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General Discussion => Welcome and General Discussion => Topic started by: tyleriam on July 08, 2016, 12:22:04 PM

Title: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 08, 2016, 12:22:04 PM
My wife has $90K student loans.  We are hitting them hard this year and have paid off half, expect to pay off the other half by the end of this year.  All but a few thousand are at 6.55%.  My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.  I just think even if something is done it's going to be for lower income people not us.  Also, just to give you the whole picture...the loans are all in my wife's name not mine.  She stays at home, works part time and only makes about $20K per year.

In the back of my head a part of me thinks...maybe my Dad is right.  How stupid am I going to feel if I pay these things off, next year Hillary is elected and they pass some massive student loan forgiveness package.

Curious what ya'll think.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: thd7t on July 08, 2016, 12:29:17 PM
Refinance at the very least. You are paying an exorbitant rate. If you can knock that down, paying a low amount will be win-win.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Lagom on July 08, 2016, 12:31:38 PM
With 56k left in loans myself, I've had the same thought but ultimately I'm not sure this is much different than market timing as there is not nearly enough evidence to suggest forgiveness is inevitable. First, the chances of my loan being forgiven completely seem pretty low, since even if some kind of forgiveness happened, it would likely be means-tested. And, even if it was a universal forgiveness, who knows how long it would take to actually go through. Finally, even if it goes through the day after my last loan payment and benefits everyone, I might kick myself a bit, but would still ultimately feel OK not receiving a tax-subsidized benefit that I don't really need, when there are so many people out there in dire economic straights because of their loans.

That said, if you are able to refinance at a low (say <4-5%) rate, it's probably mathematically best to pay the minimum anyway, so as thd7t said, that's a win-win option.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 08, 2016, 12:32:10 PM
I highly doubt there is going to be a blanket immediate student loan forgiveness. Will there be more plans concocted with forgiveness based on income and payments and all that jazz, most likely. But to expect them to just disappear anytime in the 5 year timeline seems crazy. I'd continue paying them off.

That being said, I paid off all of ours above 5%. Then instead of paying off the rest I saved what I would pay towards them in a brokerage account with VTSAX. Now I have the freedom to pay them off if I really want to and the flexibility to have money at my disposal for once. As a bonus, if there ever is some blanket student loan forgiveness I will get some benefit. Although the amount remaining will be <10% of what I started with. There's risk that the market could downturn but it doesn't really matter because I could just wait it out since the minimum payments won't make or break me.

**Yes, refinance. If you have professional jobs and some retirement savings Earnest gives a really good rate.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 08, 2016, 12:39:03 PM
To add to the picture...

My wife works in mental health for a state agency...but she does not work full time and we have no plans for her to work full time for the foreseeable future.

I have not looked into refinancing them.  We have outstanding credit and I have a great full time job, long employment history, etc. 

No other debt besides our modest mortgage of $125K.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Psychstache on July 08, 2016, 12:42:12 PM
My wife has $90K student loans.  We are hitting them hard this year and have paid off half, expect to pay off the other half by the end of this year.  All but a few thousand are at 6.55%.  My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.  I just think even if something is done it's going to be for lower income people not us.  Also, just to give you the whole picture...the loans are all in my wife's name not mine.  She stays at home, works part time and only makes about $20K per year.

In the back of my head a part of me thinks...maybe my Dad is right.  How stupid am I going to feel if I pay these things off, next year Hillary is elected and they pass some massive student loan forgiveness package.

Curious what ya'll think.
Loans are already forgiven. It just takes 20 years of payments (10 if you work in a public sector job). This is the kind of compromise that government is capable of these days. There might be small changes around the edges, but think the idea that they will pass a sweeping law that forgives all public loans overnight is super unlikely and wouldn't plan my life with that in mind.

Sent from my SM-G930V using Tapatalk

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Bucksandreds on July 08, 2016, 12:42:33 PM
Outstanding student loan debt is $1.2 trillion.  It is completely unaffordable to forgive them all and will never happen.  The key is keeping people out of poverty from having to pay them and lower the costs going forward.  Obama has made changes that help answer the first problem by limiting student loan payment to 10% of income your discretionary income and forgiving the rest after 25 years.  The second part of the equation is not reflating this debt bubble as it slowly deflates.  Hillary wants to do that by giving the poor and middle class free undergrad.  Not sure from where the money comes for that but it would save me $300,000 or more.  I'm not in favor of it either as having some 'skin in the game' is an important motivator for people.  Now lowering the costs by rewarding federal higher education dollars to the universities that give the best value in education would be a good move.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 08, 2016, 12:44:22 PM
If I remember correctly all of the income based repayments are based on married income unless you file separately. I think even with part time income you'd be a good candidate for refinance. Both Earnest and Sofi only use soft credit checks for the initial rate. So you don't lose anything by taking a look. Also, since you have the extra income to pay them off in two years a variable rate would be a good option to get the rate even lower. Mine went to 2.38% on variable and it shouldn't change much until the feds start raising rates should be very slow at first (0.25% increments).
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 08, 2016, 12:54:16 PM
I just applied at Earnest...

3.87% variable
5.07% fixed

So she had $90K, I just paid them down $40K last week so $50K.  About $5K is at really low rates so wouldn't refinance those.  So say she has $45K right now at 6.55%.

On Aug 1st I will have $20K more cash I was going to put on them to get them down to $25k and then with work bonuses hopefully knock them out by the end of the year then move on in life socking away 3-5K a month into investments.

Does any of that info change the thought?

Wouldn't there be a cost to refinance?
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 08, 2016, 01:01:27 PM
No cost to refinance, in fact with a referral they give you $200. I have the mindset that any interest saved is better than none so I intend to keep it around until the rate raise. And it was pretty painless. But if you're the type of person that likes to keep it simple (I tend to make things horribly complicated) and its motivating to pay them down then I'd say just stick with your plan as the savings would be minimal maybe a few hundred dollars at best.

Yay for not waiting on some magic legislation that may or may not come to save you. Kill the student loans!
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 08, 2016, 01:10:49 PM
I just read with Earnest they require you to hook up all your accounts to them.  I am not very comfortable with that.

Are there any other comparable refinance choices that don't require that sort of thing?

Still not sure I want to keep them past this year.  Every time I think about them, see them in my Mint account my anxiety level rises.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Lagom on July 08, 2016, 01:27:03 PM
I just read with Earnest they require you to hook up all your accounts to them.  I am not very comfortable with that.

Are there any other comparable refinance choices that don't require that sort of thing?

Still not sure I want to keep them past this year.  Every time I think about them, see them in my Mint account my anxiety level rises.

I just posted this in another thread but I think it applies here as well:

Quote
I would argue that whatever provides the largest amount of sustainable happiness with the least negative impact on others will always be the most mustachian choice.

There are quite a few on this forum who are all about mathematical optimization. As a mathematical type myself, I totally get it, but I also have come to realize that delaying long-lasting sources of happiness in the name of math often isn't worth it (unless the wait is short). Paying off a loan that feels like an albatross is one such example. Prioritizing buying a house over maxing a 401k is another. I'm not saying those choices are best for everyone, but they definitely are best for some people.

Interestingly, many routinely justify vacations and other such expenses, but seem to have trouble relating to the idea that removing the immense mental weight of a loan can be just as satisfying, if not more so. After all, I would argue those choices permanently increase a person's happiness in the way an led bulb permanently reduces energy usage. A vacation is much more ephemeral (albeit still often worthwhile!).
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: futurehermit on July 08, 2016, 01:32:15 PM
Pay them off.

My wife and I started marriage with around $150k in student loan debt.

After 8 years of being out of college for me and 6 years for her, we paid them off.

We only seriously started attacking the debt about three years ago.

Only two years of debt pay down was with a combined income above five figures.

While we were paying it off, we had populist visions/fears of a scenario envisioned by the original poster/father, due to the current administration.

Had we not done what we did, our debt would much greater.

Instead, we live easy because we constrained expenses while having a burgeoning income, continue to do so, and, oh yeah, have only a (small) mortgage debt.

Stacking cheddar,

Futurehermit
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: banjarian on July 08, 2016, 01:37:49 PM
I just made the final payment on my student loans, after putting $3-4k a month towards them for a while. I briefly considered this, but ultimately decided not to wait.

Forgiveness has been talked about, but it's not certain. It's not even close to being passed. And if it passed, it'll likely take years to happen. By paying off early, you are risking the possibility of eventual forgiveness. By NOT paying off, you are also taking a chance that they never will be forgiven, and that you are tacking extra interest onto your bill. Either way you're taking a chance.

Let's say I made minimal payments and bided my time, but forgiveness didn't happen. I could end up paying $102,000 on what was initially a $45k loan by stretching it out as long as possible. Even if I only waited it out for 3 years or so, and then paid it off after realizing forgiveness wouldn't happen, I would add about $8600 to my total amount paid, just by waiting.

Even if student loans end up being forgiven at some point, I've still only paid the amount I initially agreed to pay -- in fact, much less, considering all the interest I skipped out on. Perhaps I'll miss the opportunity to unload $40k of personal debt on to the government, but ultimately, I'm okay financially, still working aggressively on my early retirement goals, and benefiting from that education I've paid so much for. The benefit in waiting is uncertain, and the risk in paying off early is only that you'll pay the amount you signed up to pay in the first place. I say pay 'em.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Jack on July 08, 2016, 01:40:18 PM
Hillary ain't Bernie. I wouldn't expect the Federal student loan terms to change in the next eight years.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Yaeger on July 08, 2016, 01:40:28 PM
In a private setting, the people making the decisions are responsible for results. If someone can't pay off a student loan, the loaner (a private business) loses money, no one else loses out. In a public setting, people not involved in the decision-making process and risk analysis shoulder the burden for the defaulted or forgiven loan. Why is this acceptable?

This is an example of why the government should never have been involved in the student loan business. Not only has it caused a student loan bubble by offering lower cost loans to more people, but it has the potential of putting the taxpayers on the hook for someone's poor decision, i.e. vote for Hillary. Similar to the mortgage crisis, for student loans. We never learn.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: 2buttons on July 08, 2016, 01:43:06 PM
HRC is courting the Bernie vote, and once you actually dig into the details of her plan its not really forgiveness. Her plan just cuts interest rates in half and a few other things like forgiveness with americorps service. 

