Loans Forgiven

[Aimee918]

I've heard buzz about these economic hard times eventually causing banks to have to forgive student loans.

perhaps that sounds ridiculous...

but i'm in the position to pay mine off at the moment and just can't help but wonder if there's any possibility that i'd be throwing money away by paying off my loans.

is this foolish, wishful thinking?

[Julie Rains]

I hadn't heard of proposals to forgive student loans but I did a search and found a state proposal (that was defeated) to forgive student loans for those who stayed in North Dakota (just an example).

I have a friend who was forgiven her loan for dental school by practicing in an underserved area (she signed up for dental school with this deal in mind, not as an afterthought); there are similar programs for physicians (remember Northern Exposure), nurses, teachers, etc. You could do some research into conditions for loan forgiveness and see if you qualify.

[SouthShoreGirl]

There's actually a loan forgiveness program that was recently passed for social workers. The "catch" is though that you have to pay your loans yourself for 10 years and I believe you can only work for a non-profit. That rules me out, at least for now.......I work for a for-profit. But I may be leaving down the road.....

[Philip Brewer]

All of the proposed loan forgiveness programs related to the hard economic times that I've heard about are targeted at people who really can't pay their loans back.

Of course, that's a bad idea. It punishes people who manage their finances well. It also has the pernicious result of encouraging people to make their finances look worse than they are, in order to qualify for whatever the forgiveness plan calls for. (After all, if spending a few thousand dollars on clothes, a new car, and a new TV would push you down to the point where you could get a few thousand dollars wiped off your debt, that'd be a great deal.)

Much less harmful are the programs Julie mentioned that forgive student loan debt for students who work in underserved areas (as teachers, doctors, etc.). Those usually require that you live in a specific place or do specific work, so it doesn't like like just what you're talking about.

The other kind--the one for people hard-hit by the hard times--don't exist yet, as far as I know. People propose them a lot during hard times, but they rarely actually get passed and funded. I wouldn't manage your finances assuming that there'll be such a program. If there were, you probably wouldn't qualify--and stretching your finances in order to qualify would probably do more harm than good.

[Aimee918]

Philip -

I was hoping to hear from you. (have been reading your stuff for awhile and enjoy your writing and love your frugal and financial tips).

i teach, act and direct in the theater. I don't work with at-risk populations or for the gov't in any way. it doesn't seem as if any current forgiveness program applies to me.

so... I've been given a gift and will pay my loans with that gift.

if loans are forgiven in the near future - it'll really sting.

but in the meantime - this is the moment of transitioning into a new debt free life...

it feels like anything is possible now.

i'm the luckiest gal in the world.

[Philip Brewer]

Originally Posted by Aimee918

if loans are forgiven in the near future - it'll really sting.

Before there's any widespread program to forgive loans, I expect the economy will have to get a lot worse. (My best guess--a loan forgiveness program will only happy when so many loans aren't being paid back that "forgiving" them will just be a technicality--those loans weren't going to be paid back anyway.)

Being debt-free opens up a world of possibilities. Grab your chance and run with it.

And, thanks for the kind words!

[lucille]

Originally Posted by Aimee918

Philip -

I was hoping to hear from you. (have been reading your stuff for awhile and enjoy your writing and love your frugal and financial tips).

i teach, act and direct in the theater. I don't work with at-risk populations or for the gov't in any way. it doesn't seem as if any current forgiveness program applies to me.

so... I've been given a gift and will pay my loans with that gift.

if loans are forgiven in the near future - it'll really sting.

but in the meantime - this is the moment of transitioning into a new debt free life...

it feels like anything is possible now.

i'm the luckiest gal in the world.

Depending on the situation with your loan sometimes you can offer to pay a lump sum smaller than the balance to get the loan paid off. I have heard of other people getting an agreement this way and was able to get a portion of one of mine gone this way. I think they are more willing to do this with amounts that are fees, interest or penalties than on the principal.

[redambrosia]

Well, I know that my mom's student loans from 30 years ago have been forgiven, but that's a different sort of issue, and you probably wouldn't want to be in the position my mom is in to get it to happen.

Also, my dad found out that his student loans will be forgiven if he doesn't pay them for 25 years. So all you have to do is have really bad credit for 25 years and you don't have to pay your loans. Kind of a bad way to do imo though >.>

[SouthShoreGirl]

I think for my field as well, one loan-forgiveness program, you have to be getting paid very little and often work for an agency/area/population that is undesirable to live/work in/for. That's not really a good trade-off personally for me to get my loans forgiven. I'd rather enjoy my job and make enough to make ends meet and then some (which I do now!) then the latter.

It's kinda like some of these teaching fellows programs if you think about it (i.e. NYC Teaching Fellows). Sure you may get a lot of your Master's paid for, but there are often huge cons involved in doing so.

[lucille]

Originally Posted by redambrosia

Well, I know that my mom's student loans from 30 years ago have been forgiven, but that's a different sort of issue, and you probably wouldn't want to be in the position my mom is in to get it to happen.

Also, my dad found out that his student loans will be forgiven if he doesn't pay them for 25 years. So all you have to do is have really bad credit for 25 years and you don't have to pay your loans. Kind of a bad way to do imo though >.>

I read something over the summer where the Dept. of Ed was going to continue pursuing loans when people RETIRE. So if your 65 and you retire and still owe any old loans they will take it out of your social security checks or if you become disabled they will take it out of your SSD checks. The latter really bothers me. If someone is disabled, they can't work. If they can't work, denying them that money that is supposed to be for bare bones living expenses for a student loan debt seems a bit heavy handed. In relation to that the clause to get a loan forgiven for being "disabled" has a different means test than going on SSD. The loan forgiveness requires something close to being a vegetable with no hope of recovery.