Is Student Loan Cancellation In The Stars?

View of space and stars

 

“Either a) they’re going to resume repayments right before the election, which would be suicidal, or b) they’re going [sic] forgive loans right before the election, which would be brilliant.” ~ Michael Love

What’s it gonna be? I saw the tweet above and couldn’t stop thinking about it.

Going back several decades gives some clarity on how we got here with student loans. From many articles that I’ve read, it goes back to President Reagan. A “Common Dreams” piece is especially illuminating.

“Before Reagan became president, states paid 65 percent of the costs of colleges and federal aid covered another 15 or so percent, leaving students to cover the remaining 20 percent. Today the numbers are pretty much reversed.

As soon as he became president, Reagan went after federal aid to students with fervor. Devin Fergus documented for The Washington Post how, as a result, student debt first became a widespread thing across the United States during the early 80s:

‘No federal program suffered deeper cuts than student aid. Spending on higher education was slashed by some 25 percent between 1980 and 1985. … Students eligible for grant assistance freshmen year had to take out student loans to cover their second year.’

It became a mantra for conservatives, particularly in Reagan’s cabinet. Let the kids pay for their own damn ‘liberal’ educations.”

An article on President Reagan’s budget that was published by the American Association of University Professors discusses the reduction in student assistance back in the early 1980s. I was a freshman in college in 1982. I had a mixture of grants, work study and loans. However, I remember in my junior year losing a lot of grant money and having to take on more loans than anticipated. I didn’t understand what was happening and remember being shocked.

The article goes on to say, “With rare exception, every college campus would be affected by the proposed cuts beginning in academic year 1981-82. The degree of impact would vary depending on the current numbers of students utilizing federal student assistance programs and the income status of students and their families. We do not know at this time the impact on the size of the freshman classes of academic years 1981-82 and 1982-83.”

Well, I don’t know the impact on the size of the classes, but it was the beginning of a decades long student loan debt problem. President Reagan also contributed generally to consumer loan debt problems for those with middle and lower incomes. With the Tax Reform Act of 1986, credit card interest and other forms of personal interest were no longer tax deductible. We now know what the theory was really trickling down.

Credit Scores & Debt

Money itself means nothing. It’s a tool created by humans so that we can exchange goods and services in a way that is easier than bartering.

We reduce people to a credit score based on whether they are deemed “worthy” of credit.  Buying a home is supposed to be the American dream, but most people have to go into debt to get it. Credit scores are looked at by employers and can impact one’s ability to get employment. Unless you have other income, you can’t pay back debt without a job. It’s a truly vicious cycle.

Credit shouldn’t be needed to get the basics in life like housing, transportation, education, health care and literal freedom. Many if not most Americans go into debt to obtain at least a few of these. Most obtain mortgages to buy a house. People use loans to finance cars. Student loans are used for education. After receiving health care, many are often saddled with medical debt. For those unlucky enough to be arrested without sufficient monetary resources, if they cannot pay bail, they may remain incarcerated.

Library Fee Debt

There seems to be a collective recognition that the idea of debt is wrong and things can be different. Everything that we have in life materially, like cars, phones, houses, money, unless it already existed in nature like plants and water, all the systems in place in society (like debt and taxes) were created, built, and manufactured by people. It didn’t have to be like this from the beginning and we don’t have to continue down this path now. Things can change.

My local public library stopped collecting late fees for overdue books and many other libraries are doing the same. There never had to be late fees to begin with. It became a debt for borrowing a public book. How many people were not able to borrow books because they owed money? 130,000 just in San Diego according to a November 2021 article by the Public Library Association. So people were prevented from using a resource to gain knowledge because of debt. Does that seem right? The pandemic zeitgeist allowed the idea of pausing library fines and a collective shift to thinking that these fees are wrong.

A March 2022 New York Times article followed-up on the elimination of late fees across New York’s public library system. A flood of overdue items were returned to the branches and visitors increased as well. Debt cancellation has a positive effect. It gives power back to the people burdened by it.

The Rich & Debt

There’s a reason why Elon Musk and Jamie Dimon are feeling “super bad” about the economy. Maybe because broad debt cancellation would impact companies and other institutions whose sole purpose is to make money off of student loan debt. There would be a massive reshuffling of the economy. Mitt Romney, one of the wealthiest members of Congress, has proposed legislation to prevent President Biden from cancelling student loan debt. The mega rich are not happy about the prospect.

The pandemic turned life upside down in just about every way possible. As things begin shifting toward a new normal, we can observe how things will land and hopefully imagine a different and better way.

Debt is a fundamental system in our market based economy intentionally put in place in the United States to favor the rich and control those who are not. The tax system favors debt held by the wealthy, but not debt held by others.