That said, even if she is actually serious about her plan, gets elected President, and follows through on it, she would still need to get Congress to approve it. 

I would pay them off.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: v8rx7guy on July 08, 2016, 01:46:27 PM
I'd be so pissed if all student loan debt was suddenly forgiven.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Yaeger on July 08, 2016, 01:53:33 PM
I'd be so pissed if all student loan debt was suddenly forgiven.

All of us would be. That's a lot of loss to the taxpayers.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: 2buttons on July 08, 2016, 02:03:27 PM
I'd be so pissed if all student loan debt was suddenly forgiven.

All of us would be. That's a lot of loss to the taxpayers.

Not to mention, all of us that actually paid back what we owed by working extra and drastically cutting back, neigh, scratch that, not having a life to pay off what we agreed to for our education.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: v8rx7guy on July 08, 2016, 02:09:46 PM
I'd be so pissed if all student loan debt was suddenly forgiven.

All of us would be. That's a lot of loss to the taxpayers.

Not to mention, all of us that actually paid back what we owed by working extra and drastically cutting back, neigh, scratch that, not having a life to pay off what we agreed to for our education.

Exactly.  I busted my ass over the last 2 years to pay mine off.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Axecleaver on July 08, 2016, 02:22:41 PM
Hillary added free college to her platform to energize the younger Dem base who supported Bernie. Once she's elected, she'll name a few people to a commission to look into it, a year later they'll say it's unaffordable, and it'll die there until we get a new president. If, by some miracle, she works with the Dems to propose legislation, the Republicans will kill it in the Assembly.

Pay your loans off ASAP. I wouldn't even worry about refinancing given your short timeline. It will feel great and then you can start ramping up the tax-advantaged savings.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Eric on July 08, 2016, 02:27:29 PM
Hillary added free college to her platform to energize the younger Dem base who supported Bernie. Once she's elected, she'll name a few people to a commission to look into it, a year later they'll say it's unaffordable, and it'll die there until we get a new president. If, by some miracle, she works with the Dems to propose legislation, the Republicans will kill it in the Assembly.

Pay your loans off ASAP. I wouldn't even worry about refinancing given your short timeline. It will feel great and then you can start ramping up the tax-advantaged savings.

Agreed.  Everyone realizes how the government works, right?  It's not like the president just gets to pass their own laws.  They still have to "work with" the Party of No.  Therefore, it's not happening anytime soon.  Pay them.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: aFrugalFather on July 08, 2016, 02:36:19 PM
Pay them off, or at least refinance and invest the money you would have used. 
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tonysemail on July 08, 2016, 02:49:42 PM
I think HARP is a good example of what student loan relief may look like.
It didn't affect that many households.

p.s.
a valuable lesson here about doubting yourself because of dad.
recognize when to listen to him and when to stick to your guns
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: onlykelsey on July 08, 2016, 02:53:52 PM
Hillary added free college to her platform to energize the younger Dem base who supported Bernie. Once she's elected, she'll name a few people to a commission to look into it, a year later they'll say it's unaffordable, and it'll die there until we get a new president. If, by some miracle, she works with the Dems to propose legislation, the Republicans will kill it in the Assembly.

Pay your loans off ASAP. I wouldn't even worry about refinancing given your short timeline. It will feel great and then you can start ramping up the tax-advantaged savings.

Agreed. I would look in to refinancing, though.  It can't hurt if you're not going to do lots of hard credit pulls in the near future.

If there is reform it will be around the edges and means-tested.  I think people get confused about how (not) powerful presidents are in domestic matters.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Helvegen on July 08, 2016, 03:31:08 PM
If Hillary becomes president I see a 0% chance of student loan forgiveness. The whole idea that a center-right corporatist would do such a thing is so hilarious and naive, I don't even know what to say.

Just pay the loans.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: onlykelsey on July 08, 2016, 03:37:25 PM
If Hillary becomes president I see a 0% chance of student loan forgiveness. The whole idea that a center-right corporatist would do such a thing is so hilarious and naive, I don't even know what to say.

Just pay the loans.

Honestly, I think the chance is 0% no matter who wins.  The President doesn't get to choose their own congress, and it's a trillion dollar industry.  Maybe we'll see some reform for new students and around the edges (maybe in the deductability of interest?), but I don't think you could get even 10% of Congress behind forgiveness.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MidWestLove on July 08, 2016, 03:58:03 PM
pay them off - if you are into math/money optimization business , you are taking certain loss (in accumulated interested) vs very unlikely potential 'gain'  where timing, nature, the fact itself, or any laws regarding this is completely uncertain.

congress makes laws. congressalso  dishes out money (authorizes it), president has to convince congresscritters that it is in their interest to do so. given how horrible financial record Obama had (8.9 trillion in public debt when starting his presidency, what 19 trillion now), and given how fast the left lost the Congress (2014?) , it is very unlikely that any 'forgiveness' would happen.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MidWestLove on July 08, 2016, 03:58:44 PM
also, a stupid question -isn't it a moral/right thing to do? if I borrowed something I will pay it off..
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: TheOldestYoungMan on July 08, 2016, 04:02:42 PM
I'd be OK with forgiving the loans...as long as it was tied to destroying their credit.

I arrive at that determination based on the guidelines I use for lending/borrowing from friends or families.

1.  Never borrow what you can't pay back.
2.  Never loan money you can't afford to lose.
3.  Neither party should enter the arrangement if it will ruin the relationship.
4.  Never ask for more while the old amount is still outstanding.
5.  Never lend more while the old amount is still outstanding.

If a family member borrows any amount from me, I will never bring it up again, but the answer for all future borrowing is "no".

Not paying back this money that was borrowed, even if the government passed a law right now forgiving the debt, would make you a bad person.  Not like hitler or anything, but it would be a black mark on your contribution to society.  You'd be a taker not a contributor.

I also think publicly funding higher education is already happening, we just need to get serious as a civilization about higher education.  Culturally we could save a lot of money by not being OK with high schoolers screwing around for the last two years basically taking their first two years of college already.  Call it what it is, figure out how to adjust the accreditation, and make high school and college blend a little better.

Introduce a national public university, with online lectures from all the best professors, free, with online testing accepted by every college that takes public money.  You could knock out a 4 year degree in 6months-1year of labwork and in person verification of the online material.  This is possible right now, today, with resources that already exist, it lacks only an official recognition and a cultural acceptance.

You could even have local discussion groups for every topic.  I'd personally volunteer at the local weekly meeting to help out with engineering classes.  Lots of people would.  We just need a space (like an empty high school classroom) and someone to organize it.

We as a society have decided we want college to be expensive.  We tolerate it.

And so when one of us borrows money to pay for it, we should require them to pay back that money.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MidWestLove on July 08, 2016, 04:13:51 PM
"

Introduce a national public university, with online lectures from all the best professors, free, with online testing accepted by every college that takes public money.  You could knock out a 4 year degree in 6months-1year of labwork and in person verification of the online material.  This is possible right now, today, with resources that already exist, it lacks only an official recognition and a cultural acceptance.
"

I think we are steering into general education discussion separate from OP question. I do agree with you on lending rules and also believe strongly in right and wrong, and not paying back what I owe when I have the means to do so is wrong to me.

on the general education, my perspectives were that of the foreigner
- I found US high school to be ridiculously easy , even for 16 year old foreign boy with very limited English to graduate with honors as senior. it was just 2-4 years behind Russian education in almost everything, and exact science in particular. We studied geometry in multiple dimensions  in 6 grade when math split into geometry and calculus, botany and chemistry started in 6 grades as well. for bio science you had 2 years of botany, 1 year of zoology, 1 year of anatomy, and 1 general bio science (genetics, etc) by the time you graduated. for physics , you had  mechanics , dynamic forces, electrodynamics (Omhs law, etc), general physics (nuclear, elemental particles,etc). for chemistry - 2 years of non organic chemistry, 1 year of organics, and 1 of general. and this for each and every person, no exceptions, no 'I will pick my classes'.  in US all of this was condenced like crazy and augmented by large amount of either performing arts (chorus, band) and other non exact sciences..

- for national universities, it is complex . US universities are among the most expensive in the world, they are also among the best of the world by far.  Russia had free university system and is now operating in hybrid mode before likely switching to full US model as that shown itself to be very efficient.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Field123 on July 08, 2016, 04:33:17 PM
A lot of good discussion on the merits and arguments for/against Income Based Repayment Programs in this thread:

http://forum.mrmoneymustache.com/ask-a-mustachian/in-$150-000-of-student-loan-debt-and-need-some-adviceencouragement/msg570744/#msg570744

I've spent a lot of time analyzing this issue and I agree with others who do not expect any type of sweeping forgiveness. I do, however, expect future democratic administrations to sweeten the existing forgiveness programs through some combination of reducing pay back period, reducing % of income paid, and most of all, eliminating income tax on the forgiven amount.

If you would have asked this question before you began repaying your wife's student loans I would have argued that it is absolutely a 100% no-brainer (in terms of financial optimization, I don't want to rehatch the moral debate) to enroll in the Pay As you Earn (PAYE) or IBR, but not REPAYE. Assuming your wife makes a low income over the next 20 years you will have $0 or very minimal payments until the balance is forgiven. The only drawback to this plan is that you would have to file income taxes as married filing separately (to avoid having your income considered in the payments) thereby losing access to IRA's. I've done the math and that is an easy tradeoff for the student loan savings.

The other risk, of course, is that my analysis depends on the forgiven balance not being treated as taxable income. This is discussed in the other thread, but I'm making a huge bet on it and I think this is something that Hilary will do. Although even in the event that the forgiven balance is taxable, the net present value of the current balance still exceeds the future taxable amount.

