Thanks Joe. Joel is very appreciative

Psst. the STEM designation has already been turned into a joke.

 

Just “quit paying” is a pretty stupid idea.

Who “told” them this? And who are all these “most people?” News to me, and I pay loans right now. MOHELA was VERY CLEAR that I would start payments again in September, and that’s precisely what happened. MOHELA is the formal USG facilitator for all forgiveness. Even if you pay every last dime to another servicer like Nelnet you apply for forgiveness with MOHELA. There was never a moment of ambiguity or hint-hint about the restart.

You are beyond forbearance with this “quit” idea. You are in default. The standard penalty for that is All Due Now and aggressive collection. Maybe they sell your debt to a collection agency and at least the interest stops. But that will take a minimum of many months and most likely more like years. Meter running the whole time.

If someone was so sure about what is most certainly a DOA “lawsuit” (because how you described it does not exist in this time-space continuum) they should most certainly keep paying until this massive win. Otherwise the outcomes are life-altering capitalization on compounding balances without formal penalty (best) and they’ll pay those OG loans 5-6 times instead of just 2-3, or a hammer-of-God collection effort that will make all the rest of life seem unworthit.

Additionally, all forgiveness programs have strings attached. Other than the fake colleges, if you have a legitimate loan through a legitimate institution, the best terms are 120 straight on-time/in-full. Most are 240 OTIF. 10 or 20 years, never a day late or dollar short.

This guy (from what I can tell) benefited from the BA going back and crediting him for payments that were previously uncounted. That got him to 20+ years of payments. There is no arbitrary “15 years” unless he was in a public position, and I assume the point of only telling us “professional musician” was a slick way of saying he was on a 240 payment plan. They could have just said that. All the cloak and dagger is max sketch.

This is why this story needs much more detail before the appropriate Rage Amps can be turned up to 11.

 

First of all, anyone would have lent this idiot $250K in the first place almost deserves to get stuck. Second, this is another example of someone who made some really poor decisions and then gets bailed out by a government that far too often fails to hold its citizens accountable.

Hopefully this go getter enjoys his India sabbatical so much that he decides to stay there.

 

Disagree. If he paid back the original principal, it's very relevant.

One Clarence Thomas's wealthy friends gave him a loan to buy a RV and then forgave most of the loan (interest) because Thomas reportedly had paid off the principal.

 

Good luck to them. Somebody is selling them oceanfront property in Kansas.

 

The thread is not a sore spot for me, your ignorant take on studying music is. I'm not generally in favor of SL forgiveness, but as others have noted, there are many missing details here. For example, it's unlikely "we" are paying 250k for anything.

 

No entity lent 250k to this fellow. The loan forgiveness program only applies to direct federal loans and FFEL loans held by the Education Department, which have limits far below 250k. The high balance was not even due to high tuition; it was a matter of forbearance and ballooned interest.

 

My guess is that Joel's forgiveness of $250,000 is a tiny drop in the bucket compared with the debts discharged through the bankruptcies of organizations run by a certain failed real estate developer, reality television star and defeated politician.
Fact Checking: Donald Trump Has Filed Bankruptcy Six Times.

Fact Checking: Has Donald Trump filed for bankruptcy relief 4 or 6 times?

Let’s do some fact checking about how many times Donald Trump has filed for bankruptcy protection and why there is some debate over this number. During the 2016 presidential campaign, Hillary Clinton correctly pointed out that Donald Trump had filed bankruptcy 6 times. Here is a quick breakdown of the six Chapter 11 bankruptcy filings by companies owned by Donald Trump. All six of Donald Trump’s bankruptcy filings were prior to him becoming our current U.S. President.

1. 1991: Trump’s Taj Mahal
2. 1992: First of two Atlantic City casinos owned by Donald Trump.
3. 1992: Second of two Atlantic City casinos owned by Donald Trump.
4. 1992: Trump’s Plaza Hotel in New York City
5. 2004: Trump’s Hotels and Casinos Resorts
6. 2009: Trump’s Entertainment Resorts

​

 

Aaaaand this is the desired outcome of the lack of transparency on this story, IMO.

He did not get $250K. As mentioned in the article, he was in forbearance for some amount of time. Another oddly glaring omission, we don’t know how long. In forbearance means the interest is being accrued and periodically capitalized.

If you get $40K at 7% which would be quite a deal at $10K/year undergrad, and it is unsubsidized, it will be $49000 before the first payment is due (6 months after on-time graduation.) That will be $390/month for 20 years, and $91K paid back (more interest than the original loan.)

Any hiccup at all and obviously that can circle the drain fast. Just a couple years of forbearance can erase all previous progress. An extended forbearance can make it essentially a lifetime albatross.

If he was on a standard 10 year payback, that is $600/month, with no forbearance or penalties.

Since the article makes me guess, I will make one with the available data. I believe they mentioned “since 1998.” That makes 26 years, but since it is April, let’s call it 25.

He was in forbearance for some time, although they didn’t tell us how long.

He could “barely make” payments. So he DID pay at least some.

He is a “professional musician.” That doesn’t qualify for PSLF, but it would for some other non-public forgiveness programs. Practically impossible that he would be paying after 26 years on a straight 10 year payback, so I’ll assume he was on a 240.

Let’s say he doubled my example and got $80K. That would put him at about $110K at first payment. He’s already up to about $7500 interest annually.

