Biden administration forgives $39 billion in student debt for more than 800,000 borrowers

[NatMorton]

Then you understand why your question is stupid.

No, I understand that when a loan is written off, in full or in part, that it impacts someone's balance sheet, and that impact is a loss.

"Let's do some math:

Let's say I take out a $50,000 loan at 8% interest and, under my IDR plan, I pay $250 a month on that loan. At that rate, I will NEVER pay off the loan, the interest will accrue faster than I can pay down principle. But, after 25 years of $250 a month, I would have paid back $75,000 on a $50,000 loan.

These are the kinds of plans which are receiving forgiveness."


To directly answer your question, no one takes a loss in the above scenario. Which, again, is why your question is stupid.

No, what's stupid is the assertion no one takes the loss. And when I say "stupid" in this case, I mean really stupid.

Loans, both from the principal and future cash flow standpoint, have value. In the extreme scenario you described, that's loan value is assessed based on both the principal and the payments that can be feasibly made, i.e. $250 a month, even though that $250 a month will never catch up to the accumulating 8% interest, those payments will accumulate to something.

So yes, let's do some math though this time do it properly. For simplicity's sake, let's suppose the following is true:

• $100,000 student loan at 8%
• Borrower begins paying at age 25
• Borrower will only ever be able to pay $250 a month ($3k a year)
• Actuarial tables peg the borrower's life expectancy at 85, so they'll be making 60 years worth of payments or $180,000.

Loans are assets, and thus need to be reported on a balance sheet and assigned a value. That loan's value is a combination of the future value of the $100k principal and the time value of those $180,000 in monthly payments. The market will set that value if/when this loan, and others like it, are bought and sold. I'm going to pick a number for discussion's sake and say the mark-to-market value for this loan of that $280k ($180k + $100k) is something like $200k, i.e. if you had held this loan and wanted to sell it, that's what you could get for it, so that's how you'll report this asset on your balance sheet, "Student loan worth $200,000."

Another way to look at this, play with a loan calculator and you'll find that by agreeing to the $250 monthly payment and an 85 year life expectancy, the loan terms effectively change and become $100k at 6.2% interest, paid out over 60 years.

But here's what happens. Shortly after someone buys this loan at $200k, Joe Biden proclaims "Borrower, your loan is forgiven!" Now, If you think the holder of that loan doesn't suffer a $200k loss, then you're only fooling yourself. If the originator held the loan, they've suffered the loss. If the loan was purchased or underwritten, the buyer or underwriter has suffered the loss.

Which brings us back to the original point; the federal government has underwritten these loans, therefore it's federal taxpayers who have suffered the loss.

There's no free lunch, and there's no free loan forgiveness.

Here endeth the lesson.

 

[RealityNow]

Conservatives who complain about money being spent on student debt are fine with pouring 800 billion dollars into a giant war machine or a trillion dollars on a war in Iraq.

Conservatives say we can't afford student debt relief, but they always support spending on bombing some village in the third world.

Conservatives want everyone else to sacrifice for a small government ideology that they do not really believe in.

There has never been and there will never be "small government", only a self centered fool who wants to control something buys that stupidity. God did not make a world to be small just to appease small minds.

Every Day... in the Federal Register, it list the acts and policies that are undertaken by government to address and growing and changing society.... most of these small minded people, don't even know the website exist. Even if they did, they don't have the attention span to actually read the content.

I remember in schools, how some of these same types, uttered slap stick trying to get a laugh, and for decades they got by on that, but we live in a society that has embraced "information", and we have developed a society of young people, who will pursue information. They refuse to be held down and held back by these old heads, that can't realize the world does not go backwards and it does not stop spinning for anyone or anything.

Example: God gave man the brain to use it, and by its usages, man learned how to take rocks and other minerals and ore and other materials and over time man created and crafted something as wonderful as an "automobile" out of it.

Conservatives would still be walking and riding horse back if it was left up to them. Then; they'd curse and beat the horse because it got tired.

 

[NatMorton]

So what you are doing about it? Why should everyone else sacrifice for a small government ideology that only exists when Republicans are in the opposition and never exists when Republicans are in power? What are you sacrificing for it?

All these fiscal hawks almost always fall silent as soon as a Republican is President. There are no massive tea party protests when Bush and Trump were President.

