Tuesday, January 26, 2010

President Obama Must Have Received My Letter!

Finally, the President has noticed that Middle America is drowning under the weight of student loans and is planning on discussing the issue during the State of the Union Address on Wednesday Night.  Everyone should tune in!  And tell me what he says too, beause I most likely will not watch it. 

Anyhoo, this Forbes Article offers a primer of his proposed solution:

The president's plan would cap payments on federal loans at 10% of a borrower's income for those earning above $33,075 (which is 150% of minimum wage). Under the president's plan someone who earns less than  $33,075 would owe nothing on a monthly basis. Those with higher incomes would have monthly student loan payments that equal 10% of their income above $33,075. The plan also allows loans to be forgiven after 20 years instead of 25.

So, this is great news for the plethora of unemployed attorneys who are earning $0 a year.  This is also great news for the poor attorneys that have managed to snag "experience traps," a.k.a. associate type positions earning $30K that claim to be a good experience. 

The bad news, of course, is that you will be paying the mounting principal and interest one day. In our beautiful Capitalist model, banks don't take risks and they never lose. Remember that!

By the way, the plan does not apply to private loans.  So, since most law students have maxed out on federal loans at the undergrad level, I'm not sure how much that will help my readers.  Maybe this will help reinforce that private loans are to be avoided like the plague--as if you didn't know.

So, in conclusion, I'm happy if he manages to get this passed.  However, I will never be satisfied until private loans are dischargeable in bankruptcy.  To have it any other way is a testament to our government's bow to big business. 

Thanks Obama!  I realize that the New World Order owns you, but just try a little harder.


  1. Obama is a tool of the corporate system that gives us the pretense of "choice." Of course, it is not much of a choice, when the R and D handpuppets are on the right and left hand of one entity.

    Obama will give some nice lip service to the topic, and then per usual he will turn around and DO NOTHING about student loans. Remember, only Big Banks AND Big Industry get bailouts. Socialism, i.e. guaranteed profit, for the corporations and wealthy. "Hard work," "personal responsibility" and capitalism for the rest of us.

    I will not be watching the Smoke and Mirrors of the Union address. We would be better off watching paint dry than viewing this farce.

  2. 20 years still leaves many of us in the position of paying our own student loans AND our children's college tuition at the same time someday. Can I join y'all at the "anything but the SOTU" TV party?

  3. and I'll go one farther -- I don't just want student loan reform, I want TUITION reform. My husband is from another country to which we are considering moving. When our first child was born we called up his brother (whose wife had had their third child about two weeks earlier) and asked, "So, how much should we be saving for little JadzJunior to go to college there?"

    They laughed at us. Why? Because college is FREE there. Yes, their taxes are a little higher and yes they bitch about it. But I also note that they got good jobs when they finished school and have not had trouble paying for groceries. Their universities also do not seem to be larded up with five levels of administrators, special "programs" or (my favorite law school boondoggle) "centers of excellence" that teach nothing to anybody, student unions with rock climbing walls, etc.

    Uh, back to work....

  4. If this is Obama's first offer on the topic, it's pretty dismal. No policies are passed without significant revision, and this one doesn't seem all that great to begin with. Also, one thing that is not clear: If you make $33K or less for 20 years, are all of your federal loans instantly forgiven? I guess this would be a pretty good deal for my ex who graduated, worked one year and married some rich dude. I guess she can count down the years until complete loan forgiveness even though her household income is significant.

  5. I guess this plan builds on the IBR. I think the original plan was also based on 150% of the poverty level. I didn't realize that it would be as high as $33k. The only real difference between this proposal and the current system is that loans are forgiven over 20 years rather than 25 and that the borrower will pay 10% rather 15% of his income (less 1.5 X the poverty level).

    I don't know if it's that bad of a plan. It keeps the payments quite manageable, the time frame isn't that long (only twice the standard repayment period), and taxpayers making under $55k can deduct most of the payments from taxes anyway (since it'll be interest). For anyone who graduated from 2009 on, we shouldn't have any private loans to begin with because of GradPLUS.

    Sure, having all this debt hanging around for years (if we don't strike it rich) stinks. They'll probably also have to make sure the windfall after 20 years isn't taxed. Nonetheless, as much as I don't like law school and Sallie Mae, I don't if the taxpayers should really give us a full bailout. Maybe, Obama should tax the law schools to pay for this, though.

    The major problem is the private loans that students hold from pre-GradPLUS days. Unfortunately, it doesn't look like this proposal will include any bankruptcy reform to make private student loans dischargeable in bankruptcy for you guys.

  6. What the eff? I never heard of Grad Plus! The only private loan I took out was the bar loan.. but still.

  7. I'm glad you didn't have to resort to private loans except for the bar (which is more than enough). GradPLUS wasn't available until the fall of 2006. It allows a graduate student to borrow up to the total cost of attendance (tuition + living expenses) from the government at 8.5%. Not a great deal, but it is subject to IBR, which can dramatically lower one's monthly payments.

  8. Dumbfuck here had an awful first semester at law school. Other than that, same dumbfuck actually did quite well- it didn't matter though- no Law Review, no Summer Associateship. Dumbfuck exacerbates by working at a federal agency after 2nd year, unpaid, and takes out more loans to pay for summer school while working, in order to boost rank. Rank went up, but so did the debt. Unfortunately, the employability prospects did not improve.

    More on point, I'm not even sure how Obama's reform, assuming it even passes, will help. Have you even tried looking at your Access Group payments online? It only has the previous three payments. It is a little hard to see how you're exactly doing, or what little progress you are making when you can only see the previous three payments.

  9. Who is Dumbfuck? The President or you?

  10. Thanks for the link, please note the according to the article any amount forgiven after 25 years is treated as income. This means you pay taxes on it that year. I got burned on that one. When I consolidated my loans, one of the options for rewards for on-time payment for the first few years was a few grand knocked off the loan. What they didn't tell me, was they would 1099 me for it, so while it is forgiven, you will pay taxes on it. They get you coming and going. Love the blog. Keep it up.

  11. I'm Dumbfuck. The President was Editor in Chief of Harvard Law Review and had 647 at graduation. He cannot make a simple argument that even people who are happy with their employer health care are paying for it, because as long as premiums keep increasing, then employers are less likely to increase wages because employers are the health care eats into their salaries.

    Perhaps the spineless hopeminster can ask me to donate a few more bucks... because among the things I voted for a Democrat or was offshore drilling and nuclear energy.

  12. Awww. You're not a Dumbfuck. You were smart enough to make into law school and finish. The problem was that everyone in Law School is usually very intelligent.. so, it's you competing against the smartest people in the country. In any case, you're not alone. You will be fine... you may not have a dream job--but I'm sure you will be able to hustle and make it. If you're ever feeling down, feel free to email me, angelthelawyer@gmail.com. I really don't want anyone to feel down. Part of my writing this blog was to reach out and find out who else is in my situation. You are not alone!



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