says oh, I can email it to you. No, you can't. We tried this already. So a request gets put in to have the form mailed, it'll take a few business days to process.

A week goes by and I get a letter from them WITH A LINK TO THEIR GODDAMN WEBSITE.
So I call again and ask to get it faxed. Again a request has to be put in and it'll take a few days. I get the fax and it's crooked and, well, looks like a fax.

So I randomly go on the website again later that day and click the "message center" and see there's a message there about a fax that was sent to me. With a PDF of the entire package they faxed me. Wtf.

[karinothing]

Mar 6, 2014 22:28:44 GMT -5 downtoearth said:

Mar 6, 2014 21:27:02 GMT -5 karinothing said:

Well, it would be like 1900 Our household income is over 200K. I am not sure how it is all calculated. I just know when I put my debt in the calculator with both our incomes that is what it gave me. That is with a spouse and 1 kid.

@koshball - I started with 197K. Since I have basically been paying very little due to IBR (BECAUSE I WAS COUNTING ON PSLF!) I know owe 248K

I only lurk here on MM mostly, but just wondering, right now if you work for the feds, you can get loan forgiveness without a capped amount? How does that work? Also, does this work for state jobs too in public service?

And I'm guessing you have some sort of graduate degree with about $200k in loans, right?  Can you have loan forgiveness on undergrad and graduate loans?

So sorry about 7%...how did that happen?  I guess I was lucky to only have loans from undergrad when the rates were low. Mine are at like 3%.

Yup currently under the public service loan forgiveness program, all public service employees (feds and otherwise) can get 100% of their loan forgiven after 120 consecutive payments while employed in public service (so 10 years). This would work for state jobs.

I do have a graduate degree, but yes you can use it on undergrad loans. They must be federal loans though. You have to be on some income based plan (ibr or icr) or standard (but this is usually only if you phase out of ibr). I posted the applications above, if you want to look them over. Otherwise here is a link - studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

As for 7% i can't remember which was which now but stafford loan interest rates were something like 8.5% and 6% or something. It averaged out to 7.25% when I consolidated. I can't remember the exact numbers now. I started taking out loans in 2007

[karinothing]

Since i am all fired up I like this link - abovethelaw.com/2014/03/changes-to-government-loan-forgiveness-that-totally-miss-the-mark/

"You want a “safeguard”? I have one. After ten years, if a student owes more than $57,500 in outstanding debt, the SCHOOL that charged the ridiculous prices in the first place has to pay the government back. How about that? How about making the schools financially responsible for their willingness to saddle students with debt that they won’t be able to manage? Maybe the school should have an interest in charging people what they can afford, or, you know, EDUCATING THEM so they have the practical skills to make good on their payments. "

[chris]

Working for any 501(c)(3) qualifies for PSLF too. Same for public school districts, police departments, library systems, and some others.

[karinothing]

Mar 6, 2014 22:31:12 GMT -5 chris said:

GFL. My borrower is fedloan and they are horribly useless.

The online IBR sign up form wants to determine my income from my tax filings from the past year. I didn't file taxes and there's no way to attach a pay stub so I call them and ask for a form I can submit it with. The person says yeah sure, I'll email it to you. The next day I get an email with a link to the application tool on their website.

So I call back and ask if I can have it mailed to me. The person says oh, I can email it to you. No, you can't. We tried this already. So a request gets put in to have the form mailed, it'll take a few business days to process.

A week goes by and I get a letter from them WITH A LINK TO THEIR GODDAMN WEBSITE.
So I call again and ask to get it faxed. Again a request has to be put in and it'll take a few days. I get the fax and it's crooked and, well, looks like a fax.

So I randomly go on the website again later that day and click the "message center" and see there's a message there about a fax that was sent to me. With a PDF of the entire package they faxed me. Wtf.

Do you just need the app? I included it in the link I sent to carrots.

I just sent that in with my tax return since my income was different from 2012 (and that is what the online app pulled) Sorry they are less than helpful!

[chia]

Maybe then, you could get screwed... like I am.
You pay not much more than I do, and will have a bunch of your debt forgiven.
I'll be paying that shit for 20 more years.  Plus DH's.  Even though I've been busting it for the Fed Gov't for 11 years.

And, we make less than you.



I'm just whining.
But, it really sucks.
I just like to think of our $700/month-for-30-years student loan payment as our "move up a social class" tax.

[karinothing]

You don't qualify for forgiveness chia?

Also, I may have just called the Chief of Staff of a congress woman and yelled about this lol (we are friends)

[chris]

karinothing I eventually got the form and confirmed their receipt after I sent it back and now have to wait one to two billing cycles for it to be processed.

[Deleted]

Dup.

[Deleted]

Mar 6, 2014 22:33:56 GMT -5 karinothing said:

Mar 6, 2014 22:28:44 GMT -5 downtoearth said:

I only lurk here on MM mostly, but just wondering, right now if you work for the feds, you can get loan forgiveness without a capped amount? How does that work? Also, does this work for state jobs too in public service?

