Author Topic: Ethical Dimensions of Student Loan Income Based Repayment Plans  (Read 48569 times)

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #50 on: October 09, 2013, 10:02:56 PM »
Are you hiding assets? Hiding income from the IRS? Lied anywhere on the application for loan forgiveness? No? Then I say there's no moral dilemma here.

Does the law specifically say "Only those who are unable to work, or are otherwise unable to earn enough to repay the loan in full may take advantage of this program."? If it does...ok, I change my answer. You're taking advantage of the program. But if it merely looks at income, and you truthfully declare all income...I still see no issue.

Even programs like school lunches, food stamps, etc; do you fit their criteria? If yes, then no problem. If not, then don't lie and try to get it anyways. The only time morals would (should?) come into it, is if you're going to an actual charity, i.e. a food bank. The government is not a charity. Neither are banks, or most other large corporations (even some charities aren't actually charities, but that's another discussion).

Nords

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #51 on: October 09, 2013, 11:07:47 PM »
I think you guys are missing the point among all of the ethics preaching.

The government suckered RootofGood.  They convinced him to go to college and stay there.  They paid him to get a degree and an education and then find a job.  Once he did all of that, he was so brainwashed that he became a productive member of society and bought stuff to keep the economy going and paid taxes.  He kept this up for years, and in his apparent blissful ignorance he overlooked a whole slew of ways to bilk the govt out of more "free" programs, all while he slaved away to pay more taxes and build the consumer economy.  Not only that, but he even procreated more little future taxpayers.  Score for the govt!

As we know, the govt could care less whether he repays every penny of his loan (plus interest, deferrals, and phantom income).  The govt just cared about making sure that he didn't bump along the dregs of society on minimum-wage jobs and sucking down welfare or other assistance programs.  He followed the rules like a good little taxpayer.  He stayed out of the safety net, contributed to the GDP, and (along the way) helped dump a little cash back into the govt coffers. 

Let's examine the ethics of my govt-funded education.  I borrowed nearly $125K of the government's money for my college (1978-1982).  Then I borrowed at least that much more to get a graduate degree (1986-89).  I never paid any of it back.  In fact, while I was at college I was paid hundreds of dollars per month.  During the 20 years afterward (1982-2002, including graduate school) the government paid me over [Dr. Evil voice] ONE MILLION DOLLARS [/Evil] (much of it tax-free) to learn how to kill people and break things.  Yet for two decades I never took advantage of any opportunities to do any of the things I'd been trained & paid to do.  Now they'll pay me a pension for the rest of my life, providing that I refrain from killing people and breaking things.  Your tax dollars at work, folks.

By your ethical standards, should I cut off my pension and pay back all of your tax dollars?  Or will someone thank me for my service?

So why not thank RootofGood for his service, and wish him well as he stays off the welfare rolls?  He just followed the rules and did as he was trained to do, and we should be grateful that he's been such a productive member of society.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #52 on: October 10, 2013, 02:03:30 AM »
Nords, that is impressive satire.  You had me going there for a while.  Nicely done.

markbrynn

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #53 on: October 10, 2013, 06:37:39 AM »
My two cents:

If everybody tries to play the system or find the loopholes, then it all falls apart. If that's what you want in your house, town, country, planet, then sure it's your right to do it because it's not illegal.

My favourite example is health care. Under most health care systems you can visit the doctor as often as you want. Sometimes free or sometimes with a co-payment. Either way, it's not enough to pay the doctor's salary or costs for all the materials and medicine you might use. Individually, it might be great to go to the doctor when you get the sniffles; or to get physical therapy instead of exercising yourself to reduce problems. For a society as a whole it's a killer. It's one of the reasons why health care costs so much in some places. Use something when you need it, not because it's "free".

I get it that your government sucks and screw them, but exploiting loopholes does not hurt any of the "idiots" who make the laws. It hurts your neighbours (who pay more taxes). If you don't care about your neighbours, that's fine, but then don't expect them to care about you. Make sure you have the biggest walls and the biggest guns.


CommonCents

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #54 on: October 10, 2013, 07:03:57 AM »
You asked about the ethics rather than legality of this situation, so I'll focus on that in my answer, using two major ethical theories.

Kant simplified says one should only do what you can apply to all. You can't create special rules for you. So imagine if everyone did this action, would it work?  You can plug in any action - lying (no, if everyone lied then no one would believe anyone and the world would be more difficult), kindness (yes, great), or doing this method of failing to pay back loans (no).

Utilitarianism on the other hand cares more about the ends - the result, than how you get there. You consider what creates the greatest happiness - you not paying back (high happy for just one person but a lot of little unhappiness for many taxpayers).   I think again its a no.  Utilitarianism would be ok with setting off the atomic bomb possibly, to avoid more deaths in WWII. Kant on the other hand would not.

So based on this I would say its not ethical. Sorry if not explained well, typing on iPhone at airport.

+1

Lawyers are so adept at justifying unethical but legal behavior.  I'm a lawyer so I'm familiar with this particular rabbit hole.  This is an example that illustrates the truth of the old saying "Just because it's legal, doesn't mean it's ethical."

I'm not sure why you posted this thread in the first place.  Perhaps you're proud of this but I sense an undercurrent of desire for approval from a frugal community.

I can't help you with that.  This reeks of entitlement and exploitation.  I gotta go open a window.

Ironically, I'm a lawyer (and an ethicist - Masters in Bioethics). I know, know, it's an oxymoron.

OP, let me try putting it a different way. If you see a child drowning in a kiddie pool and no one else around, and you could save with no harm to yourself (except maybe wet shoes and pant hems), it may be legal to keep walking*, but it isn't ethical.

Also, as a note, many talk about the morality of this action rather than the ethics as asked. Many ethicists consider these slightly different questions.

*In all states but VT I believe, which has a Good Samaritan law last I looked.
« Last Edit: October 10, 2013, 07:12:27 AM by CommonCents »

seattlecyclone

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #55 on: October 10, 2013, 08:31:03 AM »
CommonCents, I'm curious where you would draw the line as an ethicist. Your Kantian test of whether the student loan program would work if everyone behaved in this manner seems to be a good starting point, but I see so many situations where it might not hold up. What else might you apply it to? Before claiming a tax credit designed for low-income people, should an early retiree consider whether the system would collapse if everyone retired early and claimed that same tax credit? Taking it one step farther, you could make the argument that the system would collapse (and perhaps is already collapsing) if people continue to pay the bare minimum of what the law demands in taxes, since revenue is currently so much less than expenditures. Then might Kantian principles demand that everyone should voluntarily pay as much tax as they think they can afford until the deficit is closed, even if that amount is significantly more than required?

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #56 on: October 10, 2013, 09:27:09 AM »

Ironically, I'm a lawyer (and an ethicist - Masters in Bioethics). I know, know, it's an oxymoron.

Really?  Do people throw rotten vegetables at you?  Do small children follow you in the street and laugh?

You must have heard a lot of lawyer jokes.  Any favorites?

My favorite economist joke is the three econometricians that go hunting.  They see a deer and one shoots, missing a yard to the left.  The second shoots, missing a yard to the right.  The third jumps up and down shouting "we hit it TWICE!"
« Last Edit: October 10, 2013, 09:29:03 AM by brewer12345 »

CommonCents

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #57 on: October 10, 2013, 11:08:27 AM »

Ironically, I'm a lawyer (and an ethicist - Masters in Bioethics). I know, know, it's an oxymoron.

Really?  Do people throw rotten vegetables at you?  Do small children follow you in the street and laugh?

You must have heard a lot of lawyer jokes.  Any favorites?

My favorite economist joke is the three econometricians that go hunting.  They see a deer and one shoots, missing a yard to the left.  The second shoots, missing a yard to the right.  The third jumps up and down shouting "we hit it TWICE!"

