Student Loan Forgiveness Act of 2012

[Zoebird]

I don't deny this, you've made good points. But we can't wish the debt away. Oh wait, I guess we can--poof! It's gone.

Sign. whatever.

Banks do this all the time. Honestly, it is "poof! gone!"

In fact, I've done it within my business -- and in so doing, had a positive tax result! My accountant explained the benefits of discharging the debt at the end of the fiscal year, how it balanced my books and created a good re-set which made the business healthier.

I don't understand why people don't understand how this debt forgiveness/discharge stuff works. It happens *all the time* in all manner of consumer, medical, and foreclosure debt. That's what happens in bankruptcy court.

[Zoebird]

Yes, I had a colleague with 90,000 in student debt, which she called her "mortgage"--so the two (housing and student debt) definitely are connected.

Perhaps we should be better educators of our children about the ramifications of loans of all kinds--then maybe they would make different decisions about their college "needs."

That's what we call my debt too. The mortgage!

[Zoebird]

Obviously Zoe's case is special, but on a broader scale I think her point is valid. And, she could certainly make the argument that it was the stiffled economy in the US, caused by things like excessive student loan debt overall, which caused her to expatriate herself in the first place. She's mentioned before that one of the big reasons for her family's move was because they saw more opportunity elsewhere.

This is true.

There were many reasons for choosing here. Some of them were positives -- we love wellington and new zealand, we love the lifestyle/culture/way of life.

But, one aspect was that I couldn't get a small business loan in the US because my student loans are in default (technically). Even though I demonstrated that I ran a successful business for years (profitable), and that I had a decent business plan, lease agreement, and sublease agreements with other teachers and massage therapists/etc lined up, and I needed only a very small amount of money ($15k) as I was providing seed money as well, and that I had made payments on the default to the creditor every month since I started working with them (I provided an accounting from the creditor that demonstrated this).

"With the economy the way it is, we cannot take on any risky loans."

Here in NZ, the business that I wanted to purchase cost far less than the one I wanted to start. The sustaining of it costs the same, and by this time I'd managed to save up 1.5 years worth of capital to sustain it. We also had the money from our house and car to utilize for our move, and then DH had his 401k rolled over into an IRA (mutual funds).

We were pre-approved for a small business loan from the local bank here -- having provided the relevant information -- and our landlord was willing to guarantee us for 3 months as well. The prior owners guaranteed us for two years (we provided an escrow account in case we defaulted in our rent), and we came into a business that had several subleasing practitioners.

NZ also provided us with business mentors -- which is something they try to do to prevent brain drain as well as to help people innovate. This is part of how they want to stimulate the economy, and while my business isn't exactly an economic stimulator in the highest order, they noted that franchises have a lot of possibilities in developing the service industry and self-employment work force. They also provide grants for people who would apply for them. I have not yet applied for any grants. We were awarded a small cash prize by our small mentoring group -- which we claimed on our taxes and everything. It was enough to cover a part of our web site that we wanted finished.

So, this was part of it as well.

[flowerseverywhere]

Of course we will be means tested for Soc Security, there's not other way to proceed. Sucks a big one. But it will be necessary.

sucking it up for the greater good of society I can take. I am not sure this is one of those circumstances. I have some friends and family members who have had to take much lower paying jobs or go on unemployment and they would love to see their debt discharged, but it will not be. Their only hope is to work until they are old if their health holds out or move in with a relative or small apartment. It just doesn't seem right to me that special groups of people are singled out to get a break.

All around me I see cities, counties, schools, states and the federal government buckling under their pension and health benefit obligations, which they most likely won't be able to meet. Can you imagine how many people will have a future that is a shadow of what they worked for and expected if social security is targeted as well as medicare?

It would be great if all the debt our government is taking on could just be discharged with the stroke of a pen and go poof and vanish, but we all know it won't be. Instead future generations will have to pay it back. Not very fair in my book.

[redfox]

Anyone with SL debt, be aware that if you default, your social security can be seized to pay for it.

[catherine]

I don't understand why people don't understand how this debt forgiveness/discharge stuff works. It happens *all the time* in all manner of consumer, medical, and foreclosure debt. That's what happens in bankruptcy court.

If there is no other recourse, there is no other recourse. But I do believe that if you say you're going to do something, it may not be a matter of good economics, but it's a matter of good character to follow through on what you promised to pay. I believe that society is based on commitments you can hold in good faith, realizing that sometimes life happens. But to make bail-outs the rule and not the exception--how is that reasonable? Discharges do happen, and bankruptcies happen and there are consequences to the consumer. Their credit score suffers. Banks refuse to loan money to them. The consumer has to pay more for future loans. That's how it should be. On a personal level, if I loan you money because you say you need it and then you then come back and say sorry, I don't see why I have to pay you back, how is that acceptable?* And how is a bank or government loan any different?

I don't understand why people don't understand that if you say you're going to pay for something, you mean you're going to pay for it. And that if you don't, you suffer the consequences. Call it bad economic policy or call it karma.

*ETA: That scenario wouldn't happen, because I no longer lend money--it's a personal policy. If you come to me and ask to borrow money, I'll give it to you, no strings attached and no expectations. I've arrived at this because of the resentment I was building up when people I gave money to never felt compelled to pay it back, even if they said they would. So now, I will either not lend it, or I will give it freely. That's the best way, I've found. Maybe that's how we should approach education: just make give out grants based on need.