In your present situation, you'd have to do the math to calculate the tradeoff of losing IRA's and other costs associated with married filing seperately and balance that against the risk of potentially having income tax due on the forgiven amount. It's probably still in favor of PAYE, but not the landslide obvious choice it was originally.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Field123 on July 08, 2016, 04:55:23 PM
I think it is also important to note that refinancing, while it may save you some money on interest if you do repay the loans in full, renders your wife ineligible for any type of government student loan benefits such as income based payment and forgiveness. For this reason, I would not refinance if I were you.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: chasesfish on July 09, 2016, 11:55:15 AM
I think you have to be in the business of you....pay off that deb.   My wife and I had to payoff $110,000 of student loan debt and it wasn't easy.   
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Indexer on July 09, 2016, 12:09:17 PM
The only way I see them being forgiven are the rules that are already in place or maybe more generous versions of those same rules. I'm of course referring to the income based repayment. After making that minimum payment for X years they are forgiven. That forgiveness then shows up as taxable income...  So you just owe the IRS a smaller amount instead. Unless you weren't even paying the interest and the balance kept growing, in which case you might end up owing the IRS an amount similar to or greater than what you borrowed. With certain government jobs the forgiveness doesn't show up as income. The only forgiveness I could see coming in the future is making those rules even more lenient, but I don't see a mass forgiveness happening.

Even considering the income based plan with your income you are probably going to be making the full payment so you might as well pay them down.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: SimplyMarvie on July 09, 2016, 12:15:25 PM
I am nearly 5 years into payments on IBR and am expecting my loans to be forgiven through Public Interest Loan Forgiveness sometime in mid 2022, after ten years of scrupulous on-time payments. I am also white-knuckling it through the next five years, hoping that there are no major changes in the program before I'm through with it. It's kind of a form of golden handcuffs, because the outstanding interest is amortizing back into the loan, and the balance is already high (law school, during which I had two babies and tuition increased 24%), so at this point even though I could command a higher salary in the private sector, I really can't afford to leave public sector or non-profit employment.

I am very grateful for this program, but I would NOT want to put yourself into a position where you're tying your financial decisions to people making (or not making) changes in the law in your favor at some point in the future. Been there, doing that, it kind of sucks.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MisterTwoForty on July 09, 2016, 08:03:35 PM
Pay them off, if you are expecting a politican to save your finances you'll be waiting forever.

If you took out the loan, you pay it back. 
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: LouLou on July 10, 2016, 04:21:20 AM
Highly unlikely that Hillary Clinton would propose and Congress would pass a law instantly forgiving 100% of student loans.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Field123 on July 10, 2016, 09:27:53 AM
also, a stupid question -isn't it a moral/right thing to do? if I borrowed something I will pay it off..

One would think...

I see not paying back your student loans the same as not paying back your credit card. You willfully borrowed money to acquire something, why shouldn't you be responsible to pay it back?

I said I didn't want to start an ethical debate on this, but I think there is a big misunderstanding between the people familiar with these loan forgiveness programs and those who are not.

On the face of the actual loan documents that you sign when taking out student loans through the Department of Education (in the fine print) there is a sectional called "Repayment Options". Included in those options are the various income based repayment programs.

So although an outstanding balance may be "forgiven", as long as you comply with the repayment terms spelled out in the actual loan document (pay a % of income for a certain amount of time), I would argue that you have fulfilled your obligations as specified in the loan and you have, in fact, "Paid it Back". To do anything less than financially optimize your repayment in the name of morality is the antithesis of mustachianism. How many of MMMs articles basically conclude that people should "just do the math"?

Loan forgiveness upon completion of IBR or PAYE is not some type of charity or welfare from the government. Rather, it is the government fulfilling its end of the bargain after you have fulfilled yours.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Yaeger on July 10, 2016, 12:13:22 PM
Loan forgiveness upon completion of IBR or PAYE is not some type of charity or welfare from the government. Rather, it is the government fulfilling its end of the bargain after you have fulfilled yours.

That's why we need to eliminate, or reform, federally-backed student loans. Most taxpayers aren't aware of the fact that they're being taxed to provide this bargain for you, and even more insidious is that upon loan default that the taxpayers are the losers of someone else's poor decision.

I'd like to see this program become a Working Capital Fund, where it has greater flexibility over defaults, interest rates, and loan approval. Basically future student's availability for federal loans becomes contingent upon current students paying back loans.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: forummm on July 10, 2016, 12:40:23 PM
There is no chance that all student loans will be forgiven. What do you think student loan holders are--rich bankers who make lots of campaign contributions?

It's possible that attending college could get a lot cheaper in the future. But other than the long term income based repayment plans with long term forgiveness (after 25 years w/o public service employment), you'll have to pay.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MissNancyPryor on July 10, 2016, 12:56:07 PM
I am in the camp of "you borrowed it, pay it back" and the idea of waiting for Hillary or any other politician is folly.  I do like forgiveness for occupations within communities or services that lack participation.  The  incentive approach of trading 10 or 20 years serving the underserved to pay back the debt seems fair. 

Shouldn't there be strings attached in the free college utopia though?  If school is paid for by society, shouldn't those paid-for degrees be among those that benefit society most?  That is the same reason that the incentives works--society needs help in some geographies and communities so we are willing to make a trade of time spent for debt forgiveness.  STEM degrees as well as much-needed vocational skills would rise to the top of the 'needs' list.  The old trope of underwater basket weaving and its equivalents should not be funded by the masses.  Personal enrichment should be on the individual's dime. 

Yes, that requires that we pass judgement and forces communities to determine what they value most.  That idea is a mismatch with lots of snowflakes out there who haven't figured out how to make their talents marketable and don't feel they should have to.       
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Telecaster on July 10, 2016, 02:56:15 PM

That's why we need to eliminate, or reform, federally-backed student loans. Most taxpayers aren't aware of the fact that they're being taxed to provide this bargain for you, and even more insidious is that upon loan default that the taxpayers are the losers of someone else's poor decision.

Federal student loans were reformed in 2010, which significantly reduced costs.  Both Trump and Elizabeth Warren have made the point that the student loan program actually takes in tens of billions more in "profits"  than it spends. 

Now, because people who took out loans in 2010 will presumably be paying them back over the coming years and decades, you can't actually say if the program will continue to be in the black.   Maybe a recession hits and the default goes up or whatever.  And of course there is opportunity cost too (from the point of view of the government), which makes the accounting even more complicated.  On the flip side, you could make the argument because college educated workers make more money, they pay more in taxes too.  So there is an increase in tax revenue. 

It is complicated, but right now no one is being taxed to provide student loans because the program is a net positive to the government.   
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Yaeger on July 10, 2016, 04:28:41 PM

That's why we need to eliminate, or reform, federally-backed student loans. Most taxpayers aren't aware of the fact that they're being taxed to provide this bargain for you, and even more insidious is that upon loan default that the taxpayers are the losers of someone else's poor decision.

Federal student loans were reformed in 2010, which significantly reduced costs.  Both Trump and Elizabeth Warren have made the point that the student loan program actually takes in tens of billions more in "profits"  than it spends. 

Now, because people who took out loans in 2010 will presumably be paying them back over the coming years and decades, you can't actually say if the program will continue to be in the black.   Maybe a recession hits and the default goes up or whatever.  And of course there is opportunity cost too (from the point of view of the government), which makes the accounting even more complicated.  On the flip side, you could make the argument because college educated workers make more money, they pay more in taxes too.  So there is an increase in tax revenue. 

It is complicated, but right now no one is being taxed to provide student loans because the program is a net positive to the government.   

I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students. Never trust a politician, here's an article explaining why what they said is technically correct, but misleading:

http://www.forbes.com/sites/prestoncooper2/2016/04/10/federal-student-loans-will-cost-taxpayers-170-billion/#38bf9f255e04 (http://www.forbes.com/sites/prestoncooper2/2016/04/10/federal-student-loans-will-cost-taxpayers-170-billion/#38bf9f255e04)

The CBO report, table 5 shows the net deficit when using fair-value accounting vs. standard accounting (what Warren and Trump were talking about):
https://www.cbo.gov/sites/default/files/51310-2016-03-StudentLoan.pdf (https://www.cbo.gov/sites/default/files/51310-2016-03-StudentLoan.pdf)
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 10, 2016, 04:56:48 PM
It's pure fantasy to think there's going any sort of mass forgiveness program. Income based plans appear to be the "solution" the gov is providing, probably with the hope that people's incomes go up and they end up paying what they would have anyway.

90K in federal loans implies grad school. Undergraduates can't borrow that much themselves. I think a grad student should know better than to borrow tens of thousands of dollars and then expect a bailout.

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Bartleby_the_Scrivener on July 10, 2016, 05:22:13 PM
Hillary added free college to her platform to energize the younger Dem base who supported Bernie. Once she's elected, she'll name a few people to a commission to look into it, a year later they'll say it's unaffordable, and it'll die there until we get a new president. If, by some miracle, she works with the Dems to propose legislation, the Republicans will kill it in the Assembly.

Exactly. Clinton's just pandering. Just pay 'em.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: forummm on July 10, 2016, 05:48:30 PM
I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students.

There are a ton of private lenders. Have you seen all the people refinancing with SoFi and Earnest and other loan providers (and their referral codes) here? People are refinancing their federal loans into these lower cost providers. And remember that the government can borrow at much lower rates than private firms. So the government is profiting even more.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: woopwoop on July 10, 2016, 05:59:22 PM
I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students.
Except that with federal loans, you don't have the possibility of declaring bankruptcy. Which means private lenders are taking on a lot more risk than the govt and necessarily would need more profit for it to make sense for them. Which is a really stupid part of federal loans, but there it is.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: clarkevii on July 10, 2016, 06:03:30 PM
Pay the loans off. Hillary is going to lose anyway.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 10, 2016, 06:04:33 PM
I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students.

There are a ton of private lenders. Have you seen all the people refinancing with SoFi and Earnest and other loan providers (and their referral codes) here? People are refinancing their federal loans into these lower cost providers. And remember that the government can borrow at much lower rates than private firms. So the government is profiting even more.