My dad made sure to share every one he could find, so I would go in eyes open. :). Only he says they aren't jokes - they're true stories.

A doctor is at a party with a lawyer and a woman comes up to interrupt with a small medical issue. The doctor answers then turns to the lawyer and complains about how annoying that is. "You must get it all the time too - what do you do?"  "Easy," the lawyer replies, "I just send them a bill after and they never ask me again."  "Great idea," the doctor says enthusiastically.  The next day, the doctor received a bill from the lawyer: "$50 - advice"

CommonCents

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #58 on: October 10, 2013, 11:15:25 AM »
CommonCents, I'm curious where you would draw the line as an ethicist. Your Kantian test of whether the student loan program would work if everyone behaved in this manner seems to be a good starting point, but I see so many situations where it might not hold up. What else might you apply it to? Before claiming a tax credit designed for low-income people, should an early retiree consider whether the system would collapse if everyone retired early and claimed that same tax credit? Taking it one step farther, you could make the argument that the system would collapse (and perhaps is already collapsing) if people continue to pay the bare minimum of what the law demands in taxes, since revenue is currently so much less than expenditures. Then might Kantian principles demand that everyone should voluntarily pay as much tax as they think they can afford until the deficit is closed, even if that amount is significantly more than required?

Yes re early retiree. Or not stealing to qualify by falsifying docs.
Re voluntarily paying more, that requires rather a leap from not enough revenue to paying more rather than other options such as cutting costs, raising taxes etc. it doesn't follow that to universalize the action you must pay in extra.

Happy to chat in more depth in about a week and half when I get back from vacation (no internet on it).

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #59 on: October 10, 2013, 11:20:36 AM »

Ironically, I'm a lawyer (and an ethicist - Masters in Bioethics). I know, know, it's an oxymoron.

Really?  Do people throw rotten vegetables at you?  Do small children follow you in the street and laugh?

You must have heard a lot of lawyer jokes.  Any favorites?

My favorite economist joke is the three econometricians that go hunting.  They see a deer and one shoots, missing a yard to the left.  The second shoots, missing a yard to the right.  The third jumps up and down shouting "we hit it TWICE!"

My dad made sure to share every one he could find, so I would go in eyes open. :). Only he says they aren't jokes - they're true stories.

A doctor is at a party with a lawyer and a woman comes up to interrupt with a small medical issue. The doctor answers then turns to the lawyer and complains about how annoying that is. "You must get it all the time too - what do you do?"  "Easy," the lawyer replies, "I just send them a bill after and they never ask me again."  "Great idea," the doctor says enthusiastically.  The next day, the doctor received a bill from the lawyer: "$50 - advice"

Very good one.

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #60 on: October 10, 2013, 03:32:36 PM »
Discussions that revolve around someone taking "advantage" of a "loophole" always brings up timeshare presentations in my mind.

If everyone took advantage of the timeshare presentation, i.e. spend 90 minutes of their time, get a free meal, plus $100 or so in tickets/meal vouchers/cash, and not actually buy a timeshare...the whole system would completely collapse. But the system works fine, thrives even. Why? Because they've run the numbers. They know that there will be some people (in this case, most people) who don't buy a timeshare. They know that most people will try to work the system (do note, that most people who end up buying, probably had every intention of not buying and simply working the system). They also know that some people will lie (you don't have to bring proof of income, just pinky-swear that you make the minimum annual salary that they require). What happens if too many people take advantage of the system? They change it. They could require proof of income, and/or lower the gifts you get.

So it is with this government program. The government wants you to get a college degree. They also want to make sure you are a productive member of society. They could push you to a path that'll lead to crushing student loan debt for the rest of your life (which, many could argue, is exactly what the gov did for a long time). Instead they say "hey, get this awesome degree, and if for some reason you don't make enough money to pay it back...that's ok, we'll call it even after X years". And also "Oh, btw, if you work a job that most people wouldn't, we'll also forgive the loan after X years." They should know that there'll be a number of people that work the system, and also a number of people that plan on working the system but end up doing exactly what the gov wanted all along. If it turns out that too many people are "abusing" the system, then the system will simply change. Well, at least it "should" change.

Mazzinator

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #61 on: October 10, 2013, 03:50:10 PM »
Nords, if i understand you correctly, i think you fall under the category of "you received a benefit from your employer" If you work for me, for x years, i will pay off your sl/pay for your education. If you work for me for xx years, i will give you a pension. You earned it by working!!

IBR is not the same. It is not an employee benefit, tax exemption, tax credit and this is not pslf. IBR has nothing to do with working for the gov or not or how many years.

It's closer to bankruptcy.* He bought something and now is going to pay it back, even though he has the means to pay it back. How many people would file, then come on here and say "woo hoo!! I'm debt free..just filed bankruptcy, finally have a $0 net worth, yippee"

I think it differs from the mortgage example where you can give back your house. There is no assessed value that changes over time.

Quote
If it turns out that too many people are "abusing" the system, then the system will simply change.

So it's ok to abuse the system??


*i realize there are differences with filling bankruptcy.
« Last Edit: October 10, 2013, 04:01:34 PM by Mazzinator »

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #62 on: October 10, 2013, 04:12:08 PM »
So it's ok to abuse the system??

Oops, thought that was quoting me...double-checked and it wasn't. Already made this response though, it'd be a shame to let it go to waste.

I don't see it as abusing.. The people making the system should have calculated just how it'd work, and have a good buffer in case they were wrong. And I'd be surprised if the conversation when coming up with this legislation didn't go something along the lines of:

Person 1 "Well, won't a lot of people try to work the system, getting a free education and then just stop working?"

Person 2 "I'm sure a lot of people will plan on working the system, but then they'll get caught up in the 'American Dream' and be nice little consumers, and will thus have to keep working."

Person 1 "Ok, what about those that succeed on abusing the system?"

Person 2 "Oh, the 0.5% that could still work, but decide they can retire early instead? A statistical anomaly. This program is projected to cause many more people to get a college education, earn more, and thus pay more in taxes; it's worth the chance that a few people clock out early. In fact, the program would still be successful even if 15% took advantage in the manner you suggest; they're still earning more money for a bit and paying higher taxes during that period, we're taxing them on investment income, plus they did repay part of their loans."

Person 1 "But what if more than 15% decide to..."

Person 2 "You're giving the American public too much credit! They won't. But even if they did, we'd just change the program, either directly or indirectly."

Person 1 "How could we change it indirectly?"

Person 2 "Oh, we'll figure out a way to charge a higher tax on people living mostly on a low investment income. Naturally, we'll make sure it doesn't affect us."

Person 1 "Of course not, that'd be just absurd!"

*In unison* "Hahahahahahaha!"

Mazzinator

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #63 on: October 10, 2013, 04:28:31 PM »
Quote
Oops, thought that was quoting me...double-checked and it wasn't. Already made this response though, it'd be a shame to let it go to waste.

I was quoting you :)

Anyways, i see what you're saying, that it's built into the cost, blah blah blah...

My problem is with the "abusing" or taking "advantage" of the system and calling it "frugality." I just don't see it as a good thing.

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #64 on: October 10, 2013, 04:49:45 PM »
I was quoting you :)

So you did...man, I'm just not awake this morning. So the obvious thing to do is gather up the family in a big steel cage and go barreling towards other huge steel cages at high rates of speed, hopefully we'll narrowly avoid the oncoming ones by a foot or two.

My problem is with the "abusing" or taking "advantage" of the system and calling it "frugality." I just don't see it as a good thing.