[ApatheticNoMore]

Why debt forgiveness for student loans and not, say, car loans? Or home improvement loans? Or small business loans? Are tutions outrageous? Sure they are. But here, unlike a car or trip or any number of things you get a loan for, you are 'buying' something that will essentially never go away. Once you have that degree, you have it forever. You own it, and saying these kids need 'forgiveness' because, why? I don't get it.

+1 I mean if you really want wholesale jubileee well .... ha as I like to say, at least that position is consistent and hey while I'm not entirely sold on it yet, the great jubilee might even be interesting, I would like to see some power shifted to the middle class and down. But really why single out any type of debt?

sucking it up for the greater good of society I can take. I am not sure this is one of those circumstances. I have some friends and family members who have had to take much lower paying jobs or go on unemployment and they would love to see their debt discharged, but it will not be. Their only hope is to work until they are old if their health holds out or move in with a relative or small apartment. It just doesn't seem right to me that special groups of people are singled out to get a break.

Yea, that's what irritates. A special break here, a special break there, not even based on anything like income redistribution, which would be a heck of a lot cleaner, but just pure pandering. And not based on anything widely accepted like funding education for the greater good or something (you do that on the front end for all, not with selective forgiveness on the back end only for those who took out debt).

I don't have debt. I don't want to bail out those with housing debt as I don't have a mortgage, I rent (and may be renting at 70 for all I know - there is a price for my choices). I don't want to bail out those with education debt as I don't have a 4 year degree (and may be and probably am discriminated, and yes that's the right word, for the lack of such in the job market all the time - there is a price for my choices). But apparently it is just my job to bail out endlessly the price of everyone else's choices while constantly facing the full cost of my own. grumble .... helping the poor I don't mind, funding state colleges which I or anyone else could go to I don't mind, but the special people getting singled out is really getting quite annoying.

[bae]

And this sort of thing is why I have been removing myself from the lending business the past couple of years.

Let the Jubilee begin! Just give me a few days' warning, so I can max out my credit cards and home equity lines first though, thanks!

[jp1]

sucking it up for the greater good of society I can take. I am not sure this is one of those circumstances. I have some friends and family members who have had to take much lower paying jobs or go on unemployment and they would love to see their debt discharged, but it will not be. Their only hope is to work until they are old if their health holds out or move in with a relative or small apartment. It just doesn't seem right to me that special groups of people are singled out to get a break.

All around me I see cities, counties, schools, states and the federal government buckling under their pension and health benefit obligations, which they most likely won't be able to meet. Can you imagine how many people will have a future that is a shadow of what they worked for and expected if social security is targeted as well as medicare?

It would be great if all the debt our government is taking on could just be discharged with the stroke of a pen and go poof and vanish, but we all know it won't be. Instead future generations will have to pay it back. Not very fair in my book.

The key difference, thanks to the banks and their bought and paid for legislators, is that student loan debt CANNOT be discharged by bankruptcy. That is the one fatal flaw that makes student loan debt completely different from virtually every other debt that a person in the US can face. Anyone who is truly on the ropes financially, with virtually any other debt, can declare bankruptcy and start to rebuild their life. Student loan debtors will continue to have to repay up to and through their collection of social security. Welcome back, debtors prisons...

The bigger problem is that we've long gone done the path where banks, and anyone who lends money, has stopped underwriting those loans to be sure that the people they loan to have a realistic hope of repaying the loan. Unlike bae, who rightfully is now afraid to lend his hard earned money to anyone. instead banks now expect the government, through laws like the last bankruptcy law update, and bailouts like have been happening non-stop since 2008, to save their bacon. Why should anyone feel like they need to pay back a loan since the bank will just get a negative interest rate bailout loan from the federal reserve and permission to mark to fantasy the value of the loan on their balance sheet and pretend like it's not a loss.

[Zoebird]

For me, I think a jubilee would be a great idea. I've already said this though.

I also don't think it's really fair to get into character question over this issue. Most people who end up in bankruptcy courts are not trying to get there. Most people whom would be benefitted in the current economy by this sort of economic stimulus programming -- which goes to the people rather than banks or auto industry or what have you -- can do a lot of wonders for a lot of people in their daily lives.

IF we were to assume for a moment that I was in the US doing what I am doing -- I would be fine going as I am going now. And I'd keep on going and paying and saving to pay off. After all, I've been doing it for several years already anyway.

But, if the debt were to be discharged (legally speaking), it would be really great for us. That added money would allow us (in this environment) to purchase the health insurance that we want (which includes dental) and a life insurance policy as well. Or, it would allow us to live a little bit better (for example, buy a little bit more food since I am still eating sub-calorically 6 out of 7 days). Or, it would allow me to purchase the (used) linens that I would like for DS's bed (blankets, mostly).

Each of these things would stimulate the economy in some way -- and better my life considerably. And my payment is currently quite low, to be honest.

If I included the amount I'm saving per month into that amount, we could live high on the hog -- but really, we'd go into investing it in our mutual funds and retirement funds -- which I also think stimulates the economy, and will make it such that we wouldn't need government assistance down the track (in so much as we will).