I am not a fiscal conservative and you have no right to demand everyone else be a fiscal conservative when most fiscal conservatives abandon this ideology whenever they feel like it.

The students have to sacrifice for some fake small government ideology that never ever seems to get implemented.

The most effective thing I can do to control the growth of government is not vote for Democrats. The next best thing I can do is not vote for Republicans. Regrettably, I usually don't have a third option.

 

[RealityNow]

No, I understand that when a loan is written off, in full or in part, that it impacts someone's balance sheet, and that impact is a loss.



No, what's stupid is the assertion no one takes the loss. And when I say "stupid" in this case, I mean really stupid.

Loans, both from the principal and future cash flow standpoint, have value. In the extreme scenario you described, that's loan value is assessed based on both the principal and the payments that can be feasibly made, i.e. $250 a month, even though that $250 a month will never catch up to the accumulating 8% interest, those payments will accumulate to something.

So yes, let's do some math though this time do it properly. For simplicity's sake, let's suppose the following is true:

• $100,000 student loan at 8%
• Borrower begins paying at age 25
• Borrower will only ever be able to pay $250 a month ($3k a year)
• Actuarial tables peg the borrower's life expectancy at 85, so they'll be making 60 years worth of payments or $180,000.

Loans are assets, and thus need to be reported on a balance sheet and assigned a value. That loan's value is a combination of the future value of the $100k principal and the time value of those $180,000 in monthly payments. The market will set that value if/when this loan, and others like it, are bought and sold. I'm going to pick a number for discussion's sake and say the mark-to-market value for this loan of that $280k ($180k + $100k) is something like $200k, i.e. if you had held this loan and wanted to sell it, that's what you could get for it, so that's how you'll report this asset on your balance sheet, "Student loan worth $200,000."

Another way to look at this, play with a loan calculator and you'll find that by agreeing to the $250 monthly payment and an 85 year life expectancy, the loan terms effectively change and become $100k at 6.2% interest, paid out over 60 years.

But here's what happens. Shortly after someone buys this loan at $200k, Joe Biden proclaims "Borrower, your loan is forgiven!" Now, If you think the holder of that loan doesn't suffer a $200k loss, then you're only fooling yourself. If the originator held the loan, they've suffered the loss. If the loan was purchased or underwritten, the buyer or underwriter has suffered the loss.

Which brings us back to the original point; the federal government has underwritten these loans, therefore it's federal taxpayers who have suffered the loss.

There's no free lunch, and there's no free loan forgiveness.

Here endeth the lesson.

Projected interest rate gains is speculative, it is something that has not materialized. Do you understand that?!!!.

 

[Lethargic Aptitude]

Why do you love corruption? Oh wait, youre a lib. That explains everything.

FFS hyper partisan right winger always assume that I am a lib. Don't feel too bad though hyper partisan left wingers think I am a conservative.

The irony is that political parties are the main source of corrup[tion worldwide. It was not just the traitor Trump who tried to steal the country from its citizens, but it was the ****ing Republican party at the center of the insurrection.

So instead of calling me names why don't you be a patriotic American and fight for the Constitution instead of destroying it. I have no tolerance as an American for traitors to the Union.

 

[highroller]

Pure bribery.

It’s the millennial tax cut.

 

[Yes_Minister]

The most effective thing I can do to control the growth of government is not vote for Democrats. The next best thing I can do is not vote for Republicans. Regrettably, I usually don't have a third option.

Really, why didn't you organize a tea party rally during the Trump or Bush years or why don't you get involved in Republican primaries so people who reflect your supposed values get into office?

Let me guess, can't be bothered, instead you want others to sacrifice for this ideology, how convenient. Take this student debt money and give it to the war machine eh?

I could come up with an argument that maybe forgive this debt would allowed people to contribute to the economy by buying a house or spending money elsewhere that in the economy instead of spending money on these debts. But I guess you will reject that eh? Is this really about small government and good economic policy or is this about punishing people?

How many European countries with free university have a worse debt load than the US?

 

[PoS]

More stupidity. This is the sort of response I would expect from a ten year-old.

I bring myself down to your level. What can I say.

FFS hyper partisan right winger always assume that I am a lib. Don't feel too bad though hyper partisan left wingers think I am a conservative.