Would you have a problem with a frugal person who went to a timeshare presentation (and did so honestly, they meet the minimum requirements) with no intention of buying a timeshare, and simply getting a free breakfast and some Disney tickets? I wouldn't, and thus I find no problem with someone taking advantage of other similar setups. If you would...then it makes sense that you'd feel the same toward people taking advantage of other similar setups.

Off-topic just a bit, I am surprised that a forum with so many INTJs has so many people advocating making financial decisions based on emotions, rather than cold (unfeeling) hard logic. One should move out of his parents' home because he needs to grow up, though it would obviously be a hit to his finances. One should not take advantage of various government programs that facilitate early retirement because...um...that's not what they were meant to do? One should pay on a mortgage for a foreclosed house because...well the house is gone so...it's moral or something. I just don't get the whole "well, emotions say this, so that's that" which, if we follow that course of (il)logic, shouldn't we say "well, emotions say to buy this new car, so that's that"?

You do know that every new car you don't buy, is helping to put Americans out of work (foreign or domestic car, they're so intertwined; domestic cars have foreign parts, foreign cars are assembled domestically, etc.)? Wouldn't it be more moral if we go spend all our money so our fellow Americans can all have jobs? Yes, faulty logic for sure, but with a hint of truth. Which is how I see the other arguments.

Sorry, rant over, please continue.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #65 on: October 10, 2013, 08:40:04 PM »
Ironically, I'm a lawyer (and an ethicist - Masters in Bioethics). I know, know, it's an oxymoron.

OP, let me try putting it a different way. If you see a child drowning in a kiddie pool and no one else around, and you could save with no harm to yourself (except maybe wet shoes and pant hems), it may be legal to keep walking*, but it isn't ethical.

Also, as a note, many talk about the morality of this action rather than the ethics as asked. Many ethicists consider these slightly different questions.

*In all states but VT I believe, which has a Good Samaritan law last I looked.

Hey, I saved 4 lives last summer!  I didn't jump into the rip currents to save these suckers though.  The 2 guys that did that almost died themselves.  I waded back to shore, called for the water rescue, patiently waited as I had to explain to the guys I borrowed a cell from that their friend jumped in and might be dead.  Given my professional background, I knew exactly how to communicate with emergency personnel and guide them for the rescue (geographic position, location, address, where to access beach, distance to drowning swimmers, approx speed of water flow, etc).  Right place, right time, quick thinking under duress = 4 live people today.  It kind of ruined an hour or two of my afternoon, which sucked.  But I figure and hour or two of my time is worth four people's lives.  As a bonus, I got to see the Marine's Chinook rescue chopper get waived off since it didn't get to the scene until the 4th and final victim was being pulled out of the water.  Unfortunately, one of the four pulled out of the water was nearly unconscious, but I think he recovered.  I'll never forget one of the ambulance drivers telling me that if the rescue crews didn't get there exactly when they did, these folks likely would have drowned. 

I guess I could have made this up, but here's the link covering the day's excitement.  http://www.wnct.com/story/21013393/rescue-crews-pull-4-swimmers-at-north-topsail-beach

If I had a do-over, I would not jump into the rip tide to save the drowning swimmers because I know the rough stats on that type of rescue.  It usually creates more dead bodies for the recovery team.  And I was likely the best person to calmly coordinate getting the rescuers to the somewhat remote scene and instilling the gravity of the situation to the dispatcher (so they literally call the Marines and the Coast Guard and not just a park ranger). 

As for your hypothetical, not only would I save the kid drowning in the kiddie pool, I'd do it gladly and even get my shoes wet. 

Your analogy doesn't apply to the student loan situation.  I would have to work an additional ~3 years of my life to repay the student loans in full.  Those three years wouldn't be completely wasted, but I never really enjoyed work given the often quotidian nature of the work and the stresses I occasionally endured.  Working 3 years isn't like losing 3 years of my life completely, but there is a great diminution in my quality of life when I have to work (hence my pursuit of very early retirement). 

I work better with numbers.  I'm 33, I have 45 years of life expectancy remaining.  Should I waste 7% of my remaining life toiling away because I took a principled stand on a truly debatable matter of ethics?  If I had a 7% chance of losing my life (or a 100% chance of having a sucky life for 3 years), would I jump in to save the drowning kid in the pool?  More likely than not, but an entirely different hypothetical question, and not one as easily answered. 

For the limited purposes of this discussion, I'll proclaim that I am following my option 1 in my original post.  "I am a stay at home dad, merely taking time off from work to raise my kids for the next 17 years"  Surely no one would begrudge a father his right to properly raise his own children as he sees fit?  Besides, the higher quality future taxpayers I raise, the more revenue the federal government can expect. 

As long as I don't let my kids know the secret of IBR...  Should I tell the kids? - My next "Ethical Dimensions of..." post.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #66 on: October 10, 2013, 08:47:43 PM »
Are you hiding assets? Hiding income from the IRS? Lied anywhere on the application for loan forgiveness? No? Then I say there's no moral dilemma here.

Does the law specifically say "Only those who are unable to work, or are otherwise unable to earn enough to repay the loan in full may take advantage of this program."? If it does...ok, I change my answer. You're taking advantage of the program. But if it merely looks at income, and you truthfully declare all income...I still see no issue.

Even programs like school lunches, food stamps, etc; do you fit their criteria? If yes, then no problem. If not, then don't lie and try to get it anyways. The only time morals would (should?) come into it, is if you're going to an actual charity, i.e. a food bank. The government is not a charity. Neither are banks, or most other large corporations (even some charities aren't actually charities, but that's another discussion).

That seems to sum up my take on the ethics in this situation. I am very careful to disclose everything they ask for, and clarify where there are unknowns.  I did that with the free/reduced school lunch program and determined by their strict (and new to me) criteria, we didn't qualify.  I could easily have filled out the forms without calling the program administrator to verify requirements.  I would have saved $576 each year on the kids' lunches. 

If my perjury was ever discovered, I could plead ignorance to the intricacies of their program.  It is highly unlikely we would ever have been pursued for fraud or for recovery of the wrongfully obtained benefits.  That is irrelevant to my decision making process.  It is fraud in my eyes regardless of the chance of being caught (unless the violations are so widespread and egregious, and known to authorities, and in spite of the knowledge not enforced). 

Many of these government programs and handouts aren't for the "poor"; they extend well into the middle class.  Maybe that is a confusion for some here? 

DebtDerp

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #67 on: October 10, 2013, 09:56:04 PM »
Many of these government programs and handouts aren't for the "poor"; they extend well into the middle class.  Maybe that is a confusion for some here?

I think I may be able to explain it to you. The problem some people have with your situation is that you are using the system to gain something (loan forgiveness) without offering something in return and without an actual need for the thing you are gaining. To many, and I would argue most, that is simply un-American. Our culture is one of self-reliance. There are many in this country that would be embarrassed if they had to rely on a Government subsidy let alone seek one out.

I speak from experience. In college, somehow, I qualified for food stamps. I never even considered applying for the program. In my view if I wasn’t able to feed myself then I was a failure. To you I was foolish to not use the system to my advantage. To others I was being responsible.

I still remember how defeated I felt when one month my junior year I had to ask my dad for $200 to make rent and I couldn’t pay him back for two weeks. I still stress constantly about the money I owe my parents for the portion of my tuition they paid when, in the credit crunch, no one would lend to me. Some of us just have it wired into us that we never want rely on the charity of others or a hand-out from the government.

Now don’t get me wrong, I support the program, but only for those that actually need it. Nobody can make the argument that ibr was meant for a person with over a million dollars in assets.

So hopefully that gives you an idea where others are coming from. It goes back to the deeply embedded American ideals of self-reliance and fierce independence.