I suspect default rates are higher for gov loans. SoFi and Earnest have the advantage of being picky. Based on the refinancing stories here, it's pretty clear they're geared toward a subset of high income borrowers. The government is also making the loan before you have the degree or any work history. That would seem to be a logical reason for higher rates.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 10, 2016, 06:05:32 PM
I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students.
Except that with federal loans, you don't have the possibility of declaring bankruptcy. Which means private lenders are taking on a lot more risk than the govt and necessarily would need more profit for it to make sense for them. Which is a really stupid part of federal loans, but there it is.

You can't declare private loans in bankruptcy either.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: forummm on July 10, 2016, 06:13:55 PM
I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students.
Except that with federal loans, you don't have the possibility of declaring bankruptcy. Which means private lenders are taking on a lot more risk than the govt and necessarily would need more profit for it to make sense for them. Which is a really stupid part of federal loans, but there it is.

You can't declare private loans in bankruptcy either.

I think it depends. I think you can with certain refinancing.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: ReadySetMillionaire on July 11, 2016, 07:35:07 AM
Refinance at the very least. You are paying an exorbitant rate. If you can knock that down, paying a low amount will be win-win.

If OP's loans are federal loans, for the love of God don't do this. The benefits that come with federal student loans (forbearance, being able to enroll in income-based repayment plans, they go away upon your death, etc.) far outweighs the benefits of refinancing your loans.

I just applied at Earnest...

3.87% variable
5.07% fixed

So she had $90K, I just paid them down $40K last week so $50K.  About $5K is at really low rates so wouldn't refinance those.  So say she has $45K right now at 6.55%.

On Aug 1st I will have $20K more cash I was going to put on them to get them down to $25k and then with work bonuses hopefully knock them out by the end of the year then move on in life socking away 3-5K a month into investments.

Does any of that info change the thought?

Wouldn't there be a cost to refinance?

Your original question intrigued posters like Fields123 and me, who read about student loans way more than we should. And what your father said wasn't exactly true, but it was close: the student loan legislation only blows in one direction, and that direction is always towards better terms for the borrower.

Student loan "forgiveness" started with PSLF: work for 10 years in public job, payments would be based on your income (not your debt), and your loans would be forgiven. Then came Income Based Repayment, which expanded income-based repayment to borrowers who worked in the private sector. IBR is calculated on 15% of AGI and is forgiven after 25 years, but only those who had loans after 2007 (I think) were eligible. Then came "Pay As You Earn."  This lowered the AGI calculation to 10%, but still couldn't be used by people who took out loans prior to 2007ish.

And then came the greatest student loan program to date, Revised Pay As You Earn. This is based on 10% of AGI, half of unpaid interest gets subsidized, those with undergrad debt are forgiven after 20 years, professional debt is 25. Do the math and if you're near 100k in loans, REPAYE is the greatest hedge of all time.

It should be noted that for IBR, PAYE, and REPAYE, you have to pay income tax on the amount forgiven.

But whether that will actually be imposed is another story. The first IBR people will be done paying the terms of their loan in about 17-18 years. Think about how far we've come on student loans in the last decade, and I have a hard time believing that Congress isn't going to make things even more favorable by the time these loans conclude. My guess as to what Congress enacts:

(1) Eliminate income tax on the forgiven debt.
(2) Better interest rates (somewhere between 2.5% and 4%).
(3) Better tax deductions on student loan interest (currently capped at $2,500; I expect this to go up).
(4) Better subsidization of interest.

Of course, all of this would tip the scale even more in favor of stringing out your loans as long as possible, which is exactly what I'm doing.

To OP, though, you've already put $50k cash towards $90k of loans. Let this be a lesson that once you throw money towards debt, there's no bringing it back, ever (which is part of the reason why so many people on here are against aggressive mortgage repayment). At this point, the math to string out the loans does not make sense, so just pay them off as fast as you can.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: charis on July 11, 2016, 08:07:04 AM
I agree that given the amount that you have already paid toward these loans, there is no point in reducing your payments now, much less hoping that more forgiveness is coming in the near future.   People are quick to denounce loan forgiveness, but forget there already are, and have been for years, many federal and state loan forgiveness programs for public sector employees in a variety of fields.  Not many borrowers actually take advantage of these, if they qualify, and the government makes billions off student loan interest.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: thd7t on July 11, 2016, 08:43:28 AM
Refinance at the very least. You are paying an exorbitant rate. If you can knock that down, paying a low amount will be win-win.

If OP's loans are federal loans, for the love of God don't do this. The benefits that come with federal student loans (forbearance, being able to enroll in income-based repayment plans, they go away upon your death, etc.) far outweighs the benefits of refinancing your loans.

I just applied at Earnest...

3.87% variable
5.07% fixed

So she had $90K, I just paid them down $40K last week so $50K.  About $5K is at really low rates so wouldn't refinance those.  So say she has $45K right now at 6.55%.

On Aug 1st I will have $20K more cash I was going to put on them to get them down to $25k and then with work bonuses hopefully knock them out by the end of the year then move on in life socking away 3-5K a month into investments.

Does any of that info change the thought?

Wouldn't there be a cost to refinance?

Your original question intrigued posters like Fields123 and me, who read about student loans way more than we should. And what your father said wasn't exactly true, but it was close: the student loan legislation only blows in one direction, and that direction is always towards better terms for the borrower.

Student loan "forgiveness" started with PSLF: work for 10 years in public job, payments would be based on your income (not your debt), and your loans would be forgiven. Then came Income Based Repayment, which expanded income-based repayment to borrowers who worked in the private sector. IBR is calculated on 15% of AGI and is forgiven after 25 years, but only those who had loans after 2007 (I think) were eligible. Then came "Pay As You Earn."  This lowered the AGI calculation to 10%, but still couldn't be used by people who took out loans prior to 2007ish.

And then came the greatest student loan program to date, Revised Pay As You Earn. This is based on 10% of AGI, half of unpaid interest gets subsidized, those with undergrad debt are forgiven after 20 years, professional debt is 25. Do the math and if you're near 100k in loans, REPAYE is the greatest hedge of all time.

It should be noted that for IBR, PAYE, and REPAYE, you have to pay income tax on the amount forgiven.

But whether that will actually be imposed is another story. The first IBR people will be done paying the terms of their loan in about 17-18 years. Think about how far we've come on student loans in the last decade, and I have a hard time believing that Congress isn't going to make things even more favorable by the time these loans conclude. My guess as to what Congress enacts:

(1) Eliminate income tax on the forgiven debt.
(2) Better interest rates (somewhere between 2.5% and 4%).
(3) Better tax deductions on student loan interest (currently capped at $2,500; I expect this to go up).
(4) Better subsidization of interest.

Of course, all of this would tip the scale even more in favor of stringing out your loans as long as possible, which is exactly what I'm doing.

To OP, though, you've already put $50k cash towards $90k of loans. Let this be a lesson that once you throw money towards debt, there's no bringing it back, ever (which is part of the reason why so many people on here are against aggressive mortgage repayment). At this point, the math to string out the loans does not make sense, so just pay them off as fast as you can.
Your concern about refinancing is partly correct. As long as the spouse's loans aren't consolidated together, they still discharge upon death. Regarding forbearance and IBR, they don't seem to have much value given OP's savings and income. If as you suggest, they pay the loans as quickly as possible, there is no benefit to maintaining the higher rates.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: ReadySetMillionaire on July 11, 2016, 09:33:01 AM
Your concern about refinancing is partly correct. As long as the spouse's loans aren't consolidated together, they still discharge upon death. Regarding forbearance and IBR, they don't seem to have much value given OP's savings and income. If as you suggest, they pay the loans as quickly as possible, there is no benefit to maintaining the higher rates.

Federal loans basically act as disability insurance. Assuming OP pays this by the end of next year (eighteen months), keeping the loans as federal will cost maybe an extra $800 in interest paid, and that's assuming he gets a great private rate (around 3.5%). The difference is considerably less if he gets a so-so interest rate, which is possible given his presumably young credit history.

Also, I suspect that if he wanted to get a great rate, he and his wife would have to co-sign the refinance, which isn't good.

So the extra cost associated with higher interest rates is well worth it.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 11, 2016, 10:44:19 AM
This is the disclosure from my Earnest refinance:
 
Loan Discharge Provisions.
 You will discharge (forgive) my Loan if (a) I die and you receive acceptable documentation of my death consisting of a
certied copy of my death certicate or other documentation acceptable to you; or (b) if I become totally and permanently disabled (“TPD”) as
dened below. In order to establish total and permanent disability I must demonstrate to your satisfaction that I am unable to engage in any
substantial gainful activity due to a physical or mental impairment that: (i) can be expected to result in death; (ii) has lasted for a continuous period
of not less than sixty (60) months; or (iii) can be expected to last for a continuous period of not less than sixty (60) months. A doctor of medicine or
osteopathy, authorized to practice in the United States, must describe and certify my TPD status on your TPD discharge application form.

Refinance is also eligible for forbearance in 3 month increments and deferments in case of job loss, military, or university enrollment.

Just curious, what other protections am I missing out on compared to federal loans? (Other than the loan forgiveness since I wasn't eligible anyway)
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Telecaster on July 11, 2016, 11:22:36 AM

I understand what you're saying, but for me it's not passing the common sense check. If the programs were profitable, private lenders would be entering and offering loans at lower interest rates than what the federal government is to capitalize on that profit and offer better value loans to students. Never trust a politician, here's an article explaining why what they said is technically correct, but misleading:


 Private lenders are more than happy to give you a student loan--but at higher interest rates.  Banks are all about return on equity.  The government isn't trying to maximize ROE. 

Your point about fair value accounting is why I used the word "profit" in quotes and my comment that people be paying loans back over the coming years and decades, so we don't really know the true cost.   Fair value is GAAP, but it is still an estimate.   But the reality is that right now, student loans bring in more money to the government than they cost. 
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: golden1 on July 11, 2016, 11:29:57 AM
This attitude is why the human race can't have nice things.  "I suffered, so by god, everyone else has to suffer the same as I did."  Where does that end? 

It is in everyone's best interest to have an educated population.  Currently our system puts up a lot of economic barriers to that.  I like the idea of having free online education supplemented by local discussion centers/ lab workshops.  I also like the idea of a more formalized system of mentoring through apprenticeships/ internships.  For type of jobs that are available, people need a better level of training than they are getting. 