The irony is that political parties are the main source of corrup[tion worldwide. It was not just the traitor Trump who tried to steal the country from its citizens, but it was the ****ing Republican party at the center of the insurrection.

So instead of calling me names why don't you be a patriotic American and fight for the Constitution instead of destroying it. I have no tolerance as an American for traitors to the Union.

Then you shouldnt tolerate corruption when it happens either.

It’s the millennial tax cut.

More like the millennial vote buy.

 

[snakestretcher]

I bring myself down to your level. What can I say.


Then you shouldnt tolerate corruption when it happens either.


More like the millennial vote buy.

What can you say? Best say nothing mate; "It's better to keep one's mouth closed and be thought a fool, than to open it and have all doubt removed".

 

[PoS]

What can you say? Best say nothing mate; "It's better to keep one's mouth closed and be thought a fool, than to open it and have all doubt removed".

LOL you ought to practice what you preach. It would make your posts look less silly.

 

[NatMorton]

Really, why didn't you organize a tea party rally during the Trump or Bush years or why don't you get involved in Republican primaries so people who reflect your supposed values get into office?

Let me guess, can't be bothered, instead you want others to sacrifice for this ideology, how convenient. Take this student debt money and give it to the war machine eh?

Ah yes, make others pay their debts so that others don’t have to sacrifice.

Now there’s some prime leftwing logic for you.

I could come up with an argument that maybe forgive this debt would allowed people to contribute to the economy by buying a house or spending money elsewhere that in the economy instead of spending money on these debts. But I guess you will reject that eh? Is this really about small government and good economic policy or is this about punishing people?

How many European countries with free university have a worse debt load than the US?

Great, let’s also “forgive” everyone’s mortgage, too. That should be a real boon for disposable income.

 

[highroller]

More like the millennial vote buy.

Tax cuts were the boomer vote buying (They didn’t cut spending). Millennials are just following their “echo-boomer” roots.

I have no horse in this race as I’ve paid off my student loans, but a politician will do what is necessary to win office. The GOP won the boomer votes with tax cuts. The DEM are trying to win with millennial student loans.

 

[eohrnberger]

Tax cuts were the boomer vote buying (They didn’t cut spending). Millennials are just following their “echo-boomer” roots.

I have no horse in this race as I’ve paid off my student loans, but a politician will do what is necessary to win office. The GOP won the boomer votes with tax cuts. The DEM are trying to win with millennial student loans.

Rather odd that no one notices or calls out that the Dems are buying those millennial's votes with tax payer money.

 

[WorldWatcher]

Rather odd that no one notices or calls out that the Dems are buying those millennial's votes with tax payer money.

Plenty are attempting to do that.

Oh look, you just did.

(But the same people don't want to say that the Bush or Trump tax cuts were buying votes. Oh look, I just did.)

WW

 

[Cardinal]

No, I understand that when a loan is written off, in full or in part, that it impacts someone's balance sheet, and that impact is a loss.



No, what's stupid is the assertion no one takes the loss. And when I say "stupid" in this case, I mean really stupid.

Loans, both from the principal and future cash flow standpoint, have value. In the extreme scenario you described, that's loan value is assessed based on both the principal and the payments that can be feasibly made, i.e. $250 a month, even though that $250 a month will never catch up to the accumulating 8% interest, those payments will accumulate to something.

So yes, let's do some math though this time do it properly. For simplicity's sake, let's suppose the following is true:

• $100,000 student loan at 8%
• Borrower begins paying at age 25
• Borrower will only ever be able to pay $250 a month ($3k a year)
• Actuarial tables peg the borrower's life expectancy at 85, so they'll be making 60 years worth of payments or $180,000.

The monthly payment on a 100k loan at 8% is about $666 (give or take a few dollars) per month. The total interest paid after 60 years is $384,047. How are you arriving at $250/month?

Loans are assets, and thus need to be reported on a balance sheet and assigned a value. That loan's value is a combination of the future value of the $100k principal and the time value of those $180,000 in monthly payments. The market will set that value if/when this loan, and others like it, are bought and sold. I'm going to pick a number for discussion's sake and say the mark-to-market value for this loan of that $280k ($180k + $100k) is something like $200k, i.e. if you had held this loan and wanted to sell it, that's what you could get for it, so that's how you'll report this asset on your balance sheet, "Student loan worth $200,000."