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #68 on: October 10, 2013, 10:34:54 PM »
I speak from experience. In college, somehow, I qualified for food stamps. I never even considered applying for the program. In my view if I wasn’t able to feed myself then I was a failure. To you I was foolish to not use the system to my advantage. To others I was being responsible.

I remember my dad having financial problems around the time I was in High School. He'd say that he (or rather, us kids) could qualify for free school lunches (and maybe food stamps too, I dunno), but it was a source of pride that it was never "bad enough" that he had to stoop to that. I could never reconcile that...he's struggling, we're suffering ("suffering" is a relative term, I'd say we suffered more from the stress of the financial situation, we still had food/clothing/shelter); why wouldn't he want to avail of a program that was surely meant for people in our situation? And of course, he'd talk poorly about those who were better off than us and who had food stamps. Couldn't figure out if it was jealousy, or if it was so ingrained that anyone who took advantage of such a program must be immoral somehow (and I dared not ask what he felt of his parents getting food from the government).

And now I'm asking myself...why do we still feel this way? Is it simply an easy way to keep these programs in check (our lawmakers can either figure out exactly how to close every single loophole, ensuring that only those that truly need the program can take advantage of it...or just let society handle it by shaming those who take advantage of the program but didn't really "need" it)? Or perhaps the government would just love that everyone who qualifies for these programs to take advantage of them, making us more dependent on the government, and more willing to give up certain freedoms in exchange for being so well cared for.

Me...I'm a gonna take advantage of any program I can. And I'll try to not be afraid to let everyone know. If I "abuse" a program and it makes people angry, then they can write their representative, vote new people in who'll close the loophole(s), etc. So...am I being immoral for taking advantage of such programs, or super-moral for bringing these issues to light and giving them the chance to change the law (to stop all those people who were doing the same as me, but keeping a low profile).

I'll give a quick example. We weren't in the US at all last year. Not even for a second. We're still required to file taxes, so be it. Turns out, that we still qualify for the child tax credit of $1k per kid. The IRS gave us $2k for two kids, we never sat foot in the US, we didn't claim residency in the US, didn't pay a penny in taxes; there's really no reason they should give us the child tax credit.

Ok, chop chop, go rewrite some laws!

DebtDerp

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #69 on: October 10, 2013, 10:56:15 PM »
I remember my dad having financial problems around the time I was in High School. He'd say that he (or rather, us kids) could qualify for free school lunches (and maybe food stamps too, I dunno), but it was a source of pride that it was never "bad enough" that he had to stoop to that. I could never reconcile that...he's struggling, we're suffering

Well, I can only speak for myself. I certainly was not struggling in College. I probably spent $100 each week at the bars (this was pre-MMM) and I certainly did not need help buying food.

Quote
And of course, he'd talk poorly about those who were better off than us and who had food stamps. Couldn't figure out if it was jealousy, or if it was so ingrained that anyone who took advantage of such a program must be immoral somehow (and I dared not ask what he felt of his parents getting food from the government).

Myself, I don't look down on others who use government programs whether I feel they deserve the program or not. I could never presume to know everything about a person's situation to make a complete and informed judgement. I don't think OP is a bad person for using IBR. I am merely saying that in my opinion he should not qualify for the program and even if I (me, personally) qualified I would not use it.

Quote
So...am I being immoral for taking advantage of such programs, or super-moral for bringing these issues to light and giving them the chance to change the law (to stop all those people who were doing the same as me, but keeping a low profile).

I have a hard time passing judgement on another persona and saying they are right or wrong for using a program (see above). I think all I can really say is that in a similar situation for me it would be wrong to use the program.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #70 on: October 11, 2013, 04:20:49 AM »
I am OK with you not repaying your loans because legally you are able to avoid doing so (especially as I'm not American, so I don't have to pay for them through my taxes).

But you asked whether your actions are ethical.  To answer that, I start from the position that a society wants to encourage ethical behaviour and discourage unethical behaviour.  So in your case, you can afford to repay your loans (either by working longer, or based on what you've posted in other threads, out of your existing assets which greatly exceed your loans).  Not repaying your loans mean that the cost is borne by taxpayers generally.  I'd suggest that most societies would encourage those who can afford to repay their loans to do so, and would want to discourage those who can afford to repay their loans from contriving their circumstances to avoid doing so.  That would suggest your behaviour is unethical. 

So the rules favour you now.  But the risk you take is that, sometime between now and when your loans are written off, the government decides that the risk posed by those taking advantage of the system is so great that they change the rules to stop this type of behaviour.  For your sake I hope they don't - although for the sake of the tens of millions of taxpayers who will instead bear the burden of your written off loans I hope they do!

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #71 on: October 11, 2013, 08:01:25 AM »
So the rules favour you now.  But the risk you take is that, sometime between now and when your loans are written off, the government decides that the risk posed by those taking advantage of the system is so great that they change the rules to stop this type of behaviour.  For your sake I hope they don't - although for the sake of the tens of millions of taxpayers who will instead bear the burden of your written off loans I hope they do!

Even though it would harm me greatly financially, I would be 100% okay with the closure of this loophole or the complete elimination of the IBR program.  After all, as many here have said, when you borrow money, you should expect to pay it back. 

This commented is not in response to your comment specifically: I don't want to pay taxes to support handouts in general, and specifically not to mostly middle class and possibly upper class college or grad school graduates.  The same arguments being put forward that say "OP has the means to repay, whether that is deplete his assets, or work more" could be made for anyone* under the IBR.  What is to keep the starving artist** from getting a "real" job or two to pay the bills?  I couldn't care less whether the artist produces his art or works 80 hours per week flipping burgers (and then produces art), as long as he is repaying his own debt.

Same argument for writers**.  Great, you earned an MFA in Literature from an Ivy League and now you struggle to make $20,000/yr freelancing.  I refuse to work more hours to repay your student loan debt.  Learn a skill and work 80 hours per week if that is what it takes to repay your debt. 

I have never seen a single example of someone who couldn't make sacrifices and work in a different profession, or work harder, longer, and forever if necessary to repay their student loan debts.  To say "OP, you only have to work 3 years longer, but the starving artist or writer might have to work until they are 80!!" means nothing.  In that case, it is a difference of degree, and not a difference of kind. 

Pursuing your passion is great, but don't ask me, the taxpayer, to work at something I'm not passionate about so you can pursue your passions.  I'm not interested in that arrangement at all. 

Since I don't have enough money to actually buy my congressmen (I may have a large portfolio, but not that large), I have to resort to the best means of protest available.  My own form of non-violent civil disobedience - mocking the system of doling out others' cash to those that aren't in really need. 


*I'll except the terminally ill or seriously disabled from this category
** I'm just being an ass to artists and writers because I actually love them and appreciate the aesthetics they create to enliven our otherwise drab world.  However, the stereotypes of artists and writers make easy whipping boys.

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #72 on: October 11, 2013, 09:30:12 AM »
Since I don't have enough money to actually buy my congressmen (I may have a large portfolio, but not that large), I have to resort to the best means of protest available.  My own form of non-violent civil disobedience - mocking the system of doling out others' cash to those that aren't in really need. 

So let me get this straight, you are protesting the system that yourself have taken advantage of and engaging in? So you don't have an ethical dilemma at all now? Why did it take so long for you to admit this?

I'm calling BS. I don't really buy it all.. on one hand you're bragging about exploiting these loopholes. Now your protesting it.

All I'm hearing are excuses trying justify some sort of legal theft and blaming everyone (like Congress) but yourself. This is why so many people are against a welfare system, because people like you take advantage of it. It screws it up for the people who actually need it.

DebtDerp

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #73 on: October 11, 2013, 10:14:16 AM »
The same arguments being put forward that say "OP has the means to repay, whether that is deplete his assets, or work more" could be made for anyone* under the IBR.  What is to keep the starving artist** from getting a "real" job or two to pay the bills?  I couldn't care less whether the artist produces his art or works 80 hours per week flipping burgers (and then produces art), as long as he is repaying his own debt.

