Student Loans New student loans grad school

[joshuakz]

Jurisdiction

New York

I am attending a graduate school in New York City (NYU - New York University). My question is about the student loan forgiveness that is going on right now. Someone told me that graduate school wouldn't be covered whether from federal student loans or another source. Is this true? Could I discharge a massive loan that I have in bankruptcy?

 

[army judge]

Could I discharge a massive loan that I have in bankruptcy?

Not bloody likely mate.

Can You Discharge Your Student Loans In Bankruptcy?
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Someone told me that graduate school wouldn't be covered whether from federal student loans or another source. Is this true?

That entire scheme is facing legal challenges.

President Joe Biden's administration is scaling back his federal student loan cancellation program to protect against legal challenges, including two suits filed this week -- with new guidelines now excluding at least hundreds of thousands of borrowers initially told they qualified for the forgiveness.

On Thursday, the Department of Education quietly updated its instructions on who qualifies for the debt forgiveness program of up to $20,000 for some Americans. (NPR first reported the change.)

The new guidance excludes people who took out federal loans that, while they were guaranteed by the government, were technically handled by private banks. As of Thursday, those borrowers -- with Perkins loans and Federal Family Education Loans (FFEL) -- can no longer qualify for the forgiveness program.

That change was made the same day as a lawsuit was filed by six Republican-led states targeting that very part of the program. The complaint argued that the debt cancellation would decrease revenue from interest payments for the private banks who manage those loans.

While about 4 million Americans in total have FFEL or Perkins loans, an administration official told ABC News that only about 770,000 of those borrowers will be affected by the change in the debt cancellation policy.

Biden administration scales back student loan forgiveness for some, amid lawsuits
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The Biden administration quietly changed the fine print of it's student loan debt forgiveness plan Thursday, cutting hundreds of thousands of borrowers out of the sweeping program.

The change to the Department of Education website, made without announcement amid legal challenges, leaves out Federal Family Education Loans, which included the once-popular Perkins loans. Those loans were issued by private banks but guaranteed by the government under a program that the Obama administration ended in 2010. The site previously advised those borrowers to consolidate the loans into the federal Direct Loan program in order to be eligible for up to $20,000 of relief.

"As of Sept. 29, 2022, borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans," the site now advises, although it says borrowers who consolidated and applied before September 29 remain eligible for relief.

Biden's Stealth Change To Student Loan Forgiveness Scheme Could Cut Out Millions Of Borrowers | The Daily Wire
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In a reversal, the Education Dept. is excluding many from student loan relief
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[adjusterjack]

You borrowed the money, now you have to pay it back. That's how loans work.

When I took out home loans I had to pay them back. Nobody cut me any slack.

When I took out car loans I had to pay them back. Nobody cut me any slack.

When I have credit card bills I have to pay them. Nobody cuts me any slack.

Why should you be any different than any adult who borrows money and has to pay it back?

 

[cbg]

The difference is that many of the people seeking loan forgiveness have already paid back the amount of their loan, the same again in interest, in some cases multiple times, and still owe more than they initially borrowed. I saw one story about someone who had borrowed $65,000; had already paid back $175,000, and still owed $68,000. I'm not sure if the numbers are perfect but that was the general gist.

We're not talking about deadbeats here.

 

[hrforme]

Unfortunately I think there are a lot of college students (and parents) that don't understand the value of compounding interest and paying only a minimum interest payment....that and taking "deferrals' from payments doesn't always stop interest from accruing.... So if a person is just paying a minimum payment, it will take years and lots of extra interest to get paid off.....

I'm happy to say all three of mine got out of college with no debt because my spouse and I knew the above and went without a lot of things that people think they need to get through....

I can't imagine what compounded interest at high interest rates on a total of $350k would be for them right now.....I was glad to be able to provide that gift to them....I know not everyone can. But I do think a lot of people didn't think far enough ahead. I had one applicant back in the mid-2000s tell me she has $120k in debt and couldn't take a $48k salary! She had used part of her student loan to purchase a car....

 

[cbg]

And I don't know what others may call it, but in my view when the interest rates are such that they've paid back multiple times the amount of the loan and still owe more than they've borrowed in the first place, I call that usury. Might be "legal" usury under the laws of student loan, but usury nonetheless.