According to the Education Data Initiative, 43.4 million people have federal student loan debt. The average balance owed is $37,014.00. If you include private student loan debt, the amount is closer to $41,000.00. In total, the federal government is owed over $1.606 trillion dollars in student loans. Research from Insight Into Diversity states that two-thirds of the people holding this student loan debt are women and most of these women are Black.

The government spends money by incurring debt all the time and forgives it too. But this country seems to fundamentally disagree with who deserves money and who doesn’t. Business need is favored over personal need. It also disagrees with whose debt should be cancelled. According to Pandemic Oversight, many PPL loans were forgiven.

“More than 11.8 million Paycheck Protection Program (PPP) loans were issued as of June 30, 2021, with 708 borrowers receiving the maximum loan amount of $10 million. Of the total number of loans, 4.1 million have been forgiven. The average dollar amount forgiven was $95,700. Of the borrowers receiving the maximum amount, 323 loans have been partially or fully forgiven.”

PPL loans were issued to businesses on the premise that the money would be used to save jobs. That these companies could not pay their workers otherwise. When I heard that Tom Brady’s health and wellness company received close to a million dollars from this program, I had thoughts. Between his wealth and Gisele’s, they couldn’t otherwise afford to pay their employees? Hmmm.

Many companies didn’t have to pay back the money. The PPL program has also been called “the biggest fraud in a generation” based on the hundreds of billions of dollars spent on luxury items and not employee paychecks.

The difference in outrage between what is shown toward PPL loan forgiveness and the idea of student loan forgiveness is stark and monumental.

Who Has Student Loan Debt?

Yet, most likely voters favor student debt cancellation. Just days ago, hundreds of organizations jointly called on President Biden to keep his campaign promise and cancel student loan debt, stating that it will “strengthen the economy, tackle racial disparities, and provide much-needed relief to help all Americans weather the pandemic and record inflation.” Recent headlines state that President Biden may forgive $10,000.00 per student borrower. However, that’s just a drop in the bucket and would do nothing for anyone with debt larger than that. Myself included. Why? Interest capitalization.

From what I see personally with my own student loans, every July, the interest capitalizes. So whatever progress was made during the year in paying towards the loan, the unpaid interest is added again and the loan keeps growing. This happens every year. So the principal keeps getting exponentially bigger. It is a never ending pit. A trap. Unless you have a lot of money and can make very large payments, the loan will never be paid off. When I took out my student loans, I understood that there was interest, but not how much the interest would be repeatedly added to the principal. This issue is very personal to me and I cannot even pretend to be neutral.

So many people are caught in the student loan debt trap. It’s very difficult to make large payments unless you accumulate a certain amount of wealth or someone helps you. President Obama and Kerry Washington were both unable to pay off their student loans until they started making the kind of money that comes from fame.

Things do seem to be changing. Over the past few months on Twitter, I’ve noticed people exclaiming that their student loans were forgiven. Mostly through the Public Service Loan Forgiveness program (PSLF). Over the years, graduates sought to have the loans forgiven, but virtually nobody was ever eligible. The Biden Administration has been taking another look at the programs to see the flaws in the system. Actually those flaws seem intentional. Keeping people in debt seems to be a thing with this country. Debt is as American as mass shootings.

However, the momentum shift by the federal government seems to be only for piecemeal cancellation. Forgiveness for students who attended certain for-profit schools is part of that trend.

Broken Student Loan System

Most recently I’ve read that President Biden is forgiving loans for 28,000 student borrowers who attended for-profit Marinello Schools of Beauty and 560,000 student borrowers of for-profit Corinthian Colleges.

If in the past you tried to get your loans forgiven through PSLF, try again. It’s now working for some people. Hundreds of thousands of people could be eligible to have those loans forgiven. The Twitter celebrations of newfound freedom from student loan debt are beautiful. Maybe the tide is changing.

President Biden extended the pause on federal student loan payments for the 7th time since the pauses began in March 2020. This time the pause is through August 31, 2022. The student loan system is broken and exactly how broken is becoming more clear.

A recent NPR investigation reveals that the federal student loan system has been badly mismanaged. Those tasked with managing the loans have not always kept track of payments made on those loans. Often student loans are eligible for cancellation after a certain number of years or payments. But those servicing the loans don’t always have systems in place to let borrowers know when they have reached eligibility. The system is a mess and the burden of endless years of debt falls on those who can least afford it. Revelations in the article are stunning, including the portion below.

Before the days of multiple loan servicers, there was simply one. From 1992 to 2009, ACS Education Services managed the entire federal student loan portfolio.

But when the federal government ended its contract with ACS and the company began transferring borrowers’ profiles to other servicers, it became clear that ACS had made a dizzying number of errors — more than 5 million according to a 2020 report.

ACS has also faced allegations of mismanaging IDR, misleading borrowers and of taking months, even years in some cases, to correct and update borrowers’ records.