Same argument for writers**.  Great, you earned an MFA in Literature from an Ivy League and now you struggle to make $20,000/yr freelancing.  I refuse to work more hours to repay your student loan debt.  Learn a skill and work 80 hours per week if that is what it takes to repay your debt. 

I have never seen a single example of someone who couldn't make sacrifices and work in a different profession, or work harder, longer, and forever if necessary to repay their student loan debts.  To say "OP, you only have to work 3 years longer, but the starving artist or writer might have to work until they are 80!!" means nothing.  In that case, it is a difference of degree, and not a difference of kind.

This is actually a really good point. Is someone more deserving of loan forgiveness if they knowingly took out huge loans without ever having the expectation of paying them back? Perhaps the larger question we should be asking is why don’t we offer a standard level of higher education to any individual that graduates high school at no cost to the individual (I know some states do this). Then those that seek better schools, more expensive programs, and additional education will have to pay for that through loans, scholarships, a job, etc. Then, maybe, we could do away with ibr altogether.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #74 on: October 11, 2013, 10:37:40 AM »
Since I don't have enough money to actually buy my congressmen (I may have a large portfolio, but not that large), I have to resort to the best means of protest available.  My own form of non-violent civil disobedience - mocking the system of doling out others' cash to those that aren't in really need. 

So let me get this straight, you are protesting the system that yourself have taken advantage of and engaging in? So you don't have an ethical dilemma at all now? Why did it take so long for you to admit this?

I'm calling BS. I don't really buy it all.. on one hand you're bragging about exploiting these loopholes. Now your protesting it.

All I'm hearing are excuses trying justify some sort of legal theft and blaming everyone (like Congress) but yourself. This is why so many people are against a welfare system, because people like you take advantage of it. It screws it up for the people who actually need it.

Where is this need of which you speak?  How do we define "need"?  Congress has defined "need", and if we accept their definition, I am in need.  I'm okay availing myself of the freely given benefits, while concurrently disagreeing with the system that provides those benefits. 

I disagree with most "tax expenditures" (the costs of providing tax credits and deductions):
Here is a good illustration of our tax expenditures: http://www.economist.com/node/21553473

We spend $87 billion per year on the mortgage interest tax deduction.  Do we really need to subsidize the overconsumption of McMansions?  It wastes resources, hurts the environment, and doesn't even help those most in need (renters and lower income homebuyers with smaller mortgages who can't itemize on their 1040).  I would expect that everyone on this forum that disagrees with my usage of the IBR repayment plan would also opt out of the mortgage interest deduction on ethical grounds.  After all, you don't need the deduction.  Sell your house and move to a cheaper house if you can't afford your mortgage.  As a taxpayer, I'm not interested in subsidizing your lifestyle. 

Cap gains and dividends - $97 billion/yr.  Why is there any difference in this income versus earned income that is taxed at a hugely higher rate (including payroll taxes).  Again, on ethical grounds, you don't need the lower tax rate, so treat this income as earned income and pay the higher rate. 

Tax free employer provided health insurance - $197 billion/yr - Oh, don't feel like paying taxes on this employer provided benefit?  Too bad, you don't need the deduction, so add that amount to your earned income. 

On a different note, if you are FI, don't file for social security when the time comes.  If you don't need it, why should you bankrupt the system that is designed to provide a social safety net for those in need of support in old age. 

Getting into the question of "need" is a very tricky proposition.  When it comes to paying taxes or receiving benefits from the government, I focus on what the laws and regulations say.  I say that is ethical.  If everyone acted in this manner and it was detrimental, we, the people can change the laws (through our representatives).  I say that satisfies Kant's categorical imperative and the utilitarian notion of greatest good for all. 

Our system of laws outlines the social contract between the people and the government we have created.  If there are problems with the laws, don't blame the people for availing themselves of the existing laws.  Seek redress of your grievances with the broken system of laws. 

To touch on your comment about bragging about my reduced payments and potential forgiveness of debt, I wouldn't characterize it as bragging.  I mentioned it because it is an important government program that many here may benefit from.  If you consider it unethical to participate in the program, that is your choice, but some may be interested in learning more about it (whether they seek eventual forgiveness of debt or simply assistance with cash flow during periods of low income). 

Oddly enough, the government actually spends significant money promoting social programs like the IBR, so I am doing them a free service by promoting their various programs.  Think of what a GS-11 or GS-13 social media marketing exec would cost. 

Undecided

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #75 on: October 11, 2013, 11:31:28 AM »

I disagree with most "tax expenditures" (the costs of providing tax credits and deductions):
Here is a good illustration of our tax expenditures: http://www.economist.com/node/21553473

(emphasis added)

That's just not how I see the programs you discuss. They're not independent costs, or expenditures---they're considerations that impact on what the gross tax rates are. If the government and its people are happy collecting $X tax revenue, how they decide to get there (flat rate with no exclusions, progressive rates with no exclusions, either variant with exclusions or either variant with even more exclusions) doesn't magically turn the amounts that aren't collected into "tax expenditures" unless you think that the government is entitled to literally every dollar in the first place, and only graciously allows us to keep some of them. 

Mr.Macinstache

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #76 on: October 11, 2013, 11:51:19 AM »
Need: someone who cannot pay or does not have the ability to pay.

RoG, I think I understand where you are coming from. You have objections to some things that you are forced to pay for in the form of taxes, yes? And IBR is your means of getting that back in some form?

I would disagree that, that is any form of civil disobedience. Civil disobedience is fought on moral or ethical grounds and sometime involves paying a price (Rosa Parks). Saying that just because it's legal ≠ moral or ethical. What you are doing is just exasperating the problem you're trying to protest against solely for your own good.

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #77 on: October 11, 2013, 02:54:47 PM »
We spend $87 billion per year on the mortgage interest tax deduction.  Do we really need to subsidize the overconsumption of McMansions?  It wastes resources, hurts the environment, and doesn't even help those most in need (renters and lower income homebuyers with smaller mortgages who can't itemize on their 1040).  I would expect that everyone on this forum that disagrees with my usage of the IBR repayment plan would also opt out of the mortgage interest deduction on ethical grounds.  After all, you don't need the deduction.  Sell your house and move to a cheaper house if you can't afford your mortgage.  As a taxpayer, I'm not interested in subsidizing your lifestyle.

Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

Getting into the question of "need" is a very tricky proposition.  When it comes to paying taxes or receiving benefits from the government, I focus on what the laws and regulations say.  I say that is ethical.  If everyone acted in this manner and it was detrimental, we, the people can change the laws (through our representatives).  I say that satisfies Kant's categorical imperative and the utilitarian notion of greatest good for all.

I treat the laws the way they're written. If they said "This program is for those who cannot pay their bills" then I'd have to decide if I can, or cannot, pay my bills. But if it says "This program is for those with an AGI under X, and assets less than Y" then that's a no-brainer; either my AGI and assets are under the amounts and I qualify, or they're not and I don't.

Our system of laws outlines the social contract between the people and the government we have created.  If there are problems with the laws, don't blame the people for availing themselves of the existing laws.  Seek redress of your grievances with the broken system of laws. 

My sentiments exactly. If you don't like it when people play a game by the rules, change the rules.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #78 on: October 11, 2013, 09:00:45 PM »
Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

It's all one big pot of money.  It seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need (again, per the "need" definition above). 

