Is it frugality... or extreme cheapskate?

[abefroman329]

and the loan has changed hands under consolidation two times over the years.

Also shouldn't matter

Yeah, well it's this part that gives me question marks:

Consolidated loans are eligible as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022. If a borrower consolidated federal loans into a private non-federal loan, the consolidated private loan is not eligible for debt relief, according to [the Department of Education].

We'll have to dig into it some more.

Oh, yeah, I thought you meant that the loan had been sold to another servicer.  Yeah, seems unlikely.

[kphoger]

and the loan has changed hands under consolidation two times over the years.

Also shouldn't matter

Yeah, well it's this part that gives me question marks:

Consolidated loans are eligible as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022. If a borrower consolidated federal loans into a private non-federal loan, the consolidated private loan is not eligible for debt relief, according to [the Department of Education].

We'll have to dig into it some more.

Oh, yeah, I thought you meant that the loan had been sold to another servicer.  Yeah, seems unlikely.

I'm not entirely sure how to tell if our loans were consolidated into "a private non-federal" or not.  How can I tell?

[ZLoth]

Student loans are indeed horrible nowadays.  We've gone from really being able to work through college (aside from some outliers that will probably die of a heart attack in their 40s), to Gen X low interest rates (<3%) to Gen Z loan shark rates (8%+).

There is a lower-cost path to higher education which is that you take your "core" general education classes at the community college level, then transfer over to the college/university levels. At the end, the employer only cares about your degree, and not really the path you got there. Unfortunately, too many parents tell the kids "You need to go to Prestigious U! Get the student loans!" without understanding the full consequences. Then, when the repayment time comes, you are just looking at the numbers and picking the lowest number, not realizing that it is only payment the interest and not paying down the actual principal. I actually got my degree by working fulltime, going to school part time, and saving up all my paid time off for major exam days.

One thing that troubles me is that we don't put more emphasis on the trade schools. Some of these trades, once you have the experience, pay some serious money, but we tend to look down on them here in the states.

[abefroman329]

I'm not entirely sure how to tell if our loans were consolidated into "a private non-federal" or not.  How can I tell?

It's something you would have had to apply for.

So you have federal student loans, which don't really have any underwriting criteria at all, which means they don't use risk-based underwriting or pricing, which means everyone gets the same interest rate.

Then you have private student loans, which pretty much use the same risk-based underwriting and pricing as any other unsecured loan, which means you could get a better interest rate than federal student loans (or you could get a worse one).

So, in some situations, it would make sense to consolidate your federal student loans with a private lender, since then you'd get a better interest rate and a lower monthly payment.  But, again, if you (or your wife) had done that, then you would have had to apply to do it.

[Rothman]

and the loan has changed hands under consolidation two times over the years.

Also shouldn't matter

Yeah, well it's this part that gives me question marks:

Consolidated loans are eligible as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022. If a borrower consolidated federal loans into a private non-federal loan, the consolidated private loan is not eligible for debt relief, according to [the Department of Education].

We'll have to dig into it some more.

Oh, yeah, I thought you meant that the loan had been sold to another servicer.  Yeah, seems unlikely.

I'm not entirely sure how to tell if our loans were consolidated into "a private non-federal" or not.  How can I tell?

I had Direct Loan Consolidated Loans.  Still federal.

There's a site that can help studentaid.gov

[kphoger]

There's a site that can help studentaid.gov

OK, so that's what I'm coming around to:  if the loans still show up under the studentaid.gov site, then does that mean they are still federal and therefore not private?  Do they disappear from that site if they're consolidated into a non-federal private loan?

[Scott5114]

Is there any penalty for applying and getting rejected? (i.e. is there a waiver application fee or a "under penalty of perjury I swear these loans are forgivable"?) If not, I would be apt to just apply for a waiver and let the government figure out whether I qualify or not.

[kphoger]

For the sake of clarity, let me just specify that we have two "FFELP Consolidated" loans that appear on the studentaid.gov site.

[J N Winkler]

For the sake of clarity, let me just specify that we have two "FFELP Consolidated" loans that appear on the studentaid.gov site.

AFAICT, that should mean you qualify for the debt forgiveness, since the types of private loans that don't are not visible on the federal system.

[Rothman]

For the sake of clarity, let me just specify that we have two "FFELP Consolidated" loans that appear on the studentaid.gov site.

AFAICT, that should mean you qualify for the debt forgiveness, since the types of private loans that don't are not visible on the federal system.

I thought FFELP were in some sort of gray area that the Feds were sorting out still.

[kphoger]

A 9/10/2022 webpage from a firm called Tate Law states:

Initially, the White House said that only those with loans held by the Education Department would qualify for debt cancellation. But the department later clarified that FFEL borrowers could consolidate their loans into a Federal Direct Consolidation Loan to qualify. ... Those with private student loans are locked out of it permanently. But borrowers with commercially held FFEL Loans can crack into the cancellation opportunity by consolidating into a Direct Consolidation Loan. Nearly all FFEL borrowers can consolidate – even those who already have an FFEL Consolidation Loan. (In that case, you're effectively refinancing the loans with the federal government.) The only people who can't consolidate are those with joint spousal consolidation loans. Federal law blocks their eligibility for consolidation.

https://www.tateesq.com/learn/what-is-a-ffelp-loan

[ozarkman417]

Student loans are indeed horrible nowadays.  We've gone from really being able to work through college (aside from some outliers that will probably die of a heart attack in their 40s), to Gen X low interest rates (<3%) to Gen Z loan shark rates (8%+).