Another way to look at this, play with a loan calculator and you'll find that by agreeing to the $250 monthly payment and an 85 year life expectancy, the loan terms effectively change and become $100k at 6.2% interest, paid out over 60 years.

Can you link to this calculator?

But here's what happens. Shortly after someone buys this loan at $200k, Joe Biden proclaims "Borrower, your loan is forgiven!" Now, If you think the holder of that loan doesn't suffer a $200k loss, then you're only fooling yourself. If the originator held the loan, they've suffered the loss. If the loan was purchased or underwritten, the buyer or underwriter has suffered the loss.

Which brings us back to the original point; the federal government has underwritten these loans, therefore it's federal taxpayers who have suffered the loss.

There's no free lunch, and there's no free loan forgiveness.

Here endeth the lesson.

 

[Metric Mouse]

I would agree this would allow the wealthy to give back to their community

Don't they already set up scholarship funds? I think they already can...

 

[trouble13]

Biden administration forgives $39 billion in student loan debt to more than 800,000 borrowers

The Biden administration announced Friday that it will provide $39 billion in automatic loan forgiveness for federal student loans.

www.foxbusiness.com

Fantastic news! Glad to see Biden is being more assertive in delivering on his election promises. Very popular measure among Democrat voters and hopefully will mobilize younger people to vote.

Just to be clear about what he is doing and you approve of...

When the courts tell him "no that isn't allowed". It's OK to ignore that ruling and find ways around it to violate the law, because it's a ruling you don't like?

 

[gbg3]

Here's a thought. How's about we all agree that, as citizens of this great country, we all have an obligation to work hard, pull our weight, honor our debts, and do everything within our power to not be a financial burden to others.

What used to be the norm is now just a crazy dream. It's hard to fathom how far we've gone in the wrong direction.

 

[Cardinal]

Just to be clear about what he is doing and you approve of...

When the courts tell him "no that isn't allowed". It's OK to ignore that ruling and find ways around it to violate the law, because it's a ruling you don't like?

This is a way of saying that the court was implementing an ideology rather than making a specific legal ruling.

 

[trouble13]

This is a way of saying that the court was implementing an ideology rather than making a specific legal ruling.

No it's not.

 

[Cardinal]

No it's not.

Your understanding is that the court ruled on the principle of student loan forgiveness. That is obviously false. And if it isn't false, then the 6 conservative justices are indeed ideologue, activist judges (not that we really needed any confirmation for that).

But that's hardly surprising, since conservatives are outraged over the principle of student loan forgiveness and not some legal point concerning whether or not the President overstepped his legal authority.

 

[eman623]

“Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” said U.S. Secretary of Education Miguel Cardona.

So 20 years is a "life sentence"? I've got a 30 year mortgage. Where's my relief bribe?

 

[Nomad4Ever]

Just to be clear about what he is doing and you approve of...

When the courts tell him "no that isn't allowed". It's OK to ignore that ruling and find ways around it to violate the law, because it's a ruling you don't like?

The court made that way of doing it impossible and he had to go down a different avenue. He didn’t ignore the ruling.

 

[highroller]

Plenty are attempting to do that.

Oh look, you just did.

(But the same people don't want to say that the Bush or Trump tax cuts were buying votes. Oh look, I just did.)

WW

Or even the Reagan tax cuts. The argument could’ve been made that lower taxes and less reliance on the government spending makes an economy better, but that was blown up when they continued to increase government spending under Reagan, even in the face of tax cuts.

It’s just Keynesian economics, but the Boomers voted in mass for the tax cuts.

 

[highroller]

“Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” said U.S. Secretary of Education Miguel Cardona.

So 20 years is a "life sentence"? I've got a 30 year mortgage. Where's my relief bribe?

I knew people didn’t know how the student loan system works. The fact that you compare it to a mortgage is very ignorant as it is not something that you can just walk away from ever.

The fees they put on when you default, or the predatory practices of offering the loans put it on par with mafia loansharks.

I will always prefer bankruptcy over forgiveness, but I can understand why politicians are pandering to millennials to forgive their student loans.

Millennials got a taste of freedom that the boomers had for the last three years and they want it back. And they don’t care about your ideology they don’t care about this country they don’t care about the future or past generations. They will vote to destroy the world if they can get that $300 a month back in their pockets just like the boomers.