I guess I could contort the picture of my finances and say "I'm in need".  I don't work because my job ended unexpectedly.  I have 3 kids and I take care of them as their primary caregiver.  My wife's take home pay doesn't quite cover our expenses.  I would have to sell off my retirement assets or a car or get a 2nd mortgage on the house to keep paying my student loans.  Getting a job is tricky because I have all these kids and the job market is tough.  I'm super stressed out, so I think I'm going to take up boating to get my mind off things.  Boats ain't cheap and boat fuel ain't cheap either.  And I need a new truck to tow the boat.  Wow, I'm outta cash!  Oh woe is me, I'm in need now.  :) 

Does that make it ethical for me to participate in the IBR program, since I'm "genuinely" in need now (due to super spendy dumb choices)? 


beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #79 on: October 11, 2013, 09:06:32 PM »
Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

It's all one big pot of money.  It seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need (again, per the "need" definition above). 

I guess I could contort the picture of my finances and say "I'm in need".  I don't work because my job ended unexpectedly.  I have 3 kids and I take care of them as their primary caregiver.  My wife's take home pay doesn't quite cover our expenses.  I would have to sell off my retirement assets or a car or get a 2nd mortgage on the house to keep paying my student loans.  Getting a job is tricky because I have all these kids and the job market is tough.  I'm super stressed out, so I think I'm going to take up boating to get my mind off things.  Boats ain't cheap and boat fuel ain't cheap either.  And I need a new truck to tow the boat.  Wow, I'm outta cash!  Oh woe is me, I'm in need now.  :) 

Does that make it ethical for me to participate in the IBR program, since I'm "genuinely" in need now (due to super spendy dumb choices)?

The difference I see is that the law authorizing IBR authorized it for those specifically experiencing financial hardship (20 USC 1098E).   No such specification exists for the mortgage interest deduction (26 USC 163).

liquidbanana

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #80 on: October 12, 2013, 03:34:58 AM »
Y'all realize that the Department of Education will make more profits than Exxon Mobile this year, right? I would paste a link, but I'm a luddite on a tablet, so I have no idea how, but you cwn google it. :-)

Just saying.

Anyway, I wouldn't try what the Op is doing as you cannot trust Congress. That debt is just going to get bigger and bigger, and there is no true gaurantee that it will be forgiven.
« Last Edit: October 12, 2013, 03:41:24 AM by liquidbanana »

dragoncar

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #81 on: October 13, 2013, 07:46:12 PM »
Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

It's all one big pot of money.  It seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need (again, per the "need" definition above). 

I guess I could contort the picture of my finances and say "I'm in need".  I don't work because my job ended unexpectedly.  I have 3 kids and I take care of them as their primary caregiver.  My wife's take home pay doesn't quite cover our expenses.  I would have to sell off my retirement assets or a car or get a 2nd mortgage on the house to keep paying my student loans.  Getting a job is tricky because I have all these kids and the job market is tough.  I'm super stressed out, so I think I'm going to take up boating to get my mind off things.  Boats ain't cheap and boat fuel ain't cheap either.  And I need a new truck to tow the boat.  Wow, I'm outta cash!  Oh woe is me, I'm in need now.  :) 

Does that make it ethical for me to participate in the IBR program, since I'm "genuinely" in need now (due to super spendy dumb choices)?

The difference I see is that the law authorizing IBR authorized it for those specifically experiencing financial hardship (20 USC 1098E).   No such specification exists for the mortgage interest deduction (26 USC 163).

It says "partial financial hardship," which it explicitly defines, not "involuntary financial hardship."

Just because we mustachians have skills to live well on 150% of the poverty line does not mean we are not experiencing a partial financial hardship.  I'm fact, most here would characterize that level of debt on that income as a financial EMERGENCY.

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #82 on: October 13, 2013, 07:53:36 PM »
Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

It's all one big pot of money.  It seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need (again, per the "need" definition above). 

I guess I could contort the picture of my finances and say "I'm in need".  I don't work because my job ended unexpectedly.  I have 3 kids and I take care of them as their primary caregiver.  My wife's take home pay doesn't quite cover our expenses.  I would have to sell off my retirement assets or a car or get a 2nd mortgage on the house to keep paying my student loans.  Getting a job is tricky because I have all these kids and the job market is tough.  I'm super stressed out, so I think I'm going to take up boating to get my mind off things.  Boats ain't cheap and boat fuel ain't cheap either.  And I need a new truck to tow the boat.  Wow, I'm outta cash!  Oh woe is me, I'm in need now.  :) 

Does that make it ethical for me to participate in the IBR program, since I'm "genuinely" in need now (due to super spendy dumb choices)?

The difference I see is that the law authorizing IBR authorized it for those specifically experiencing financial hardship (20 USC 1098E).   No such specification exists for the mortgage interest deduction (26 USC 163).

That 20 USC 1098E that you reference, is that the one where Congress specifically developed and codified a formula to define Partial Financial Hardship? 
Like this?

(3) Partial financial hardship
The term “partial financial hardship”, when used with respect to a borrower, means that for such borrower—
(A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or C (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under section 1078 (b)(9)(A)(i) or 1087e (d)(1)(A) of this title, based on a 10-year repayment period; exceeds
(B) 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which—
(i) the borrower’s, and the borrower’s spouse’s (if applicable), adjusted gross income; exceeds
(ii) 150 percent of the poverty line applicable to the borrower’s family size as determined under section 9902 (2) of title 42.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #83 on: October 13, 2013, 08:34:38 PM »
Awesome point. If you're like me, you view tax deductions/credits in the same light as any other government program that benefits you financially (food stamps, student loan forgiveness, "free" medical care). But I believe many (most?) don't view them in the same light.

It's all one big pot of money.  It seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need (again, per the "need" definition above). 

I guess I could contort the picture of my finances and say "I'm in need".  I don't work because my job ended unexpectedly.  I have 3 kids and I take care of them as their primary caregiver.  My wife's take home pay doesn't quite cover our expenses.  I would have to sell off my retirement assets or a car or get a 2nd mortgage on the house to keep paying my student loans.  Getting a job is tricky because I have all these kids and the job market is tough.  I'm super stressed out, so I think I'm going to take up boating to get my mind off things.  Boats ain't cheap and boat fuel ain't cheap either.  And I need a new truck to tow the boat.  Wow, I'm outta cash!  Oh woe is me, I'm in need now.  :) 

Does that make it ethical for me to participate in the IBR program, since I'm "genuinely" in need now (due to super spendy dumb choices)?

The difference I see is that the law authorizing IBR authorized it for those specifically experiencing financial hardship (20 USC 1098E).   No such specification exists for the mortgage interest deduction (26 USC 163).

That 20 USC 1098E that you reference, is that the one where Congress specifically developed and codified a formula to define Partial Financial Hardship? 
Like this?

(3) Partial financial hardship
The term “partial financial hardship”, when used with respect to a borrower, means that for such borrower—
(A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or C (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under section 1078 (b)(9)(A)(i) or 1087e (d)(1)(A) of this title, based on a 10-year repayment period; exceeds
(B) 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which—
(i) the borrower’s, and the borrower’s spouse’s (if applicable), adjusted gross income; exceeds
(ii) 150 percent of the poverty line applicable to the borrower’s family size as determined under section 9902 (2) of title 42.

Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #84 on: October 13, 2013, 08:40:54 PM »
If you have to ask whether something is ethical, you already know in your heart of hearts that it's wrong.  You're hoping that someone will convince you otherwise. 

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #85 on: October 13, 2013, 08:42:25 PM »
Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

They may have screwed up in drafting the legislation, but they made it pretty clear what they meant by Partial Financial Hardship, and I am certain I fall into that category.  It seems like a strange outcome of the law, but they intentionally drafted the language in this manner. 

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #86 on: October 13, 2013, 08:45:08 PM »
If you have to ask whether something is ethical, you already know in your heart of hearts that it's wrong.  You're hoping that someone will convince you otherwise.