Our system of higher education isn't training people particularly well for the amount of money invested.  It is just padding the coffers of university administration and the finance industry.  A loan that you can't ever forgive or discharge through bankruptcy?  Yes, please!

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Jack on July 11, 2016, 11:44:37 AM
It is in everyone's best interest to have an educated population.

Is it? Let's question that statement for a moment:

1. How educated is "educated?" Shouldn't a high-school education be enough? If not, then how do we know a bachelor's degree would be enough either -- should we keep pushing so that eventually everyone would be expected to have a PhD?

2. Is the real goal to produce an educated populace, or merely a skilled workforce? There seems to be much disagreement on this point: on one hand, some people disparage the traditional liberal-arts curriculum as failing to prepare students for the workforce, but on the other hand, other people seem to think everyone should go to college (as opposed to apprenticing in the trades). Personally, I think we need more well-read tradespeople with good critical thinking skills and understanding of civics, but I'm not sure how best to accomplish that.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: clarkfan1979 on July 12, 2016, 03:36:07 PM
Pay off the loans. Assuming Hillary will pass legislation for high income earners to not pay off their loans sound like crazy speculation.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: wenchsenior on July 14, 2016, 08:25:20 AM
Pay off the loans. Assuming Hillary will pass legislation for high income earners to not pay off their loans sound like crazy speculation.

Hillary won't pass any such legislation even if she wins because presidents don't have that power to pass legislation and she has never proposed that anyway.

Congress also won't pass legislation to forgive student loans because 1) very few Dems have any interest in doing this; 2) the vast majority of Repubs have no interest in doing this; even if a majority of Dems could be convinced to vote for such legislation....3) the House will remain in GOP control for at least the next 4 years and likely longer than that; and 4) there is no guarantee the Dems will take even the Senate during this cycle (though they have a shot at it), and if they do they could lose it 2 years from now. No Dem-controlled congress is likely in the offing anytime in the next 4 years.

Reasons 2-4 are also why precisely none of Bernie Sander's platform positions (e.g., free college) would EVER pass, even if he were to have won the nom/presidency.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Spitfire on July 14, 2016, 08:53:07 AM
I'd pay them off, especially since you think it is doable by the end of the year. Paying off 90k per year in the loans sounds like you have a great savings rate. Put this behind you and start up your stache on the way to a bright future.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: onlykelsey on July 14, 2016, 09:25:41 AM
Pay off the loans. Assuming Hillary will pass legislation for high income earners to not pay off their loans sound like crazy speculation.

Hillary won't pass any such legislation even if she wins because presidents don't have that power to pass legislation and she has never proposed that anyway.

Congress also won't pass legislation to forgive student loans because 1) very few Dems have any interest in doing this; 2) the vast majority of Repubs have no interest in doing this; even if a majority of Dems could be convinced to vote for such legislation....3) the House will remain in GOP control for at least the next 4 years and likely longer than that; and 4) there is no guarantee the Dems will take even the Senate during this cycle (though they have a shot at it), and if they do they could lose it 2 years from now. No Dem-controlled congress is likely in the offing anytime in the next 4 years.

Reasons 2-4 are also why precisely none of Bernie Sander's platform positions (e.g., free college) would EVER pass, even if he were to have won the nom/presidency.

But Sanders is going to give us free college!!!!!!!!!!11!!1!

Agreed on all points.  I'm a bit to Clinton's left on some points and really wished she had a credible opponent from the left in the primary, but Sanders just makes ill-researched promises that have 0% chance of succeeding, and then Clinton is left looking stingy or not left enough.  Frustrating.  We are not electing a dictator. 
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Jack on July 14, 2016, 09:33:11 AM
But Sanders is going to give us free college!!!!!!!!!!11!!1!

Agreed on all points.  I'm a bit to Clinton's left on some points and really wished she had a credible opponent from the left in the primary, but Sanders just makes ill-researched promises that have 0% chance of succeeding, and then Clinton is left looking stingy or not left enough.  Frustrating.  We are not electing a dictator.

Anybody who says things like this has no clue whatsoever what half of Sanders' positions actually are, and has instead only paid attention to the sensationalized parts (as proven by the first sentence quoted).

Also, Hillary is the one who has no "credibility."
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: wenchsenior on July 14, 2016, 09:40:07 AM
But Sanders is going to give us free college!!!!!!!!!!11!!1!

Agreed on all points.  I'm a bit to Clinton's left on some points and really wished she had a credible opponent from the left in the primary, but Sanders just makes ill-researched promises that have 0% chance of succeeding, and then Clinton is left looking stingy or not left enough.  Frustrating.  We are not electing a dictator.

Anybody who says things like this has no clue whatsoever what half of Sanders' positions actually are, and has instead only paid attention to the sensationalized parts (as proven by the first sentence quoted).

Also, Hillary is the one who has no "credibility."

Point taken on my oversimplification of one of Sanders' policies. I still think most of them had a tinker's chance in hell of ever being passed.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Helvegen on July 14, 2016, 10:16:42 AM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.

TBH, that is exactly the message that came across with Wall Street bailouts. Make a bunch of shitty decisions, destroy an economy, who cares, take all the government cheese you can carry, pls.

In for a penny, in for a pound.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: thd7t on July 14, 2016, 11:12:22 AM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 14, 2016, 11:56:40 AM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.

It doesn't invalidate their efforts, but it does feel like a slap in the face if you work hard for years making the right choices only to have your neighbor get the exact same result without the work you put in.

I have a similar beef with Pell grants. Yes, they have helped many people graduate college. My own parents may have received it when they went back to school as older adults. I think that's great. However, millions (tens?) of dollars are wasted every year on people who do not finish school. They go for a semester, maybe 2, then drop out. I admit I over borrowed and that's my fault, but I also wasn't provided with 5K of grant money. Which could have prevented me from even starting to borrow!

It seems wrong that I worked hard and graduated in 4 years with tons of debt to pay back to the government (along with a higher tax rate...) when other students dick around for a few semesters and have no responsibility to pay back money they basically wasted. The whole thing is a mess. We've been so obsessed with getting poor kids into college we never worried about how to keep them there. The result is money wasted and people like me who feel like they got stiffed.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: thd7t on July 14, 2016, 12:25:25 PM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.

It doesn't invalidate their efforts, but it does feel like a slap in the face if you work hard for years making the right choices only to have your neighbor get the exact same result without the work you put in.

I have a similar beef with Pell grants. Yes, they have helped many people graduate college. My own parents may have received it when they went back to school as older adults. I think that's great. However, millions (tens?) of dollars are wasted every year on people who do not finish school. They go for a semester, maybe 2, then drop out. I admit I over borrowed and that's my fault, but I also wasn't provided with 5K of grant money. Which could have prevented me from even starting to borrow!

It seems wrong that I worked hard and graduated in 4 years with tons of debt to pay back to the government (along with a higher tax rate...) when other students dick around for a few semesters and have no responsibility to pay back money they basically wasted. The whole thing is a mess. We've been so obsessed with getting poor kids into college we never worried about how to keep them there. The result is money wasted and people like me who feel like they got stiffed.
Pell grants are an odd case. The graduation rates among students receiving Pell grants are lower, but it appears that a few institutions with really low graduation rates are dragging the numbers down: https://www.google.com/url?sa=t&source=web&rct=j&url=http://hechingerreport.org/an-unprecedented-look-at-pell-grant-graduation-rates-from-1149-schools/&ved=0ahUKEwjf7ZX5yPPNAhWTCD4KHbWnAkIQFggbMAA&usg=AFQjCNHxg3CNh3DiTqe08JSORr3NAedr0Q

Omitting these institutions brings Pell graduation rates pretty close to parity with other students.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 14, 2016, 12:32:03 PM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.

It doesn't invalidate their efforts, but it does feel like a slap in the face if you work hard for years making the right choices only to have your neighbor get the exact same result without the work you put in.

I have a similar beef with Pell grants. Yes, they have helped many people graduate college. My own parents may have received it when they went back to school as older adults. I think that's great. However, millions (tens?) of dollars are wasted every year on people who do not finish school. They go for a semester, maybe 2, then drop out. I admit I over borrowed and that's my fault, but I also wasn't provided with 5K of grant money. Which could have prevented me from even starting to borrow!

It seems wrong that I worked hard and graduated in 4 years with tons of debt to pay back to the government (along with a higher tax rate...) when other students dick around for a few semesters and have no responsibility to pay back money they basically wasted. The whole thing is a mess. We've been so obsessed with getting poor kids into college we never worried about how to keep them there. The result is money wasted and people like me who feel like they got stiffed.
Pell grants are an odd case. The graduation rates among students receiving Pell grants are lower, but it appears that a few institutions with really low graduation rates are dragging the numbers down: https://www.google.com/url?sa=t&source=web&rct=j&url=http://hechingerreport.org/an-unprecedented-look-at-pell-grant-graduation-rates-from-1149-schools/&ved=0ahUKEwjf7ZX5yPPNAhWTCD4KHbWnAkIQFggbMAA&usg=AFQjCNHxg3CNh3DiTqe08JSORr3NAedr0Q

Omitting these institutions brings Pell graduation rates pretty close to parity with other students.

The rates might be the same but my issue is that the Pell grant students leave and that's it. The borrowers leave and have to pay back loans.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: thd7t on July 14, 2016, 12:38:42 PM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.

It doesn't invalidate their efforts, but it does feel like a slap in the face if you work hard for years making the right choices only to have your neighbor get the exact same result without the work you put in.

I have a similar beef with Pell grants. Yes, they have helped many people graduate college. My own parents may have received it when they went back to school as older adults. I think that's great. However, millions (tens?) of dollars are wasted every year on people who do not finish school. They go for a semester, maybe 2, then drop out. I admit I over borrowed and that's my fault, but I also wasn't provided with 5K of grant money. Which could have prevented me from even starting to borrow!

