LovableSidekick@lemmy.world 1 year ago
It says “Trump’s changes to income-driven repayment plans.”
I don’t get it - aren’t student loans fixed amounts, with monthly payments calculated to pay off the loan after a certain amount of time? How can they just raise the payments? How does that work?
The US has income based repayment plans for all federally guaranteed loans. By removing or changing the limits in the formula, which is likely what Trump did, people that were paying $50/mo might have to pay market rates for their repayment which is unaffordable to pretty much everyone.
With ibr your interest tends to not increase despite having a much longer repayment time, allowing you to, you know, live and pay your student loans instead of having to choose in most cases.
My mom qualified for, and received, federal student loan forgiveness. Yes, she had to make payments and work in a qualifying job for 10 years but due to her low income the payment amount was adjusted down.
Unless you’re in a position that qualifies for loan forgiveness, and you trust that forgiveness will be there when you qualify, income based payment rates are not a good idea. The total amount owed by my mom actually grew over the years because the amount she was paying was less than the amount of interest charged. For a bit when she was 8 years in she had a scare that she wouldn’t qualify and was shocked to find this out, despite saying “I’ve paid thousands!!!”.
Your average American isn’t very financially literat, or lives in the land of denial, which makes them easy to take advantage of.
Your average American isn’t very financially literat, or lives in the land of denial, which makes them easy to take advantage of.
I think everything that’s happened over the last century to desensitize and decondition the public’s survival instincts and common sense, has created a fertile, open field for con artists and hucksters to harvest. And now they’ve convinced America to put them in charge. What could go wrong?
Experiential avoidance isn’t a new idea. Humans have a prepotency to ignore their problems vs tackle them head-on. We also like to avoid long term planning.
I am not a fan of many of the current administrations coming into power across the globe, but I do not think that an insidious plan to make us less free thinking/cognitively aware is the primary cause of this wave.
I don’t think there’s a plan either. By “everything that’s happened” I meant just that - things that have happened. Not a plan. The mere fact that this sounds like I’m envisioning a plan just reflects how popular that type of thinking is nowadays. People attribute all kinds of things to heinous plots. Two major things that have happened over the last century are unprecedented comforts and conveniences, and overexposure to fiction.
Technology and well-organized logistics have brought us goods and services our ancestors could only dream of. If we still had their life expectations we could be living lives of comparative ease, with all kinds of spare income and free time. But in parallel with new toys that eliminate various survival needs we’ve also developed erxpectationa that make us want/need to consume more and more, so our expenses always stay a little ahead of our incomes.
At the same time entertainment, especially fiction, has become vastly more available than ever in history. We can escape reality in more ways and forms than humans have ever been able to. Cheap book printing, radio, television, and now the internet have made fictional characters and their lives seem so vivid and real to us, they’re part of our vision of how we’re supposed to be and how life should be. This leads to all kinds of disillusion and feelings of inferiority - life just isn’t as exciting, dramatic or entertaining as it should be, based on our fiction-distorted vision.
We’ve become more childlike and incapable. Americans tend to think we inherited “pioneer spirit” - most of us couldn’t pioneer our way out of Walmart. But this wasn’t anybody’s insidious plan, it just happened. We’ve responded to new developments the way we have because apparently that’s how we work. How that turns out is anybody’s guess.
They’ve basically removed all forgiveness options. Were you on year 9 of 10 working towards PSLF? Did you plan your life around it? Whelp. Enjoy the rug pull.
This right here.
My partner graduated with a Master’s degree and about 40k in loans. After paying on an income driven plan for 10 years, they now only owe 45k!
Good time to point out that only about 30% of PSLF applications are accepted (so working for public sector for shit pay for 10 years has about a 30% chance of working) and (last I checked) only 37 (not %, but total) IDR plans have been forgiven.
You have been sold a lie about college. A degree will not get you a job. It will not get you 60k starting and double it in 4 years. Your field will not be hiring, and if it is, they’ll want a doctorate and 10 years experience for barely a livable wage. Cancel student debt. Raise minimum wage, cap maximum compensation, implement a progressive tax rate, and establish social services so people can retire and turn over their jobs and roles to the next generation.
Largely agree. The “right” degree in the “right” field you can land a decent paying job. There’s no guarantee that this degree/field lines up with your personal interests, which will make it harder to do well in the field. There’s also no guarantee that the the degree/field will remain relevant over time. If you’re in the corporate job a fun/rewarding/engaging job is not common. Much more common is a boring, soul crushing, or grind fest type position. If the only life advice you get when you’re young is “go to college” the odds of choosing the “right” degree/field is not very high.
You can absolutely make more going into a trade. Be a plumber, an electrician, a lineman, etc. Beyond trades, America is forgetting how to make stuff and that was a major source of higher paying jobs. There are also a number of interesting shocks on the horizon - the decreasing birthrate, changes in worker aptitude, a culture that leans into instant gratification (action!) over long term results, etc.
Dettweiler42@lemmy.dbzer0.com 1 year ago
Most people are relying on income-driven repayment due to high interest rates and inflated tuition costs. IDR reduces your monthly payment to a fixed percentage of your income, but it does not scale the interest generated on the principle. The new SAVE plan was intended to scale the interest along with the monthly payment so your debt wouldn’t keep piling up due to being on IDR.
Trump is removing all forms of IDR and blocking applications to renew existing plans, which means everyone will be forced to pay their full monthly amount (which is based on a 10 yr payoff plan). A lot of newer student loans are close to ~$100K or more, so imagine trying to pay that off in 10 yrs in the current job market.
Prepare for mass defaults on loans. This is absolutely going to crash the economy, and will very likely be worse than the housing market crash in ~2009.
LovableSidekick@lemmy.world 1 year ago
Thanks for the details - it sounds like you’re saying reduced payments under IDR are basically partial payments, which I assume would be applied only to the interest, thus making the debt last forever. Sounds like a plan bankers would come up with to create perpetual interest revenue. SAVE makes a lot more sense in terms of actually helping people - so no wonder Bonespurs & Company would block it. Can’t have Big Gubmint interfering with the freedom to indenture people.
Rivalarrival@lemmy.today 1 year ago
That’s going to be offset by the coming war in Central America, ostensibly against the cartels that he is claiming are running the region.