I don't think so.  I think this is a legitimately debatable question of ethics.  The fact that there are some saying they don't consider this unethical while others disagree indicates to me this is a grey area open to interpretation.  I more or less suspected that would be the outcome. 

MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #87 on: October 13, 2013, 08:48:36 PM »
Are you hiding assets?
i believe the discussion is all about hiding assets.  Having a degree, a healthy body and the opportunity to work, the opportunity to earn . . . Those things ARE huge assets.  If you can afford to retire and not work, great.  Good for you.  But if one of your reasons to retire is that it allows you to wriggle your way out of a debt, it's hard to call that ethical -- even if you can get away with it legally. 

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #88 on: October 13, 2013, 08:55:56 PM »
Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

They may have screwed up in drafting the legislation, but they made it pretty clear what they meant by Partial Financial Hardship, and I am certain I fall into that category.  It seems like a strange outcome of the law, but they intentionally drafted the language in this manner.

I'm not sure what your response has to do with mine.  You said "it seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need."  I'm saying, no, it's not arbitrary.  It's very clearly spelled out in the law.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #89 on: October 13, 2013, 09:04:04 PM »
Are you hiding assets?
i believe the discussion is all about hiding assets.  Having a degree, a healthy body and the opportunity to work, the opportunity to earn . . . Those things ARE huge assets.  If you can afford to retire and not work, great.  Good for you.  But if one of your reasons to retire is that it allows you to wriggle your way out of a debt, it's hard to call that ethical -- even if you can get away with it legally.

We can all work until our backs are broken and fingers worn to nubs.  But must we?  How do you compel one to work? 

RootofGood

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #90 on: October 13, 2013, 09:11:05 PM »
Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

They may have screwed up in drafting the legislation, but they made it pretty clear what they meant by Partial Financial Hardship, and I am certain I fall into that category.  It seems like a strange outcome of the law, but they intentionally drafted the language in this manner.

I'm not sure what your response has to do with mine.  You said "it seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need."  I'm saying, no, it's not arbitrary.  It's very clearly spelled out in the law.

I don't follow.  I'm in need (per the 20 USC 1098E definition) and I qualify for tax credits and deductions, many of which are tied to having "low" income (which means I "need" the credit or deduction.  Low in the latter case being relative, and varying from tens of thousands of dollars in income to over $100,000. 

That's why it is an arbitrary distinction to think me ethical for taking advantage of tax deductions and credits that I don't "need" (MrsPete would put me back in the harnesses after all!) yet simultaneously think me unethical for taking advantage of a student loan repayment program that I don't "need".  The money is all coming out of the same pocket on Uncle Sam's perilously low hanging trousers. 

brewer12345

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #91 on: October 13, 2013, 09:13:14 PM »
Are you hiding assets?
i believe the discussion is all about hiding assets.  Having a degree, a healthy body and the opportunity to work, the opportunity to earn . . . Those things ARE huge assets.  If you can afford to retire and not work, great.  Good for you.  But if one of your reasons to retire is that it allows you to wriggle your way out of a debt, it's hard to call that ethical -- even if you can get away with it legally.

We can all work until our backs are broken and fingers worn to nubs.  But must we?  How do you compel one to work?

Esoteric ethical considerations or vague disapproval, apparently.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #92 on: October 13, 2013, 10:37:34 PM »
Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

They may have screwed up in drafting the legislation, but they made it pretty clear what they meant by Partial Financial Hardship, and I am certain I fall into that category.  It seems like a strange outcome of the law, but they intentionally drafted the language in this manner.

I'm not sure what your response has to do with mine.  You said "it seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need."  I'm saying, no, it's not arbitrary.  It's very clearly spelled out in the law.

I don't follow.  I'm in need (per the 20 USC 1098E definition) and I qualify for tax credits and deductions, many of which are tied to having "low" income (which means I "need" the credit or deduction.  Low in the latter case being relative, and varying from tens of thousands of dollars in income to over $100,000. 

That's why it is an arbitrary distinction to think me ethical for taking advantage of tax deductions and credits that I don't "need" (MrsPete would put me back in the harnesses after all!) yet simultaneously think me unethical for taking advantage of a student loan repayment program that I don't "need".  The money is all coming out of the same pocket on Uncle Sam's perilously low hanging trousers.

I think he's saying that if you truly believe it to be a drafting error, then it's immoral to take advantage.  I might agree, but don't believe it's a drafting error.  I think that having student loans and income (voluntary or involuntarily) below 150% of federal poverty level is indeed a hardship. 

Is it voluntary?  Well I'd say it's voluntary in all cases because nobody made the student take out student loans.  Choosing to major in underwater basketweaving and not paying your loans when you inevitably don't get a high paying job is not any better than keeping earnings low IMO.  But that's the situation the law is designed for.

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #93 on: October 13, 2013, 11:33:18 PM »
The difference I see is that the law authorizing IBR authorized it for those specifically experiencing financial hardship (20 USC 1098E).   No such specification exists for the mortgage interest deduction (26 USC 163).

Uh-oh, he's got you there. They specifically say financial hardship. Well, as long as they don't go and tell you how they define it, we'll have to use our own definition....

That 20 USC 1098E that you reference, is that the one where Congress specifically developed and codified a formula to define Partial Financial Hardship? 
Like this?

(3) Partial financial hardship
The term “partial financial hardship”, when used with respect to a borrower, means that for such borrower—
(A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or C (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under section 1078 (b)(9)(A)(i) or 1087e (d)(1)(A) of this title, based on a 10-year repayment period; exceeds
(B) 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which—
(i) the borrower’s, and the borrower’s spouse’s (if applicable), adjusted gross income; exceeds
(ii) 150 percent of the poverty line applicable to the borrower’s family size as determined under section 9902 (2) of title 42.

Ooooh...they did go and define it. You may not feel that you're experiencing a financial hardship, but according to their definition, you are. Also doesn't seem to say anything about whether this financial hardship must be involuntary or not.

It truly is a shame we must go by their definitions. I mean, the law might say that all vehicles must obey the speed limit...I was hoping to use my personal definition of what a vehicle is (which, btw, is any three-winged machine which is driven by no less by ten licensed pilots, in the water). But, I have to follow "their" definition, which for some reason includes cars and trucks.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #94 on: October 14, 2013, 12:34:43 AM »
Yup, that's the one!  That's the one where Congress has codified in law the difference between using IBR and "taking advantage of tax credits and deductions" like mortgage interest deduction, where there is no statement of need.  In other words, it's not arbitrary: Congress has very specifically delineated the difference.

They may have screwed up in drafting the legislation, but they made it pretty clear what they meant by Partial Financial Hardship, and I am certain I fall into that category.  It seems like a strange outcome of the law, but they intentionally drafted the language in this manner.

I'm not sure what your response has to do with mine.  You said "it seems an arbitrary distinction between taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need."  I'm saying, no, it's not arbitrary.  It's very clearly spelled out in the law.

I don't follow.  I'm in need (per the 20 USC 1098E definition) and I qualify for tax credits and deductions, many of which are tied to having "low" income (which means I "need" the credit or deduction.  Low in the latter case being relative, and varying from tens of thousands of dollars in income to over $100,000. 

That's why it is an arbitrary distinction to think me ethical for taking advantage of tax deductions and credits that I don't "need" (MrsPete would put me back in the harnesses after all!) yet simultaneously think me unethical for taking advantage of a student loan repayment program that I don't "need".  The money is all coming out of the same pocket on Uncle Sam's perilously low hanging trousers.

