Tuesday, June 10, 2014

Pres. Obama's Huge Student Loan Annoucement: A Workable Way for Me to PAYE

President Obama signs the Presidential Memorandum on reducing the burden of student loan debt in the East Room of the White House, June 9, 2014.


So I wasn't going to update the blog tonight but I wanted to note this (for me) important news event involving President Obama's executive action -- in the form of a Presidential Memorandum -- on reducing student loan debt burdens that would significantly expand the "Pay As You Earn" (PAYE) option by Dec. 31, 2015.

At this point, I'm unsure if it would in fact apply to me, but if does, and  IF the GOP doesn't screw it up if when they return to total power (should I say more??), it would be a HUGE and life-changing financial event for me. Recall I presently owe just over $250,000 (and it's still relentlessly rising because I haven't actually started paying, although even if I did, I would have to pay wholly unrealistic amounts to make a dent).

I had written a longer entry with dollar amounts differences (Income-Based Repayment (IBR)) versus PAYE) and time frames (25 years versus 20 years), but it got too involved and, well, personal. Plus I didn't have enough suitable images to break up the text.

In short, for me it's the difference (based on my current income) between $571/month x 300 months = $171,300 versus roughly $380 x 240 months = $91,200. (The current standard payment plan is an off-the-charts and would never-actually-happen at $1,410.01/month x 347 months + $753.59/month x 7 months = $494,548.60.)

Some links:

From the Office of the Vice President: FACTSHEET: Making Student Loans More Affordable

Section 1 of the memorandum is the relevant one. However, it isn't clear if the expansion of the PAYE option will apply to me. That option involves monthly payments of 10 percent of one's monthly discretionary income for 20 years. (Of note, the public service option is 10 percent for 10 years -- no one has actually reached year 10 yet. Now of course, discharged student loans will be counted as income -- but that's many years in the future for me, assuming I'm even around.)

Presently, the PAYE option has so far only been available to those who took out new student loans after October 1, 2007 and received a Direct Loan disbursement after Oct. 1, 2011, i.e., not borrowed after that date. Neither case applies to me.)

Bitchy news media accounts* suggest the PAYE option will now be available to all those with Federal Direct Loans regardless of the date. (I have two gargantuan consolidated Federal Direct loans that were originally a host of Stafford loans from over 20 years. Combined they total $250,000, and are still rising. They are Direct Loans but now are serviced by Sallie Mae.)

*This is because "Professional Centrist" journalists and Fred Hiatt's "stable" of "Washington Consensus" corporate whore-pundits ABSOLUTELY HATE ANYTHING that is working class-friendly or that smells "populist" because it calls into question their own world paradigm and pimped-out values.

"Hi, I'm Fred Hiatt. Have you met the media horses in my WaHoPo stable?"

As for me, I've just started my second "option year" (if I can call it that) of my "mandatory forbearance due to excessive student debt" -- available for up to three years (I believe). I also should have one remaining general forbearance year. In all, if I have figured it correctly, this would bring me to June 2017.

The point here is that Obama's actions actually now enable to me to start making actual, sustained payments on my gargantuan student loans because the amounts are manageable and the time frame theoretically within my actual working age life. And I would start paying by early 2016.

In the meantime, I shall remain in whatever available forbearance options there are for me. I don't have to make any decisions just yet. (I will want to try to get into an expanded PAYE option before the next presidential election in case a Republican wins.) And, YES, I realize that ANYTHING is possible in the coming years with no guarantees. Indeed, I might not even be alive in the mid-2030s or early 2040s.

Furthermore, who knows how America will have changed and what the laws will be, though I suspect the oligarchical overclass / debt indentured servitude underclass chasm will be worse by then even as the country anarchically careens toward a multi-regional breakup.

Regardless, with Obama's actions today, I can say that maybe -- just maybe -- my lifelong shotgun marriage to Strumpet Sallie Mae will not be in fact a life sentence.

So there you have it.


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