There is a lower-cost path to higher education which is that you take your "core" general education classes at the community college level, then transfer over to the college/university levels.

This is precisely what I am doing for college. Better yet, I'm receiving it for free* thanks to a generous statewide program. The prospect of carrying a significantly higher amount of debt (not only because of tuition but also not being able to live at home) is what scared me out of attending my University of choice for four years: Missouri S&T. I do work, but let's just say I did go to a four year institution and lived by myself. The hours and wage I work for would likely not cover my expenses, that is, not without careful planning and extreme frugality.. if that.
*does not cover books and fees, only tuition.

[kphoger]

Is there any penalty for applying and getting rejected? (i.e. is there a waiver application fee or a "under penalty of perjury I swear these loans are forgivable"?) If not, I would be apt to just apply for a waiver and let the government figure out whether I qualify or not.

Well, our next step now will be to try and consolidate our two already-consolidated loans into one federal direct consolidation loan–even though they don't appear to meet any of the requirements for doing so.  We'll see what happens...

[kphoger]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

[Rothman]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

[kphoger]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

[NWI_Irish96]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

[Rothman]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

I read up more since asking.  It really isn't looking good.  Supreme Court doesn't have to hear the case and they're also conservative.

Student loan borrowers must not be that big of a faction of the voting constituency, or they've been disenfranchised for politicians being willing to snatch money out of their hands like this.

[Max Rockatansky]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

If it ends up in the Supreme Court (if it is even heard) odds are the student loan relief is still being tossed. 

[kphoger]

Student loan borrowers must not be that big of a faction of the voting constituency, or they've been disenfranchised for politicians being willing to snatch money out of their hands like this.

To be fair, I never had the money in my hands to begin with.  They've just been told the President doesn't have the authority to put it in my hands (which, honestly, is a decision I fundamentally agree with).  I mean, we knew this was possibility going in.  It's just still a bummer.

[kalvado]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

I read up more since asking.  It really isn't looking good.  Supreme Court doesn't have to hear the case and they're also conservative.

Student loan borrowers must not be that big of a faction of the voting constituency, or they've been disenfranchised for politicians being willing to snatch money out of their hands like this.

Elections have passed, and in 2 years things will be forgotten. Back to business as usual.

[mgk920]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

I read up more since asking.  It really isn't looking good.  Supreme Court doesn't have to hear the case and they're also conservative.

Student loan borrowers must not be that big of a faction of the voting constituency, or they've been disenfranchised for politicians being willing to snatch money out of their hands like this.

Elections have passed, and in 2 years things will be forgotten. Back to business as usual.

And also, the kind, caring and über-compassionate people over at the Internal Revenue Service will want to all know about any of your forgiven debts and be wanting to have their concerns regarding them to be fully addressed in the year that they are forgiven.

Mike

[J N Winkler]

I wouldn't give up on student loan debt relief until all of the legal challenges have played out.  The percentage of the US population that is affected is fairly large--26 million people, or almost 10%--so I frankly doubt the opponents really want to catch the car they are chasing.  Tactical patience is a fundamental rule when dealing with gridlock.

And also, the kind, caring and über-compassionate people over at the Internal Revenue Service will want to all know about any of your forgiven debts and be wanting to have their concerns regarding them to be fully addressed in the year that they are forgiven.

Nope!  Not for this debt forgiveness action.  It is specifically exempt from federal income tax (thanks to ARPA, supposedly, though I haven't seen chapter and verse cited).  But there is the potential for state income tax liability.

[kphoger]

And also, the kind, caring and über-compassionate people over at the Internal Revenue Service will want to all know about any of your forgiven debts and be wanting to have their concerns regarding them to be fully addressed in the year that any such debts are forgiven.

That was one of the thrusts of the lawsuit that was put forth a few weeks ago:  a handful of states (but none of the ones bringing the suit, IIRC) claim income tax on debt forgiveness payments, whereas Biden's plan explicitly prohibited such.  The states claimed that that part of the plan would result in financial damages to such states.  The counterargument is that the money wasn't actually guaranteed to the states in the first place, therefore the damages were only hypothetical:  after all, if people simply paid off their loans, then the hypothetical wouldn't apply.

The other thrust is that the plan would prompt people who held FFEL loans to rush and consolidate them with the US Department of Education in order to qualify–and, as those loans were privately held by quasi-state firms with lots of asterisks, some states could stand to lose out by the loan holders all jumping ship en masse.  (This perfectly describes our own personal situation.  My wife had an FFEL loan, and we rushed to consolidated it with the Dept of Ed.)

[Rothman]

Well, there went that.  The program has been struck down by a district judge as overreach by the President without legislative authority.  The expected appeal probably won't get anywhere.

We successfully consolidated our loans under the US Dept of Education, but it no longer matters.

Why would the appeal go nowhere?

Because it's going to the 5th Circuit Court of Appeals, which is one of the nation's most conservative.

There's also a challenge in a different circuit, so this is going to end up at the Supreme Court. This particular court has been both very conservative but also very strong defenders of executive power, so who knows which of those wins out over the other.

I read up more since asking.  It really isn't looking good.  Supreme Court doesn't have to hear the case and they're also conservative.

Student loan borrowers must not be that big of a faction of the voting constituency, or they've been disenfranchised for politicians being willing to snatch money out of their hands like this.

Elections have passed, and in 2 years things will be forgotten. Back to business as usual.

Wonder what business as usual means.  Probably another upcoming one-term Republican president.