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A capped ISA seems superior than student loan. I wish gov would implement that instead of a non-bankruptable loan. I hope this doesn't make people discard the

A capped ISA seems superior than student loan. I wish gov would implement that instead of a non-bankruptable loan. I hope this doesn't make people discard the ISA idea altogether because of a bad implementation that is unrelated to the ISA itself. When talking about student debt forgiveness, I think it's too extremely. We can make it milder like forgiving interest or converting it to some sort of a capped ISA. This is a much less controversial idea than forgiving the whole debt that I'm not sure I agree with.

alexhutcheson 7y ago
> We can make it milder like forgiving interest or converting it to some sort of a capped ISA. That exists: https://studentaid.gov/manage-loans/repayment/plans/income-driven https://studentaid.gov/manage-loans/repayment/plans/income-d...
- ergocoder 7y ago
  Wait, so why are there many complaints about student debt loop? A capped ISA (like what Lambda offers) would be livable and capped. Why does everyone not get onto this program?
  - dnautics 7y ago
    Mostly optics, I'd say, because it's more obviously fractional slavery than how nondischargeable debt is.
  - alexhutcheson 7y ago
    There are significant differences: - With the Lambda ISA, your remaining balance is forgiven after 2 years of payments, while the federal income-driven repayment plans require 20-25 years of payments. - Lambda ISA has a fixed dollar "cap" (currently $30k), but the "cap" for income-driven repayment plans is however much you borrowed + interest that accrues over the life of the loan. - Most importantly, the Lambda ISA is for a much smaller amount of money. Very few of the news articles about student debt profile students with a balance of only $30k. The horror stories tend to be students who borrowed >$100k, often for graduate study.
- the_watcher 7y ago
  It's not remotely the same. IBR is not capped, takes 25 years for forgiveness, requires payments the entire time (regardless of whether or not you have an income), and the amount forgiven is treated as taxable income (so you get a tax bomb when you actually receive the benefit).
  - learc83 7y ago
    This is all wrong >IBR is not capped It's capped at the 10 year pay off amount. > takes 25 years for forgiveness That's only for people who borrowed before 2014. For people after it's only 20 years. >equires payments the entire time (regardless of whether or not you have an income) Nope. Deferment time counts towards the 20 years. And you will never be required to make payments if you have no income. >the amount forgiven is treated as taxable income (so you get a tax bomb when you actually receive the benefit) Nope. Only the amount forgiven up to the point of solvency. If you don't manage to pay off your debts in 20 years time, you likely lack assets, which means almost none of it will be treated as income.
    - lazyasciiart 7y ago
      > Nope. Only the amount forgiven up to the point of solvency. If you don't manage to pay off your debts in 20 years time, you likely lack assets, which means almost none of it will be treated as income. That's not so likely, really. Assets counted in solvency include your car, your laptop, your clothes, retirement accounts like 401ks and even the value of any life insurance policy held. Standard financial advice is to contribute to retirement before paying above the minimum on student loans, and often even to put away additional savings as well.
      - learc83 7y ago
        If your income is so low that you didn't paying off your Federal student loans after 20 years of income based repayment, you aren't contributing much if anything to a 401k, and you owe more on your car than it's worth. Fair market value of your clothes is barely worth considering. If you make enough that you have significant assets, you almost certainly make enough that you'll be paying the max under the income based repayment plan, and you'll pay off your loans in 10 years. Remember that it's assets minus liabilities just before the discharge, which means the discharged debt counts. The minimum payment is 10% of your discretionary income, and if 10% of your discretionary income didn't pay that loan debt after 20 years, it's very unlikely your income was high enough to build assets that are significantly greater than said loan.
wpietri 7y ago
That would be a step forward. But a government-backed ISA is very much like a special-purpose income tax. If we're going to that, I say we just go all the way. I think of education as like roads, policing, and courts. It's fundamental societal infrastructure. Because the benefits are widespread and diffuse, charging directly for it is difficult. As with primary and secondary education, I think it's ultimately easier to just pay for it as a society and get it back in taxes later.

alexhutcheson 7y ago

> We can make it milder like forgiving interest or converting it to some sort of a capped ISA. That exists: https://studentaid.gov/manage-loans/repayment/plans/income-driven https://studentaid.gov/manage-loans/repayment/plans/income-d...

ergocoder 7y ago
Wait, so why are there many complaints about student debt loop? A capped ISA (like what Lambda offers) would be livable and capped. Why does everyone not get onto this program?
- dnautics 7y ago
  Mostly optics, I'd say, because it's more obviously fractional slavery than how nondischargeable debt is.
- alexhutcheson 7y ago
  There are significant differences: - With the Lambda ISA, your remaining balance is forgiven after 2 years of payments, while the federal income-driven repayment plans require 20-25 years of payments. - Lambda ISA has a fixed dollar "cap" (currently $30k), but the "cap" for income-driven repayment plans is however much you borrowed + interest that accrues over the life of the loan. - Most importantly, the Lambda ISA is for a much smaller amount of money. Very few of the news articles about student debt profile students with a balance of only $30k. The horror stories tend to be students who borrowed >$100k, often for graduate study.
the_watcher 7y ago
It's not remotely the same. IBR is not capped, takes 25 years for forgiveness, requires payments the entire time (regardless of whether or not you have an income), and the amount forgiven is treated as taxable income (so you get a tax bomb when you actually receive the benefit).
- learc83 7y ago
  This is all wrong >IBR is not capped It's capped at the 10 year pay off amount. > takes 25 years for forgiveness That's only for people who borrowed before 2014. For people after it's only 20 years. >equires payments the entire time (regardless of whether or not you have an income) Nope. Deferment time counts towards the 20 years. And you will never be required to make payments if you have no income. >the amount forgiven is treated as taxable income (so you get a tax bomb when you actually receive the benefit) Nope. Only the amount forgiven up to the point of solvency. If you don't manage to pay off your debts in 20 years time, you likely lack assets, which means almost none of it will be treated as income.
  - lazyasciiart 7y ago
    > Nope. Only the amount forgiven up to the point of solvency. If you don't manage to pay off your debts in 20 years time, you likely lack assets, which means almost none of it will be treated as income. That's not so likely, really. Assets counted in solvency include your car, your laptop, your clothes, retirement accounts like 401ks and even the value of any life insurance policy held. Standard financial advice is to contribute to retirement before paying above the minimum on student loans, and often even to put away additional savings as well.
    - learc83 7y ago
      If your income is so low that you didn't paying off your Federal student loans after 20 years of income based repayment, you aren't contributing much if anything to a 401k, and you owe more on your car than it's worth. Fair market value of your clothes is barely worth considering. If you make enough that you have significant assets, you almost certainly make enough that you'll be paying the max under the income based repayment plan, and you'll pay off your loans in 10 years. Remember that it's assets minus liabilities just before the discharge, which means the discharged debt counts. The minimum payment is 10% of your discretionary income, and if 10% of your discretionary income didn't pay that loan debt after 20 years, it's very unlikely your income was high enough to build assets that are significantly greater than said loan.

wpietri 7y ago

That would be a step forward. But a government-backed ISA is very much like a special-purpose income tax. If we're going to that, I say we just go all the way. I think of education as like roads, policing, and courts. It's fundamental societal infrastructure. Because the benefits are widespread and diffuse, charging directly for it is difficult. As with primary and secondary education, I think it's ultimately easier to just pay for it as a society and get it back in taxes later.