3 ms·

"a college education is being priced out of the reach of middle-class and even upper-middle-class families." If this were true, we would see one of two things:

"a college education is being priced out of the reach of middle-class and even upper-middle-class families." If this were true, we would see one of two things: (1) colleges would be empty and closing their doors, or (2) we'd have an enormous debt bubble. (1) is obviously false. (2) is more interesting and, indeed, debt levels may be high. However, in a development that most pieces like this ignore, the federal government now has significant loan repayment forgiveness programs, along with income-sensitive repayment plans. So no, with huge programs that will wipe student debt clean, I laugh in the face of a headline that asserts that college is "unaffordable even in higher income brackets." Look here: https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in... "Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month." So $0 a month is unaffordable??

choward 10y ago
> "If your income is low enough, your payment could be as low as $0 per month." > So $0 a month is unaffordable?? "If your income is low enough." Read the headline again.
- massysett 10y ago
  I can read it fifty times and the conclusion doesn't change. The programs cap payments to perfectly reasonable amounts.
sedachv 10y ago
The income-sensitive repayment plans come with a lot of caveats. My wife took that route before we married and it was mostly just a huge debt trap with interest piling up and she still struggled to make payments. I have not done the math with median debt/income/compound interest over X years but it seems to me that a lot of people who go that route will wind up with debt they will never be able to repay in their lifetimes. After we married it turns out the income part is based on household; my income is much larger than hers, and while hers has gone up since she still has trouble paying the new monthly rates based on our joint income from her salary alone.
- massysett 10y ago
  The income is based on the tax return. It may be to your advantage to file separate returns. Absolutely, it may be debt you will never pay off. If after several years you don't repay it, it is wiped clean. What a deal.
  - sedachv 10y ago
    > If after several years you don't repay it, it is wiped clean. What a deal. I had to check this as I had not heard of that before. "Several years" is 25 years under income-based repayment (years before you switched to income-based repayment do not count). The loans are not "wiped clean" - whatever balance is forgiven after 25 years is counted as taxable income, so actually you would be in a worse off position after getting your loans forgiven. Source: http://www.finaid.org/loans/ibrfaq.phtml http://www.finaid.org/loans/ibrfaq.phtml All this of course only applies to federal student loans. About half of my wife's loan balances are from private lenders and from what I hear this ratio is common.
    - massysett 10y ago
      How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? It would all be due at once (offhand I don't know what sorts of payment plans IRS has) so it could be worse that way.
      - sedachv 10y ago
        > How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? The IRS is much more aggressive about collections and will seize your property and garnish your wages: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien https://www.irs.gov/businesses/small-businesses-self-employe... https://www.irs.gov/businesses/small-businesses-self-employed/levy https://www.irs.gov/businesses/small-businesses-self-employe... When that 25 year forgiveness kicks in the tax money will be due all at once. Even with a payment plan the IRS collection schedule is 3-5 years. 30% of a lot of fake income is still a ton of money. This "debt forgiveness" will force a lot of people into bankruptcy, which btw does not discharge all tax obligations (http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-irs-collecting-tax-debts.html http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-...)

choward 10y ago

> "If your income is low enough, your payment could be as low as $0 per month." > So $0 a month is unaffordable?? "If your income is low enough." Read the headline again.

massysett 10y ago
I can read it fifty times and the conclusion doesn't change. The programs cap payments to perfectly reasonable amounts.

sedachv 10y ago

The income-sensitive repayment plans come with a lot of caveats. My wife took that route before we married and it was mostly just a huge debt trap with interest piling up and she still struggled to make payments. I have not done the math with median debt/income/compound interest over X years but it seems to me that a lot of people who go that route will wind up with debt they will never be able to repay in their lifetimes. After we married it turns out the income part is based on household; my income is much larger than hers, and while hers has gone up since she still has trouble paying the new monthly rates based on our joint income from her salary alone.

massysett 10y ago
The income is based on the tax return. It may be to your advantage to file separate returns. Absolutely, it may be debt you will never pay off. If after several years you don't repay it, it is wiped clean. What a deal.
- sedachv 10y ago
  > If after several years you don't repay it, it is wiped clean. What a deal. I had to check this as I had not heard of that before. "Several years" is 25 years under income-based repayment (years before you switched to income-based repayment do not count). The loans are not "wiped clean" - whatever balance is forgiven after 25 years is counted as taxable income, so actually you would be in a worse off position after getting your loans forgiven. Source: http://www.finaid.org/loans/ibrfaq.phtml http://www.finaid.org/loans/ibrfaq.phtml All this of course only applies to federal student loans. About half of my wife's loan balances are from private lenders and from what I hear this ratio is common.
  - massysett 10y ago
    How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? It would all be due at once (offhand I don't know what sorts of payment plans IRS has) so it could be worse that way.
    - sedachv 10y ago
      > How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? The IRS is much more aggressive about collections and will seize your property and garnish your wages: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien https://www.irs.gov/businesses/small-businesses-self-employe... https://www.irs.gov/businesses/small-businesses-self-employed/levy https://www.irs.gov/businesses/small-businesses-self-employe... When that 25 year forgiveness kicks in the tax money will be due all at once. Even with a payment plan the IRS collection schedule is 3-5 years. 30% of a lot of fake income is still a ton of money. This "debt forgiveness" will force a lot of people into bankruptcy, which btw does not discharge all tax obligations (http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-irs-collecting-tax-debts.html http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-...)