And I'm guessing you have some sort of graduate degree with about $200k in loans, right?  Can you have loan forgiveness on undergrad and graduate loans?

So sorry about 7%...how did that happen?  I guess I was lucky to only have loans from undergrad when the rates were low. Mine are at like 3%.

Yup currently under the public service loan forgiveness program, all public service employees (feds and otherwise) can get 100% of their loan forgiven after 120 consecutive payments while employed in public service (so 10 years). This would work for state jobs.

I do have a graduate degree, but yes you can use it on undergrad loans. They must be federal loans though. You have to be on some income based plan (ibr or icr) or standard (but this is usually only if you phase out of ibr). I posted the applications above, if you want to look them over. Otherwise here is a link - studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

As for 7% i can't remember which was which now but stafford loan interest rates were something like 8.5% and 6% or something. It averaged out to 7.25% when I consolidated. I can't remember the exact numbers now. I started taking out loans in 2007

I work for the government and don't think I qualify.

[chia]

Mar 6, 2014 22:45:29 GMT -5 karinothing said:

You don't qualify for forgiveness chia?

Also, I may have just called the Chief of Staff of a congress woman and yelled about this lol (we are friends)

I signed up for the 30 year repayment plan fresh outta grad school... because I made like less than $40K, and it was what I could afford.
I paid on it for like 7 years, and then the repayment program was passed.
I tried to sign up, but realized that the repayment plan I had been paying on all those years was ineligible.  Like, NONE of the payments counted. 
Well, by then, I was like a GS-12'ish.  Moving to an income based repayment didn't make sense.  I'd like almost triple my repayment to cut a few measly years off my loan.  I calculated it a couple different ways, and it just in no way made sense... mostly because I wasn't able to count any of my past payments toward the 120.  And, DH doesn't work for the gov't or a non-profit, so he's out.  

It's really fucking annoying.
I'm also annoyed that we aren't eligible for any of the refinancing programs (we got screwed by the Lehman brothers crap... as it turns out, our mortgage wasn't Fannie/Freddy backed, then it was bounced all over the place), and my fucking mortgage rate for my underwater house is WAY high.  I thought I was doing a "good" thing by picking a straight-up 30 year traditional mortgage.

Waa, waaa... cry me a river, right?

Well, at least I should be getting a promotion in a few months.  GS-15 here I come, bitches!  LOL.

[ESF]

Mar 6, 2014 22:37:49 GMT -5 karinothing said:

Since i am all fired up I like this link - abovethelaw.com/2014/03/changes-to-government-loan-forgiveness-that-totally-miss-the-mark/

"You want a “safeguard”? I have one. After ten years, if a student owes more than $57,500 in outstanding debt, the SCHOOL that charged the ridiculous prices in the first place has to pay the government back. How about that? How about making the schools financially responsible for their willingness to saddle students with debt that they won’t be able to manage? Maybe the school should have an interest in charging people what they can afford, or, you know, EDUCATING THEM so they have the practical skills to make good on their payments. "

I completely agree with the spirit of his proposal, but it ignores the reality of student loan defaults. The students most likely to default are those at for profit universities and certain bad community colleges. They aren't borrowing that much, they just aren't earning enough, aren't finishing their degrees, and therefore don't have the benefit of the degree. I'd rather see schools on the hook immediately for some portion of every dollar lent, so that everyone benefits from reform, and all schools have pressure to keep costs down.

[Deleted]

Mar 7, 2014 0:31:36 GMT -5 ESF said:

Mar 6, 2014 22:37:49 GMT -5 karinothing said:

Since i am all fired up I like this link - abovethelaw.com/2014/03/changes-to-government-loan-forgiveness-that-totally-miss-the-mark/

"You want a “safeguard”? I have one. After ten years, if a student owes more than $57,500 in outstanding debt, the SCHOOL that charged the ridiculous prices in the first place has to pay the government back. How about that? How about making the schools financially responsible for their willingness to saddle students with debt that they won’t be able to manage? Maybe the school should have an interest in charging people what they can afford, or, you know, EDUCATING THEM so they have the practical skills to make good on their payments. "

I completely agree with the spirit of his proposal, but it ignores the reality of student loan defaults. The students most likely to default are those at for profit universities and certain bad community colleges. They aren't borrowing that much, they just aren't earning enough, aren't finishing their degrees, and therefore don't have the benefit of the degree. I'd rather see schools on the hook immediately for some portion of every dollar lent, so that everyone benefits from reform, and all schools have pressure to keep costs down.

I think people can borrow a shitload if they attend certain crappy private schools.

[Deleted]

Mar 6, 2014 21:23:07 GMT -5 kooshball said:

Do you have over 200K in student loans? 57K being 1/4 of your SL debt? OMG.

I'm sorry, but this response really isn't helpful.

Those of us who have 6 figure of SL know how "OMG" it is. No need for the reminder!

Hence, Kari's freak out.

Kari - I didn't read the article, but hopefully like everyone says there is no way that this will pass.