And that’s about $620/month for 20 years, $69K interest on the $80K loan.

If he made that payment for 15 of the 25 years, that’s about $112K. That’s a pretty good ROI on a dude who only paid “60%” of his bill. 40% or so ROI.

And if he is in forbearance for essentially any time at all before almost the end that balance is going to erase at probably a 5:1 or so ratio. A missed month is going to add 5 months of payments. Another one will another 6, and so on.

He could have easily have paid back the whole thing plus a handsome sum and still be at $250K.

If he had paid 10 straight years, he’d still owe $75K, after paying $74K. He basically still owes the whole loan even after almost paying almost the whole original.

To be fair, at 7% he’d still have to owe about $150K for the last 15 years to get to $250K. So the above likely does not accurately predict his sitch. But if the forbearance happened early, as opposed to 10 years of payment at the beginning, then getting to $250K at year 25 could happen “easier.” The interest would be piling up faster. He could still make 10 years of payments total, but not the first 10. I have lost the thread on the calculations at this point and am not willing to do all the math, but he could still have paid back a healthy sum over $80K.

Obviously the beginning amount, rate, and payment history leads to basically infinite possible realities. But very few of them end with him getting some windfall deal.

Thus the need for the details. I am not advocating for someone to get a complete handout for college (on this thread anyway; perhaps I might on a different thread, but even I am in favor of plenty of sensible qualifiers.)

Just saying that this is almost certainly not the giveaway that the article implies. And if it is, then it should have just said that too, instead of allowing everyone to imagine their own preferred reality, including me.

 

Oh, also, until SAVE, which does not accrue/capitalize interest so long as you are paying, the other income driven plans don’t feature that. So in the above scenarios, paying less than the standard repayments will mean an ever increasing balance. You can literally never pay off the loan that way. Interest outpaces payment. He may have been doing that. Like REPAY or REPAYE or a couple of other plans.

In that scenario he would not pay as much as the above. IOW, exceedingly unlikely that he would end up having paid as nearly a generous interest amount before forgiveness. But also still unlikely it was some sort of jaw-dropping giveaway. I paid a loan back on the standard 10 year plan and got skewered. I paid a second one back on the REPAYE plan and just got moderately fleeced. But the second one was def better than the first.

And while I was never in forbearance I assure you I was working every angle to not pay more than legally required.

I mean there is a reason banks fall all over themselves to get in on this action. Borrowers are definitely losing, the only question is the margin. Usually a blowout.

 

Let's be honest, they were never going to get $250k from the guy. And if he paid back the principal, I say no harm, no foul. Getting the loan monkey off his back ought to be a positive for the economy.

 

And just one more thing, I am not trying to commandeer a thread…

The reason the REPAYE was a better gig for me was because it is a lower required monthly payment. So when things were sketchy you didn’t have a $400 bill, it was more like $220 although it was updated yearly to reflect your “disposable” income. In my case, I finally did graduate but almost simultaneously my stepdad had a quintuple bypass, my mom was diagnosed with liver disease, and my brother got busted on a bunch of hillbilliness. It was chaos for a good two years, and I was suddenly a financial supporter to everyone including my nephew. I had to buy him clothes, give him lunch money, drive him all over hell to practices and camps and games. A new trombone. New bat. Get him stuff for Xmas so he didn’t feel like the whole world was in free-fall and such. That little bit of extra money was meaningful. Driving the parents to UVA and UT weekly for specialist appointments, Medicare not covering much, hotels, and all that. Oh, and my dog got lymphoma. She also went to UT. Well, at least we could carpool to Knoxville!

But eventually things changed and I was able to make + payments and paid it off years early, which put me just a handful of payments into pure profit territory. I still ended up paying a good 115% or so.

There is a forgiveness option (with qualifiers) for REPAYE after 20 years, but it’s just a slow bleed out. Unless you are quite literally struggling to find calories that route is not a good one. You’ll end up doubling the original amount. Although had my own fortune not changed I may very well have been the person it is designed for. Lower monthly payments to keep the ship afloat, basically in perpetuity. I got lucky and was able to keep it to a standard ass-kicking.

I wasn’t able to overpay on the first loan, standard 10 years. Just paid it until the bitter end. That one was about $420/month and ended up something like 140%. Didn’t even graduate on that one. And this was decades ago. $420 was a LOT.

 

DING DING DING! We have a winner.

 

Yeh, but the dude just looks like a tool. So he has to be guilty.

 

Too bad this doesn’t work for mortgage payments, or any other loans.

I wonder why that is?

 

Yeah. Funny how the text books are hundreds of dollars.
I always bought used when I could. Pre www.
Surprised they don’t have online versions but I’m sure the fees for publishers would be crazy.

 

Exactly this. I had a professor at UF, David Conrad I think, who walking around class saw I had a used textbook that he had written. His publisher updated it every year so it was the wrong edition but honestly the same book. He joked that by buying used I was taking food out of his kids mouths. I asked what his usual take was per book. He said he was a gentleman and didn’t discuss money. I handed him a ten told him now we both were ahead. He to his credit didn’t hold it against me and put the ten down on my desk.

a lot of textbooks are online now and you get a non transferable code. The prices are still usurious. I hope hackers have figured out work around.

 

1. LOL no if you think a less educated workforce is good for the American economy.
2. Nobody loaned this guy $250,000.