It seems wrong that I worked hard and graduated in 4 years with tons of debt to pay back to the government (along with a higher tax rate...) when other students dick around for a few semesters and have no responsibility to pay back money they basically wasted. The whole thing is a mess. We've been so obsessed with getting poor kids into college we never worried about how to keep them there. The result is money wasted and people like me who feel like they got stiffed.
Pell grants are an odd case. The graduation rates among students receiving Pell grants are lower, but it appears that a few institutions with really low graduation rates are dragging the numbers down: https://www.google.com/url?sa=t&source=web&rct=j&url=http://hechingerreport.org/an-unprecedented-look-at-pell-grant-graduation-rates-from-1149-schools/&ved=0ahUKEwjf7ZX5yPPNAhWTCD4KHbWnAkIQFggbMAA&usg=AFQjCNHxg3CNh3DiTqe08JSORr3NAedr0Q

Omitting these institutions brings Pell graduation rates pretty close to parity with other students.

The rates might be the same but my issue is that the Pell grant students leave and that's it. The borrowers leave and have to pay back loans.
That wasn't the issue that you described. You said you felt stiffed, because they didn't finish college and didn't have to pay. You even gave the example of it being okay when your parents took the grants!
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 14, 2016, 12:55:21 PM
I am adamantly opposed to full loan forgiveness.

I busted my ass in college, only applied to in state schools, went to an in state school, lived on very little for 4 years, took on a hard STEM major, worked through college, applied for scholarships and still came out with $10k in debt. Guess what, during my first job, I saved as much as I could and paid back the loan ASAP because that was the agreement I made.

Loan forgiveness crosses the line when so many of us sacrificed (my parents included who helped partially fund my tuition). What precedent does that set in this country? Make terrible decisions, but don't worry about the consequences, big government is here to save you?

I hate Donald Trump but if someone is using loan forgiveness as a centerpiece of their platform I will vote against it out of spite.
So far, no one is campaigning on loan forgiveness, as such, but regarding your own struggles and sacrifices, do you really feel like someone else's loans being forgiven invalidates that? You should just be proud of yourself, not spiteful.

It doesn't invalidate their efforts, but it does feel like a slap in the face if you work hard for years making the right choices only to have your neighbor get the exact same result without the work you put in.

I have a similar beef with Pell grants. Yes, they have helped many people graduate college. My own parents may have received it when they went back to school as older adults. I think that's great. However, millions (tens?) of dollars are wasted every year on people who do not finish school. They go for a semester, maybe 2, then drop out. I admit I over borrowed and that's my fault, but I also wasn't provided with 5K of grant money. Which could have prevented me from even starting to borrow!

It seems wrong that I worked hard and graduated in 4 years with tons of debt to pay back to the government (along with a higher tax rate...) when other students dick around for a few semesters and have no responsibility to pay back money they basically wasted. The whole thing is a mess. We've been so obsessed with getting poor kids into college we never worried about how to keep them there. The result is money wasted and people like me who feel like they got stiffed.
Pell grants are an odd case. The graduation rates among students receiving Pell grants are lower, but it appears that a few institutions with really low graduation rates are dragging the numbers down: https://www.google.com/url?sa=t&source=web&rct=j&url=http://hechingerreport.org/an-unprecedented-look-at-pell-grant-graduation-rates-from-1149-schools/&ved=0ahUKEwjf7ZX5yPPNAhWTCD4KHbWnAkIQFggbMAA&usg=AFQjCNHxg3CNh3DiTqe08JSORr3NAedr0Q

Omitting these institutions brings Pell graduation rates pretty close to parity with other students.

The rates might be the same but my issue is that the Pell grant students leave and that's it. The borrowers leave and have to pay back loans.
That wasn't the issue that you described. You said you felt stiffed, because they didn't finish college and didn't have to pay. You even gave the example of it being okay when your parents took the grants!

Huh? I do feel stiffed, because they didn't finish and don't have to pay anything back. My parents finished, so not the same thing.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 14, 2016, 01:02:19 PM
Um as someone who paid off 100k+ of my own loans and 100k+ of husband's. I DO feel invalidated that others get off the hook on their loans in any sort of loan forgiveness at all. I'm even against the new REPAYE and all that crap. Want lower payments? Sure extend out your loan a ton and take the lower payments.   I don't know the full requirements of the 10 year public service forgiveness but I am okay with a program along those lines. Otherwise, I think everyone should have to pay off their loans unless they are permanently disabled or die. Is that how its going to work in reality... doubtful.

We've pretty much forfeited one of our salary's every year since we graduated (10 years!) to pay off our student loans. So to have others shirk their own responsibility on much smaller amounts does piss me off! I think the 15% of discretionary or whatever figure they are using is much too low too. As one forum member has shown you can easily use REPAYE to get out of most of the responsibility for your loan by maxing out anything that reduces AGI. Thus allowing the borrowers not paying off their student loan in full to save for retirement, buy a house, start a family, etc. All things I have had to forgo in order to pay off my loans that are my responsibility.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: bb11 on July 14, 2016, 01:15:43 PM
There is not going to be any sweeping loan forgiveness. Pay the loans off.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: charis on July 14, 2016, 02:13:18 PM
I think the 15% of discretionary or whatever figure they are using is much too low too. As one forum member has shown you can easily use REPAYE to get out of most of the responsibility for your loan by maxing out anything that reduces AGI. Thus allowing the borrowers not paying off their student loan in full to save for retirement, buy a house, start a family, etc. All things I have had to forgo in order to pay off my loans that are my responsibility.

This really just comes across as bitter (which you are certainly entitled to feel) because someone didn't choose to stall all of these things as you did.  Is it your position that it is morally superior to pay back what you borrowed instead of taking advantage of loan forgiveness programs that the federal government extends for its federal loans?  If so, unfortunately the government doesn't care about your personal moral compass, the government wants to get paid.  And that is way more likely to happen if the millions of students in or on the verge of default are paying a percentage of their income.   

It's the same argument people use against food stamps and other welfare.  "I did it on my own, why should anyone else get help."  Yes, some people will try to game the system(s), but that doesn't mean that most don't really need it.   Don't be bitter, be confident in your moral and financial superiority.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: randymarsh on July 14, 2016, 03:17:32 PM
I think the 15% of discretionary or whatever figure they are using is much too low too. As one forum member has shown you can easily use REPAYE to get out of most of the responsibility for your loan by maxing out anything that reduces AGI. Thus allowing the borrowers not paying off their student loan in full to save for retirement, buy a house, start a family, etc. All things I have had to forgo in order to pay off my loans that are my responsibility.

This really just comes across as bitter (which you are certainly entitled to feel) because someone didn't choose to stall all of these things as you did.  Is it your position that it is morally superior to pay back what you borrowed instead of taking advantage of loan forgiveness programs that the federal government extends for its federal loans?  If so, unfortunately the government doesn't care about your personal moral compass, the government wants to get paid.  And that is way more likely to happen if the millions of students in or on the verge of default are paying a percentage of their income.   

It's the same argument people use against food stamps and other welfare.  "I did it on my own, why should anyone else get help."  Yes, some people will try to game the system(s), but that doesn't mean that most don't really need it.   Don't be bitter, be confident in your moral and financial superiority.

Agree with your overall point (I don't really have a problem with income based plans. In all likelihood many people are going to end up paying their loans for 20+ years and will pay more overall), but welfare isn't a good analogy. People choose to take on debt & the amount of that debt. I suspect most people on welfare are either chronically poor or hit a rough patch from unemployment.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: therethere on July 14, 2016, 03:18:10 PM
Yes, I am bitter and jealous! I delayed and given up a lot to pay off my loans. Its called being responsible. Surprisingly, I don't feel morally superior. I would probably use the programs to my advantage too if available. But they didn't then and they do now.

I don't really care how you choose to live your life. Pay down your loans quick or slow. Don't pay them at all and face the consequences! But in conversations around student loan forgiveness there are a lot of people playing the victim and that they deserve to get their loans forgiven for blah blah blah. The entitlement is and the complete absence of responsibility is what bothers me. I believe the majority of people could pay them back if they actually tried. Instead they prioritize other things above paying off their debt and then complain that they can't afford the payments. I realize there is no perfect solution because some people truly do need help. But when these programs get to the point where they are subsidizing people who have the ability to pay but just have other priorities that's when its overreaching too far. I am upset that the push is for the net of student loan forgiveness to keep getting larger and larger and "help" more people.

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Frugalman19 on July 15, 2016, 07:39:08 AM
Refinance and pay off debt, don't wait for a government handout. You/your wife chose to take on this debt, be an adult and pay it off. It is simply immoral to wait for someone else to pay your debt for you. This is what's wrong with the US. Your wife signed for that loan!!
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: charis on July 15, 2016, 08:21:20 AM
I think the 15% of discretionary or whatever figure they are using is much too low too. As one forum member has shown you can easily use REPAYE to get out of most of the responsibility for your loan by maxing out anything that reduces AGI. Thus allowing the borrowers not paying off their student loan in full to save for retirement, buy a house, start a family, etc. All things I have had to forgo in order to pay off my loans that are my responsibility.

This really just comes across as bitter (which you are certainly entitled to feel) because someone didn't choose to stall all of these things as you did.  Is it your position that it is morally superior to pay back what you borrowed instead of taking advantage of loan forgiveness programs that the federal government extends for its federal loans?  If so, unfortunately the government doesn't care about your personal moral compass, the government wants to get paid.  And that is way more likely to happen if the millions of students in or on the verge of default are paying a percentage of their income.   

It's the same argument people use against food stamps and other welfare.  "I did it on my own, why should anyone else get help."  Yes, some people will try to game the system(s), but that doesn't mean that most don't really need it.   Don't be bitter, be confident in your moral and financial superiority.

Agree with your overall point (I don't really have a problem with income based plans. In all likelihood many people are going to end up paying their loans for 20+ years and will pay more overall), but welfare isn't a good analogy. People choose to take on debt & the amount of that debt. I suspect most people on welfare are either chronically poor or hit a rough patch from unemployment.

True, it's not a great analogy, but for many people, not going to college is not really a viable option.   Also, there is a critical need for certain people to enter certain low paying fields (teaching is the biggie that comes to mind), for which advanced degrees are required.   There are also still many intelligent people who are the first generation in their (poor) family to attend college.  Even with grants, scholarships, and public colleges, tuition is out of reach for a lot of students.    I agree that the current entitlement mentality concerning loan forgiveness is a big problem. 
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 17, 2016, 09:36:45 AM
OP here...

