Student Loan Forgiveness is NOT the same as
forgiveness for student loans?
restoring dischargeability of student loans in
bankruptcy.
The thing is, forgiveness just wipes out the student loan debt and apparently leaves the borrower with the same credit score et cetera as if she never took out the student loans.
As opposed to the bankruptcy process, which has built in means testing and the credit consequences of having filed bankruptcy.
As I saw, OK, I think on Facebook, asking the taxpayers to pay your student loans is like asking a homeless person to pay your mortgage.
The federal government already lent the money, which comes from taxes, the vast majority from folks who work.
So, the guy who went from high school to a trade job, is going to pay taxes to cover the student loans for the kids who went to school while he was working? He pays his own cost of living, and theirs? Fairness? Hello?
Readers of this blog know my views, we sold a bill of goods to tens of thousands of students on the value of a college degree and sucked them into borrowing 1.5 trillion dollars to get that degree.
But not all degrees are the same; many are making good money based on the start from their college degrees.
So What Are The Proposals?
Zach Friedman at Forbes compares the Sanders and Warren suggestions side by side.
He poses 5 questions:
First, Forgive all loans?
This goes to my point that the gal with the M.D. and 250 k of student loan debt is not in the same boat as the kid who got sucked into out of state tuition for 4 years to get a worthless degree and owes 80k.
Bernies says, who cares, erase it all! Warren says not for those making over 250k per year.
Second, who pays?
Surprise! Both Democrats have different tax increase ideas.
Third, will the forgiven student loans be taxable as debt cancellation income?
Huh, you say?
Under current law, if you finish your income based repayment plan, and are forgiven, say 50k in student loans, that 50k shows up as income subject to tax.
This does NOT mean you should not get into those programs if you qualify.
I think Congress just did not think (surprise!) about this when they passed the legislation.
And it may yet be changed to match PSLF (Public Service Loan Forgiveness) to not taxable.
Hey, Bernie has not got around to that point, Warren says not taxable.
Fourth, what role do the colleges themselves have?
You know, the ones who got the money.
Hey, free everything! Free college in the future, the Dems say.
Fifth, who pays for “free” college? The states, or the federal government?
Of course, we pay either way.
Restore bankruptcy dischargeability to student loans and get the government out of the student loan business.
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