 

[Disabled Vet]

Sad deal that college educated folks seem to blame others for their mistakes. No one forced their hands to sign the loan application. If they did pay high interest or other bs loan items. It was because they failed to keep the loan up to date. Which then allowed bs charges to be drafted in the loan agreement. There are several ways to get college paid for. Join the military. Get a job with a company that provides cost reimbursement. Most of these student loan issues isn't from the loan amount for classes. It's the money they borrowed to pay for rent, food and utilities. I feel NO remorse telling someone they need to pay back these loans.

 

[Paddywakk]

Trust me, any student who ends up owing more than they borrowed took all available years of deferments and then probably entered an income contingent repayment plan, where payments can be as low as $5 per month.

Worked in federal student aid for more than 30 years.

 

[flyingron]

It's not usury. Usury covers the rate. These student loans have a very good rate (4.99%).

In most cases, it's not compound interest either. The one exception is that if you get a payment deferral on a private loan, the interest that accrues from the deferral gets added to the principal (once) at the end of the deferral period.

Any simple interest loan that is spread out for a long time without a substantial reduction in principal is going to result with owing much more than you borrowed.

 

[Tax Counsel]

Might be "legal" usury under the laws of student loan, but usury nonetheless.

That's impossible. The modern definition of usury is "an illegally high rate of interest". Black's Law Dictionary, 8th Ed. So if the rate is not illegal, it is not usury. The rate might well be unconscionable, but that wouldn't be the case for most federal government guaranteed student loans as they generally have favorable rates. Even with favorable rates, extending the loan out, taking deferments, or paying less than the interest that accrues will eventually lead to the interest exceeding the principal of the loan.

Because student loans are available at good rates, students should avoid the unscrupulous lenders peddling unguaranteed loans at high rates.

 

[cbg]

I know it's a contradiction in terms but it's how I feel nonetheless. I'll accept "unconscionable" and I realize the legal usury is an oxymoron, but that's my feeling.

 

[joshuakz]

I don't understand why any of this loan cancellation is occurring. It doesn't make sense to me that they are saying that it doesn't change anyone's debt because someone always pays. And what I don't understand is that if the interest is usurious, then why not fix that?

Anyway. I have a large undergraduate loan that I am working hard to manage. I got into a good school and my gamble is that it is a good bet to take on my future. My only problem with all of this is that if other people are getting their loans canceled, why shouldn't I get the same benefit?

I have also seen so many people take advantage of COVID -19 loans and then get those canceled too!!!! It is crazy. Its like I work so hard and I am watching these people get small business loans for free and I feel like I am paying for all of them. I hope all of you understand that seeing all these free loans and benefits while I am struggling with the same is just making me upset and feel its unfair. Thank you all for your help and sharing your thoughts on this.

 

[cbg]

Yes, I quite understand that there are those who are against anyone else getting a helping hand, and feel that anyone who doesn't immediately understand and are able to mentally calculate what the interest is going to account to deserves what they get. I'm very glad for those of you who are able to make that kind of financial calculation mentally and instantly before signing the contract but I still don't feel that someone should have to continue paying the same loan back over and over because their skills lie in some field other than mental financial management.

 

[Tax Counsel]

Yes, I quite understand that there are those who are against anyone else getting a helping hand,

I'm not against giving people a helping hand that need it. But I dislike how Biden has gone about providing student loan relief. I especially don't like that the cancellation of outstanding loans is not accompanied by a good plan to deal with the causes of the student loan "crises." Without that, we'll simply have the problem continue, with students expecting periodic cancellations to help them deal with it. That's not a good way to address the problem. I want a viable solution to the problem, not just a band-aid that simply dulls the (financial) pain a bit.

I'm very glad for those of you who are able to make that kind of financial calculation mentally and instantly before signing the contract but I still don't feel that someone should have to continue paying the same loan back over and over because their skills lie in some field other than mental financial management.

The thing is, everyone who borrows money should have some basic understanding of how loans work and what that loan will cost them. I learned that in high school. It didn't take getting the finance degree I got later to get the basics. The Truth in Lending Act (TILA) helps consumers with this by requiring most lenders to provide certain disclosures that tell them what the total cost of the loan will be if paid timely. Sadly I think many consumers don't really pay attention to the large blocks on the disclosure that lay out the basics of the loan they are getting. For me, if a person doesn't even take the time to understand the TILA information then they are responsible for what happens when they take out loans they cannot afford.