Obama consolidating loans


16-Jul-2020 13:03

But the income-contingent repayment plan was little used, and, practically speaking, people couldn’t use income-based repayment until early 2009.Imagine the circumstances those applying for loan forgiveness in 20 might have been in a decade earlier. With the global economy crashing, there’s a good chance they were about to experience some kind of financial difficulty that would prevent them from making payments on the standard 10-year repayment plan.In short, there’s a very good chance that they would at some point in the next decade make ineligible payments, or no payments, or that the eligible payments they did make would be on an ineligible loan. Loan servicers are paid a flat rate per borrower for processing loan payments and helping people navigate the repayment process.That means that the more time and effort a borrower requires, the less money the servicer makes.When Bernie Sanders recently announced a

But the income-contingent repayment plan was little used, and, practically speaking, people couldn’t use income-based repayment until early 2009.Imagine the circumstances those applying for loan forgiveness in 20 might have been in a decade earlier. With the global economy crashing, there’s a good chance they were about to experience some kind of financial difficulty that would prevent them from making payments on the standard 10-year repayment plan.In short, there’s a very good chance that they would at some point in the next decade make ineligible payments, or no payments, or that the eligible payments they did make would be on an ineligible loan. Loan servicers are paid a flat rate per borrower for processing loan payments and helping people navigate the repayment process.That means that the more time and effort a borrower requires, the less money the servicer makes.When Bernie Sanders recently announced a $1.6 trillion plan to forgive all student loans, he had a particular kind of borrower in mind. In the 18 months after borrowers with a decade of service in government or nonprofit jobs first became eligible in 2017, 73,554 people applied to have their student loans wiped out.“You are not truly free when you cannot pursue your dream of becoming a teacher, environmentalist, journalist or nurse,” he said, “because you cannot make enough money to cover your monthly student loan payments.”Elizabeth Warren used similar language in announcing her more modest $640 billion loan forgiveness plan, noting that “student loan debt hits America’s teachers particularly hard.” Beto O’Rourke called for canceling all schoolteacher loans. And 73,036 were turned down — a rejection rate of 99.3 percent.Income-contingent repayment loans weren’t very popular. If you don’t have much money, 20 percent of discretionary income is still a lot, and 25 years is a long time.So when Congress passed the forgiveness program in 2007, it also created income repayment.

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But the income-contingent repayment plan was little used, and, practically speaking, people couldn’t use income-based repayment until early 2009.

Imagine the circumstances those applying for loan forgiveness in 20 might have been in a decade earlier. With the global economy crashing, there’s a good chance they were about to experience some kind of financial difficulty that would prevent them from making payments on the standard 10-year repayment plan.

In short, there’s a very good chance that they would at some point in the next decade make ineligible payments, or no payments, or that the eligible payments they did make would be on an ineligible loan. Loan servicers are paid a flat rate per borrower for processing loan payments and helping people navigate the repayment process.

That means that the more time and effort a borrower requires, the less money the servicer makes.

When Bernie Sanders recently announced a $1.6 trillion plan to forgive all student loans, he had a particular kind of borrower in mind. In the 18 months after borrowers with a decade of service in government or nonprofit jobs first became eligible in 2017, 73,554 people applied to have their student loans wiped out.

“You are not truly free when you cannot pursue your dream of becoming a teacher, environmentalist, journalist or nurse,” he said, “because you cannot make enough money to cover your monthly student loan payments.”Elizabeth Warren used similar language in announcing her more modest $640 billion loan forgiveness plan, noting that “student loan debt hits America’s teachers particularly hard.” Beto O’Rourke called for canceling all schoolteacher loans. And 73,036 were turned down — a rejection rate of 99.3 percent.

Income-contingent repayment loans weren’t very popular. If you don’t have much money, 20 percent of discretionary income is still a lot, and 25 years is a long time.

So when Congress passed the forgiveness program in 2007, it also created income repayment.

.6 trillion plan to forgive all student loans, he had a particular kind of borrower in mind. In the 18 months after borrowers with a decade of service in government or nonprofit jobs first became eligible in 2017, 73,554 people applied to have their student loans wiped out.“You are not truly free when you cannot pursue your dream of becoming a teacher, environmentalist, journalist or nurse,” he said, “because you cannot make enough money to cover your monthly student loan payments.”Elizabeth Warren used similar language in announcing her more modest 0 billion loan forgiveness plan, noting that “student loan debt hits America’s teachers particularly hard.” Beto O’Rourke called for canceling all schoolteacher loans. And 73,036 were turned down — a rejection rate of 99.3 percent.Income-contingent repayment loans weren’t very popular. If you don’t have much money, 20 percent of discretionary income is still a lot, and 25 years is a long time.So when Congress passed the forgiveness program in 2007, it also created income repayment.

That meant that if you put your loan into deferment or forbearance for a few months, those months wouldn’t count toward the 120.

What’s strange about the new crop of proposals is that the Department of Education already has a public service loan forgiveness program, called P. This has prompted widespread condemnation, with pundits on the left describing the forgiveness program as “the defrauding of tens of thousands of borrowers” and an “incredible, rage-inducing story.” Last week, the American Federation of Teachers filed a lawsuit accusing the secretary of education, Betsy De Vos, of “gross mismanagement” of the program.

The program, though, appears to be a spectacular failure.

Nor would payments made under graduated or extended plans, because they were available to anyone regardless of income, and Congress didn’t want doctors or lawyers artificially knocking down their payments and then having most of their loans canceled.

To be eligible for the forgiveness program, people had to make payments based on their income.So Congress created the “graduated” plan, in which, instead of equal-size installments, payments start small and grow over time.



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