I didn't realize this question was going to spark so much debate.

I am going to keep paying them down.  On Aug 1st I am going to payoff the next biggest one which is $16k and hang onto $5K as an emergency fund.  Depending on work bonuses I may be able to knock the last of them out by year end, if not within the first few months of 2017.  After that I plan to build our emergency fund back up to $12K and then go from there.

As far as the morality of it...I agree, we took the loans, she got the degree, we owe the money and morally we should pay it back.  With that said, let's just for a moment imagine that Hillary gets elected and the first thing she does is passes a massive forgiveness bill that would have wiped out our loans.  I understand that is uber unlikely but I guess it is just the thought of that happening that leaves a little kernel of doubt.  I appreciate all the kicks in the ass to charge forward and get done with them in this thread.  That is what I needed to push forward and help with the nagging doubts.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: MrsPete on July 17, 2016, 09:47:45 AM
My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.
You asked for our thoughts:

First, I think that if this guy were really all that smart, he'd have guided his daughter down a path that didn't lead to so much debt.  Really, college debt isn't that hard to avoid; perhaps she couldn't see it when she was 18 years old, but Dad should've.  He may be a great guy and solid business leader, but this makes me question his personal financial ability (incidentally, my own father was similar:  He was brilliant, worked in finance and was highly regarded ... but had no sense of restraint in his personal spending).   

Second, if you're earning 6 figures, you are "the rich" whom Hillary considers just short of the enemy.  Even if she enacts any type of student debt forgiveness act (which, like others here, I think is unlikely), it will be for people earning lower wages.

I think you've already received the best advice:  Refinance for a lower interest rate and pay them off. 

[quote author=ReadySetMillionaire link=topic=58427.msg1148451#msg1148451
If OP's loans are federal loans, for the love of God don't do this. The benefits that come with federal student loans (forbearance, being able to enroll in income-based repayment plans, they go away upon your death, etc.) far outweighs the benefits of refinancing your loans.
[/quote]
I'd hope that anyone who's paying off loans that affect other people is smart enough to take out life insurance to pay off those loans in case he or she dies. 

Point taken on my oversimplification of one of Sanders' policies. I still think most of them had a tinker's chance in hell of ever being passed.
He really resonated with my high school students.  Of my 17-18 year old students who are really interested /strongly support a candidate, a few were Trump-supporters, quite a few supported Sanders, and none were interested in Hillary.  When I tried to talk to them about Sanders' inability to follow through with what he was saying (source:  The Constitution), they didn't believe me ... nor were they interested enough to read and fact-check my statements.

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: wenchsenior on July 17, 2016, 10:56:27 AM
OP here...

I didn't realize this question was going to spark so much debate.

I am going to keep paying them down.  On Aug 1st I am going to payoff the next biggest one which is $16k and hang onto $5K as an emergency fund.  Depending on work bonuses I may be able to knock the last of them out by year end, if not within the first few months of 2017.  After that I plan to build our emergency fund back up to $12K and then go from there.

As far as the morality of it...I agree, we took the loans, she got the degree, we owe the money and morally we should pay it back.  With that said, let's just for a moment imagine that Hillary gets elected and the first thing she does is passes a massive forgiveness bill that would have wiped out our loans.  I understand that is uber unlikely but I guess it is just the thought of that happening that leaves a little kernel of doubt.  I appreciate all the kicks in the ass to charge forward and get done with them in this thread.  That is what I needed to push forward and help with the nagging doubts.

Yeah, but this was my point. You sound as though you might be young enough to have not been through many election cycles and don't really understand the likelihood of things becoming law.

Hillary is not running on this promise and never has. But let's assume she were to support such a policy (which is possible), SHE still can't do anything. She has no power to make it law. She can only propose the concept to sympathetic members of Congress, who then have to draft legislation on it, and THEN get a majority of both chambers to agree to pass it and make it law.

Problems is, I'm not sure even a solid Dem-controlled Congress could be convinced to pass such legislation. And for sure no GOP-controlled body will pass it.

BUT, let us go way out on the limb and assume you COULD get a Dem majority to sponsor, draft, and agree to pass such legislation.

Then you run into the brick wall of statistical improbability that the Dems will control both branches of Congress anytime during Hillary's first term (there is almost zero chance of them taking back the House, even if they manage to retake the Senate).

This is why precisely NONE of Bernie Sanders' left-wing proposals would be enacted, even if he were to win the presidency AND the Senate. The House is likely to remain in GOP hands for at least the next 8 years, and possibly much longer than that.  Unless a bunch of extremely unlikely events occur, the absolute best the activist far Left can hope for in terms of national legislation, is a deadlocked stalemate for the next 4-8 years.

So my question is, why would you, tylerium, or your father,assume that this type of forgiveness is likely? It makes NO logical sense. I am sincerely asking, does your father have insider info of some sort? Because I'm willing to be convinced if I'm overlooking something.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 17, 2016, 12:51:15 PM
My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.
You asked for our thoughts:

First, I think that if this guy were really all that smart, he'd have guided his daughter down a path that didn't lead to so much debt.  Really, college debt isn't that hard to avoid; perhaps she couldn't see it when she was 18 years old, but Dad should've.  He may be a great guy and solid business leader, but this makes me question his personal financial ability (incidentally, my own father was similar:  He was brilliant, worked in finance and was highly regarded ... but had no sense of restraint in his personal spending).   

Second, if you're earning 6 figures, you are "the rich" whom Hillary considers just short of the enemy.  Even if she enacts any type of student debt forgiveness act (which, like others here, I think is unlikely), it will be for people earning lower wages.


It is my father saying not to pay them off not her's.  The debt is her Master's student loans that she did after moving out of the house.  In other words my father had nothing to do with them.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 17, 2016, 01:09:19 PM
Yeah, but this was my point. You sound as though you might be young enough to have not been through many election cycles and don't really understand the likelihood of things becoming law.

Hillary is not running on this promise and never has. But let's assume she were to support such a policy (which is possible), SHE still can't do anything. She has no power to make it law. She can only propose the concept to sympathetic members of Congress, who then have to draft legislation on it, and THEN get a majority of both chambers to agree to pass it and make it law.

...

So my question is, why would you, tylerium, or your father,assume that this type of forgiveness is likely? It makes NO logical sense. I am sincerely asking, does your father have insider info of some sort? Because I'm willing to be convinced if I'm overlooking something.

I understand how bills become law.  For ease of typing/conversation I am overstating the simplicity.

At the same time...I would have never thought ObamaCare would have gotten passed and yet it did. 

Hillary's current platform as I understand it involves working to make college free for anyone earning under $125K by 2021.  She also plans to use an executive order (?) to put a 3 month moratorium on interest and in addition somehow allow many/all borrowers to refinance during those 3 months.  I am not sure how accurate that description is, that is just what I have gathered reading the news.  I can see that she has her sights set on buying the young/Bernie voters with some sort of college/student loan program.  Problem is the free college by 2021 thing only affects people who currently cannot vote.  If she wants to buy those votes she has to do something for the current college students and graduates who are already saddled with student loans.  I think she is going to push for something.  Maybe she just pushes a tax bill to make the forgiveness non taxable.  Who knows.  Regardless if it is a 10+ year solution I cannot stand waiting that long.  We have been fiddling around with these damn loans so long I am fed up.

My father is not sure what will happen he just thinks there will be an expansion of the forgiveness programs.  He also is not as debt averse as I am so he thinks if I can refinance them to 3 something I should put money in the market instead.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: wenchsenior on July 17, 2016, 01:42:13 PM
Yeah, but this was my point. You sound as though you might be young enough to have not been through many election cycles and don't really understand the likelihood of things becoming law.

Hillary is not running on this promise and never has. But let's assume she were to support such a policy (which is possible), SHE still can't do anything. She has no power to make it law. She can only propose the concept to sympathetic members of Congress, who then have to draft legislation on it, and THEN get a majority of both chambers to agree to pass it and make it law.

...

So my question is, why would you, tylerium, or your father,assume that this type of forgiveness is likely? It makes NO logical sense. I am sincerely asking, does your father have insider info of some sort? Because I'm willing to be convinced if I'm overlooking something.

I understand how bills become law.  For ease of typing/conversation I am overstating the simplicity.

At the same time...I would have never thought ObamaCare would have gotten passed and yet it did. 

Hillary's current platform as I understand it involves working to make college free for anyone earning under $125K by 2021.  She also plans to use an executive order (?) to put a 3 month moratorium on interest and in addition somehow allow many/all borrowers to refinance during those 3 months.  I am not sure how accurate that description is, that is just what I have gathered reading the news.  I can see that she has her sights set on buying the young/Bernie voters with some sort of college/student loan program.  Problem is the free college by 2021 thing only affects people who currently cannot vote.  If she wants to buy those votes she has to do something for the current college students and graduates who are already saddled with student loans.  I think she is going to push for something.  Maybe she just pushes a tax bill to make the forgiveness non taxable.  Who knows.  Regardless if it is a 10+ year solution I cannot stand waiting that long.  We have been fiddling around with these damn loans so long I am fed up.

My father is not sure what will happen he just thinks there will be an expansion of the forgiveness programs.  He also is not as debt averse as I am so he thinks if I can refinance them to 3 something I should put money in the market instead.

Ok,  I can kind of see your reasoning about the student loan thing if I squint.

Re: Obamacare, you are correct that it was extremely unlikely for such legislation to pass. That happened because of a very rare convergence of events: Dem president, broad Dem party support (longstanding for decades) to revise health care law, and Dem control of both branches of Congress (an unlikely result of 8 yrs of Bush presidency with unpopular war, plus a nearly unprecedented economic collapse, PLUS a favorable electoral map for Dems that happened to fall in that particular year). And remember, Dems held that majority for a very short time. But you are correct, they passed a bunch of legislation while they did hold it. It's just unlikely to happen again any time soon.

Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Jack on July 18, 2016, 09:32:34 AM
With that said, let's just for a moment imagine that Hillary gets elected and the first thing she does is passes a massive forgiveness bill that would have wiped out our loans.  I understand that is uber unlikely but I guess it is just the thought of that happening that leaves a little kernel of doubt.

What you need to do is do the math.

To find the expected value of Hillary loan forgiveness, multiply the probability of it happening by the forgiven loan amount. Then, to find the expected cost of that not happening, multiply one minus that probability by the amount of extra interest you would pay by choosing not to pay down the loans ahead of time.

Eforgiveness = Pforgiveness * $90k

C(no forgiveness) = (1 - Pforgiveness) * $90K((1 + 6.55%)t - 1)

Pforgiveness = P(Hillary elected) * P(Hillary pushes for loan reform) * P(Congress actually passes loan reform)

I estimate the value of Pforgiveness at about 50% * 1% * 1% = 0.005% (and even that might still be a couple of orders of magnitude too high). Therefore, Eforgiveness = $4.50. Under those assumptions, if you'll pay more than $4.50 in extra interest while waiting for loan forgiveness, it's not worth it -- but of course, your assumptions may vary.

My father is not sure what will happen he just thinks there will be an expansion of the forgiveness programs.  He also is not as debt averse as I am so he thinks if I can refinance them to 3 something I should put money in the market instead.

Well now, that changes the math entirely! Your dad is entirely correct about that. Assuming either that (a) the loans refinanced at 3% would still have the same terms regarding things like deferment, forbearance and forgiveness (either in the Hillary situation or in other circumstances, such as disability or death) or (b) you didn't care about terms that were less favorable in that regard, you would be much better off taking the 7% (market returns) - 3% (loan interest) = 4% arbitrage than paying the opportunity cost of not doing so.

Hillary loan forgiveness in that situation would be mostly irrelevant to the decision-making; it would just be a nice bonus if it ended up occurring.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: RangerOne on July 18, 2016, 12:03:54 PM
Pay the loans off. Hillary is going to lose anyway.

For Hillary to lose Trump will have to win in a land slide. The GOP will support Trump to whatever degree they have to in public to not completely piss off their base. But most establishment GOP, baring some of the quacks, will 100% be vying for Hillary. Every major US corporation wants Hillary and in a close election every trick in the book will be played to make sure she comes out ahead. Trump is too much of a liability unless they come to an understanding where they believe they can completely control him.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: tyleriam on July 18, 2016, 12:13:09 PM
With that said, let's just for a moment imagine that Hillary gets elected and the first thing she does is passes a massive forgiveness bill that would have wiped out our loans.  I understand that is uber unlikely but I guess it is just the thought of that happening that leaves a little kernel of doubt.

What you need to do is do the math.

To find the expected value of Hillary loan forgiveness, multiply the probability of it happening by the forgiven loan amount. Then, to find the expected cost of that not happening, multiply one minus that probability by the amount of extra interest you would pay by choosing not to pay down the loans ahead of time.

Eforgiveness = Pforgiveness * $90k

C(no forgiveness) = (1 - Pforgiveness) * $90K((1 + 6.55%)t - 1)

Pforgiveness = P(Hillary elected) * P(Hillary pushes for loan reform) * P(Congress actually passes loan reform)

I estimate the value of Pforgiveness at about 50% * 1% * 1% = 0.005% (and even that might still be a couple of orders of magnitude too high). Therefore, Eforgiveness = $4.50. Under those assumptions, if you'll pay more than $4.50 in extra interest while waiting for loan forgiveness, it's not worth it -- but of course, your assumptions may vary.

My father is not sure what will happen he just thinks there will be an expansion of the forgiveness programs.  He also is not as debt averse as I am so he thinks if I can refinance them to 3 something I should put money in the market instead.

Well now, that changes the math entirely! Your dad is entirely correct about that. Assuming either that (a) the loans refinanced at 3% would still have the same terms regarding things like deferment, forbearance and forgiveness (either in the Hillary situation or in other circumstances, such as disability or death) or (b) you didn't care about terms that were less favorable in that regard, you would be much better off taking the 7% (market returns) - 3% (loan interest) = 4% arbitrage than paying the opportunity cost of not doing so.

Hillary loan forgiveness in that situation would be mostly irrelevant to the decision-making; it would just be a nice bonus if it ended up occurring.

I like your style!

Another factor I haven't mentioned is wanting freedom and the ability to make some career changes.  I don't feel comfortable doing that until I have eliminated the debt and have the full use of my wife's income during that time.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: RangerOne on July 18, 2016, 12:15:29 PM
I have heard similar advice from a father in law I respect for his practicality with money and high corporate standing. But I think you have to dig deeper with him or at least put his advice in context.

I find that many people 50 years or older lived through a period where home loans had far higher interest rates than 6-7% student loans. However at the same time their bank savings were returning 4 and 5%. I think experience with numbers like these has skewed some of their perspective on how unforgiving student loan debt is at what today is a very high interest rate. Considering their is very little beneficial tax treatment to owing tones of money on student loans, unlike owning a home.

I wouldn't count on forgiveness for your student loans at the amount of money you are making. They tend to like to throw the cutoff for such programs somewhere in the range of where student loan interest tax breaks phase out. Sounds like you are already on that cusp. If anything I think the most likely fix we will see is the ability to refinance to more reasonable interest rates more easily, which I think is a fair compromise to lessen the burden of loans.


Title: Re: To payoff student loans or not (b/c Hillary)
Post by: signhere on July 18, 2016, 03:25:14 PM
I made a (predictably unpopular) post on this topic in the Investor Alley forum a few weeks ago.

Basically, my view is that there WILL, in the near future, be some sort of loan bailout and I've 'put my money where my mouth is' by making only the monthly minimum payments, dragging out repayment as long as possible. I owe roughly 120k @ 7%.

Full disclosure - don't want to sound like a jerk but I was lucky enough to be able to "retire" shortly after graduating so whether I'm right or wrong won't make a significant difference in my lifestyle. If this wasn't the case, I would be more tempted to take the risk averse route and refinance with SoFi or a similar organization, though losing out on the federal loan repayment options/benefits (such as forgiveness for public service jobs) may not make sense for your particular situation.



Title: Re: To payoff student loans or not (b/c Hillary)
Post by: AccidentalMiser on July 18, 2016, 04:12:28 PM
My wife has $90K student loans.  We are hitting them hard this year and have paid off half, expect to pay off the other half by the end of this year.  All but a few thousand are at 6.55%.  My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.  I just think even if something is done it's going to be for lower income people not us.  Also, just to give you the whole picture...the loans are all in my wife's name not mine.  She stays at home, works part time and only makes about $20K per year.

In the back of my head a part of me thinks...maybe my Dad is right.  How stupid am I going to feel if I pay these things off, next year Hillary is elected and they pass some massive student loan forgiveness package.

Curious what ya'll think.

With all due respect, you're not going to get your loans retroactively forgiven.  The money was borrowed from someone.  Someone wants their money back.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: charis on July 19, 2016, 07:58:04 AM
My wife has $90K student loans.  We are hitting them hard this year and have paid off half, expect to pay off the other half by the end of this year.  All but a few thousand are at 6.55%.  My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.  I just think even if something is done it's going to be for lower income people not us.  Also, just to give you the whole picture...the loans are all in my wife's name not mine.  She stays at home, works part time and only makes about $20K per year.

In the back of my head a part of me thinks...maybe my Dad is right.  How stupid am I going to feel if I pay these things off, next year Hillary is elected and they pass some massive student loan forgiveness package.

Curious what ya'll think.

With all due respect, you're not going to get your loans retroactively forgiven.  The money was borrowed from someone.  Someone wants their money back.

This is a good point.  Does anyone have an example of a forgiveness program that was enacted to include past borrowers?  But they could, as they have recently, sweeten current forgiveness programs and repayment plans, which is tantamount to retroactive forgiveness if past borrowers suddenly become eligible.
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Field123 on July 19, 2016, 08:05:38 AM
My wife has $90K student loans.  We are hitting them hard this year and have paid off half, expect to pay off the other half by the end of this year.  All but a few thousand are at 6.55%.  My father, who is a smart guy, former CEO of multiple companies, is telling me not to do it.  He thinks the politicians are going to eventually forgive them so we should just pay the absolute minimum and wait for that.  Our household earns low 6 figures.  I just think even if something is done it's going to be for lower income people not us.  Also, just to give you the whole picture...the loans are all in my wife's name not mine.  She stays at home, works part time and only makes about $20K per year.

In the back of my head a part of me thinks...maybe my Dad is right.  How stupid am I going to feel if I pay these things off, next year Hillary is elected and they pass some massive student loan forgiveness package.

Curious what ya'll think.

With all due respect, you're not going to get your loans retroactively forgiven.  The money was borrowed from someone.  Someone wants their money back.

This is a good point.  Does anyone have an example of a forgiveness program that was enacted to include past borrowers?  But they could, as they have recently, sweeten current forgiveness programs and repayment plans, which is tantamount to retroactive forgiveness if past borrowers suddenly become eligible.

The Revised Pay as You Earn Program (REPAYE) was enacted to retroactively allow for forgiveness for past borrowers, not all of whom would have been eligible for an income based forgiveness program.

https://studentaid.ed.gov/sa/about/announcements/repaye
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: GetItRight on July 19, 2016, 05:16:47 PM
Don't bank on the promises of criminals to give you money stolen from someone else. Continue with your current plan to be paid off around the end of the year, if it takes a little longer so be it. Refi with Earnest or another bank (I used Earnest this last time around) or look at doing 0% CC transfers since you have the cash flow. I did several of those, but of course smaller chunks at a time ($12k-$15k at a time).
Title: Re: To payoff student loans or not (b/c Hillary)
Post by: Jack on July 20, 2016, 09:02:22 AM
Don't bank on the promises of criminals to give you money stolen from someone else.

If loan forgiveness happened, it would not be in the form of the government cancelling the debt outright and leaving the lenders booking the losses. Instead, it would be in the form of the Fed paying off the lenders with newly-created money -- which is not the same thing as "criminals" "stealing" it, by definition, regardless of what you think about the Federal Reserve system.