This gets a bit into the weeds, but student loan average rates isn’t 5%. It’s currently 8%. It varies based on the year you took it out. The average since 2006 is 6%.
You can quickly estimate payments here:
If you make 100k, the payment on 20k of debt would be 232/mo (it’s 180/mo if you have a kid), compared to 587/mo per the old IDR payment plans. The SAVE plan is a truly fantastic plan as it will allow for more flexibility, no interest accrual and other things. It’s easily the biggest reform Biden has done. It’s going to have a smaller affect on a balance of 20k though.
Exactly who will save what will matter to details not released yet, but I don’t think any of what you’ve posted is relevant to whether or not you’ll get some sort of forgiveness. The headliner of this announcement is interest over initial balance is forgiven. These specific actions will apply to new grads based on if their loans have been accruing interest while in school. Undergrad loans are different, and I’m not as up on those rules as I never had any of those. No one really knows how this will work yet though, and the only people who won’t qualify are those making over 120k/240k.
Something off in the calculator feel like the interest rates must be off or it doesn’t properly cap payments at no higher than the 10yr standard repayment
It’s going to have no effect on a balance of $20K. 232 * 12 * 10 = $27,840. Pretty confident her rate is < 6%, I forget the exact number but I thought one of them was at or below 5% and the other was close to it because I remember thinking it was very close to the risk free return on short-term treasuries and I bonds when I looked.
I don’t think the wording is clear, we’ll find out I guess. Part of it sounds like a one-off cancelling of interest:
President Biden will announce plans that, if finalized as proposed, would cancel up to $20,000 of the amount a borrower’s balance has grown due to unpaid interest on their loans after entering repayment, regardless of their income.
We haven’t entered repayment yet, so that doesn’t qualify us, and it doesn’t sound like something that’s going to happen automatically every month/year. If it does, that’ll help by saving a few thousand and making it a freeroll to pay the minimum and see if relief ever comes.
Low and middle-income borrowers enrolled in the SAVE plan or any other income-driven repayment (IDR) plan would be eligible for the entire amount their balance has grown since entering repayment to be canceled under the Administration’s plans. This group of borrowers includes single borrowers who earn $120,000 or less and married borrowers who earn $240,000 or less. No application will be needed for borrowers to receive this relief if the plan is implemented as proposed.
This is relief from a growing balance. It is not relief from the interest. If we pay $200-230 a month, that’s $2,400 to $2,800 a year on a $20K balance, it more than covers the interest.
It sounds like we’ll “qualify” but nothing in the plan will actually reduce the amount we pay over a 10-year period, at which point we’ll be eligible for full forgiveness of the remaining balance, but already have paid off the entire loan amount.
I doubt they’re slow rolling some qualifiers for “hardship” that would include Pell Grant recipients, but I guess there’s a chance. Under the old plan we would have had full forgiveness.
She’s still in school, so I haven’t gone that in depth yet, but off a rough ballpark estimate, I am pretty sure it won’t help us. She doesn’t have a job yet, so I can’t do the exact math. Will probably be a year by year calculation since my income varies.
It tends to focus more on investing than news about the economy, but obviously there’s a lot of overlap. The general economy stuff gets spread around a lot. Like the argument that ended up in the containment thread spanned a few different threads over the course of a few months.
Anyway this inflation data makes me think it’s far from a lock we stick the soft landing. 3.1% in January to 3.5% in March. If we’re at 3.9% in May, and tip over 4% this summer, what happens then? We really going to stick with the current Fed rate?
At this point I’m starting to think it’s bad news for Biden if we do get cuts, because it may mean something broke in a big way.
It’s pretty annoying for Biden to post this today, after seeing this news story earlier:
Border Patrol can operate within 100 miles of the border, so they’ve been doing seizures in places in New Mexico where they have jurisdiction, saying “fuck state law, it’s still illegal federally”. Biden could make them stop!
Yeah I mean usually being caught with 300k worth of drugs would be sending everyone involved to prison. So feels like they in a situation where they like well we aren’t supposed to let people transport illegal stuff and we just found some illegal stuff so we going to take it and let the people go because this kinda a weird situation.