MrsPete was never in the thread where I quoted you saying the difference between "taking advantage of tax credits and deductions one doesn't need (as "need" is defined a few posts prior) and taking advantage of a repayment program that one doesn't need" was arbitrary.  "Arbitrary" means randomly or by personal whim.  The difference is not arbitrary - mortgage interest deduction is not designed to ameliorate financial hardship.  Nor are capital gains tax rates or tax free employer provided health insurance, which you also mentioned.  Instead, the difference is quite clearly delineated in the law. 

And yes, you meet the definition of partial financial hardship.  That has nothing to do with anything that I've said.

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #95 on: October 14, 2013, 12:36:58 AM »
It truly is a shame we must go by their definitions. I mean, the law might say that all vehicles must obey the speed limit...I was hoping to use my personal definition of what a vehicle is (which, btw, is any three-winged machine which is driven by no less by ten licensed pilots, in the water). But, I have to follow "their" definition, which for some reason includes cars and trucks.

Maybe it's just because you quoted me, but it sounds like you're mocking me.  When have I suggested using any other definition than the one in the law (the one that I cited)?
« Last Edit: October 14, 2013, 12:38:37 AM by beltim »

NumberJohnny5

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #96 on: October 14, 2013, 01:23:51 AM »
Maybe it's just because you quoted me, but it sounds like you're mocking me.  When have I suggested using any other definition than the one in the law (the one that I cited)?

Not my intention. Too busy to reread the entire thread, but I think it went like this:

OP says "Hey, look at what I'm doing, think it's ethical?"

Many say "NO! That's not the intent!"

Few say "I guess it's ok."

I say something like "Does the law specifically say...."

Someone points out that the legislation does in fact say something to the effect of "This is designed for people experiencing a financial hardship." Well, now all the naysayers have a point...the legislation says it's for people experiencing a financial hardship, and I think most here would says that the OP is in fact NOT experiencing a financial hardship. The definition of "financial hardship" may vary from person to person, but I'd agree that most people (including me) would not think the OP is experiencing any financial hardship.

But then someone points out that the legislation specifically defined what they meant by "financial hardship". Ah...well, it seems that using that particular black-and-white definition...yes, yes the OP is in fact experiencing a financial hardship. A self-imposed financial hardship that he doesn't really mind, but according to the definition, a financial hardship nonetheless.

I word my post to mimic my reaction to reading the above two points. "Uh-oh, they might have you OP, it says it's for people experiencing a financial hardship." And then "Oh...they define it...I disagree with their definition, but if it's the definition they want to use, so be it...carry on OP, you're in the clear." I'm sure some people will point out that they disagree with the definition, but I'm trying to preempt their arguments with "hey, their law their definition."

To me, it's pretty clear. The legislation does say it's for people experiencing a partial financial hardship. It goes on to define it. It's written in black-and-white language, so I view it in black-and-white. If you meet the criteria, then it's a program you may take advantage of. If you do not meet the criteria, then you cannot take advantage of it (though you're welcome to try to change your circumstances to qualify).

The OP qualifies for the program, so the OP may take advantage of it. If someone thinks the OP should not qualify then they should campaign to get those laws changed (repeal the entire program, change the definition of "financial hardship", put limits on how much can be discharged and/or what degrees can have loans forgiven, etc.). I don't see an ethical dilemma here (side note...anyone else notice that suddenly dilemna should be spelled dilemma?).

beltim

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #97 on: October 14, 2013, 01:39:59 AM »
Maybe it's just because you quoted me, but it sounds like you're mocking me.  When have I suggested using any other definition than the one in the law (the one that I cited)?

Not my intention. Too busy to reread the entire thread, but I think it went like this:

OP says "Hey, look at what I'm doing, think it's ethical?"

Many say "NO! That's not the intent!"

Few say "I guess it's ok."

I say something like "Does the law specifically say...."

Someone points out that the legislation does in fact say something to the effect of "This is designed for people experiencing a financial hardship." Well, now all the naysayers have a point...the legislation says it's for people experiencing a financial hardship, and I think most here would says that the OP is in fact NOT experiencing a financial hardship. The definition of "financial hardship" may vary from person to person, but I'd agree that most people (including me) would not think the OP is experiencing any financial hardship.

But then someone points out that the legislation specifically defined what they meant by "financial hardship". Ah...well, it seems that using that particular black-and-white definition...yes, yes the OP is in fact experiencing a financial hardship. A self-imposed financial hardship that he doesn't really mind, but according to the definition, a financial hardship nonetheless.

I word my post to mimic my reaction to reading the above two points. "Uh-oh, they might have you OP, it says it's for people experiencing a financial hardship." And then "Oh...they define it...I disagree with their definition, but if it's the definition they want to use, so be it...carry on OP, you're in the clear." I'm sure some people will point out that they disagree with the definition, but I'm trying to preempt their arguments with "hey, their law their definition."

To me, it's pretty clear. The legislation does say it's for people experiencing a partial financial hardship. It goes on to define it. It's written in black-and-white language, so I view it in black-and-white. If you meet the criteria, then it's a program you may take advantage of. If you do not meet the criteria, then you cannot take advantage of it (though you're welcome to try to change your circumstances to qualify).

The OP qualifies for the program, so the OP may take advantage of it. If someone thinks the OP should not qualify then they should campaign to get those laws changed (repeal the entire program, change the definition of "financial hardship", put limits on how much can be discharged and/or what degrees can have loans forgiven, etc.). I don't see an ethical dilemma here (side note...anyone else notice that suddenly dilemna should be spelled dilemma?).

Ah, I see.  It just seemed strange to me since I'm the one who quoted the law (for a different purpose), and seemed like you were piling on by quoting RootofGood's response to me. It's all good now - thanks for the details.

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #98 on: October 14, 2013, 07:42:55 AM »
To me, it's pretty clear. The legislation does say it's for people experiencing a partial financial hardship. It goes on to define it. It's written in black-and-white language, so I view it in black-and-white. If you meet the criteria, then it's a program you may take advantage of. If you do not meet the criteria, then you cannot take advantage of it (though you're welcome to try to change your circumstances to qualify).

The OP qualifies for the program, so the OP may take advantage of it. If someone thinks the OP should not qualify then they should campaign to get those laws changed (repeal the entire program, change the definition of "financial hardship", put limits on how much can be discharged and/or what degrees can have loans forgiven, etc.).
Finally.  Thank goodness.

Now we can get back to work on the precise definition of "retirement" and whether the mortgage is paid off first...

I don't see an ethical dilemma here (side note...anyone else notice that suddenly dilemna should be spelled dilemma?).
It always has been, but it's frequently confused with similar words.  Luckily Grammar Girl is all over it:
http://www.quickanddirtytips.com/education/grammar/it-dilemma-or-dilemna
http://www.dilemna.info/index.php
http://www.worldwidewords.org/qa/qa-dil1.htm
Quote
The reason for it seems to be a mental confusion with other words in English that are spelled with mn but said as mm, including autumn, hymn, condemn, solemn and column.

MrsPete

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Re: Ethical Dimensions of Student Loan Income Based Repayment Plans
« Reply #99 on: October 14, 2013, 10:08:41 AM »
Are you hiding assets?
i believe the discussion is all about hiding assets.  Having a degree, a healthy body and the opportunity to work, the opportunity to earn . . . Those things ARE huge assets.  If you can afford to retire and not work, great.  Good for you.  But if one of your reasons to retire is that it allows you to wriggle your way out of a debt, it's hard to call that ethical -- even if you can get away with it legally.

We can all work until our backs are broken and fingers worn to nubs.  But must we?  How do you compel one to work?
Is your back broken?  Are your fingers worn to nubs?  Are you physically able to work without undue physical stress?  If so, then you're extending the argument to a ridiculous point. 

If you owe money and cannot pay it without bringing in a paycheck, you're not at the point you should stop working voluntarily.