Nearly every borrower who could be eligible for cancellation under IDR in the next few years was serviced by ACS at some point. That means their current records, including the count of their progress toward cancellation, could be built on the sand of erroneous data.

This matters now more than ever, after several servicers have ended their federal contracts and more than a quarter of all borrowers have been — or soon will be — transferred to new servicers.

Broad Student Loan Cancellation?

But will President Biden’s willingness to cancel student loans ever extend to a broader group of people? Millions are bogged down with student loan debt. Not just young people, middle aged and elderly as well. And yes, still me. Some people even lose their social security benefits because of it. An AARP article detailed the problem.

“In fiscal year 2015 alone, almost 114,000 borrowers age 50 and older had Social Security benefits seized to repay defaulted federal student loans, according to a 2016 Government Accountability Office report. Half of those were receiving Social Security disability payments.”

People give money here and there to patch up problems for the moment or maybe a season. But not a lifetime. The Debt Collective, which is the nation’s first debtors’ union, recently “purchased purchased $1.7M of unpaid tuition bills that Black women previously owed to Bennett College — and canceled it all.” That’s a private organization trying to patch up the holes in a bigger system.

A Washington Post article examined how the student loan pause has greatly helped Black women especially, because we as a group, hold a disproportionate share of student loan debt. The pause has allowed some to purchase homes, accumulate savings and catch up on bills. For me, I’ve been able to catch my breath for a bit. But I’m still waiting for the full exhale.

Systemic change is necessary to change a person’s lifetime — not just a moment in time. Full student debt cancellation would change the system and right wrongs impacting generations. It would begin a fundamental shift in the underpinning of American society.

The Current Astrology

I’m certainly not an astrologer, but I believe there is something to astrology. For thousands of years, humans have looked to the sky for guidance. After all, many believe that three wise men followed a star to find a special newborn baby. I follow a few astrologers on social media and have noticed some trends.

Mercury just stationed direct yesterday and generally what was hidden from sight may now be revealed. So the time may be right for getting answers on the big picture with student loan cancellation. According to a podcast by Chani Nicholas, “Mercury retrogrades point out what has never worked. What has been broken for awhile or what is completely unsustainable.” Mercury helps us to realize exactly how problematic things are.

Pluto Return Of The United States

Nations have astrological birth charts just like people. At different times, planets travel to the same places they were located when someone was born. Some planets travel faster or slower than others. The moon travels through every astrological sign within a month. The sun travels through every sign over a year. Instead of wishing people “Happy Birthday!,” some say “Happy Solar Return!” Which is the day and time each year when the sun is in the same spot as it was when you were born.

There are other planetary returns too. Cycles are different for each. If we live to be 84 years old, we could experience a Uranus return. Many people talk about our first Saturn return at around 29 years of age. Depending on how long we live, we could have two or three Saturn returns.

Now Pluto is another story. A Pluto return is 248 years. No human will experience a Pluto return. But a nation can. And the buzz about the Pluto return of the United States has been ever increasing over the last few years.

Astrologer Chani Nicholas was interviewed on a podcast about this important time that we’re living through. Her interview starts around 21 minutes into the show. She says that the Pluto return started in 2008 and makes us reckon with everything. It all gets exposed and we have to heal from the past.

According to what Pluto impacts, it was no coincidence that during 2008, we were in a financial crisis and that we elected President Obama as the first Black president. The unsustainable housing market was exposed for what it was. Shaky at best. Racism that has always been a part of this country became louder and uglier.

Nicholas says that Pluto asks what we have learned about our resources and what are we going to do about it. It’s a reckoning point.

An article by Astrologer Whitney Will also states that the impacts of the Pluto return started in 2008 and that there are “three exact hits” that happen in 2022.

“At the time of the signing of the Declaration, Pluto was toward the end of Capricorn at 27 degrees, falling in the part of the chart that relates to resources, how they are acquired and how one manages finances. In this position, Pluto describes a fixation or complex that the United States will and does have with economics, and a difficulty in relating to this topic with any kind of moderation. When it comes to money, the United States as an entity is likely to relate in compulsive ways and with a great deal of psychological shadow involved. When Pluto comes back around, we will have to reconcile with the darker parts of our history.”

The Hoodwitch refers to the Pluto return of the United States as a “historic event that will rock the country and change our lives.” She continues.

“The foundation of the U.S. has many cracks in it, which is why we can expect to see it being rebuilt in a better way in which the people hold the power. The government has to be accountable and responsible for the wrong doings of its past — particularly the racist and misogynistic roots that the country was founded on. The time and reckoning has come for the country to make reparations and redefine the culture that its founders built. A restoration is necessary.”

It’s no revelation to most that Nancy Reagan had an astrologer that she often consulted. A PBS article about the death of the astrologer, Joan Quigley, says that neither President Reagan nor his wife ever admitted to using astrology to make policies or decisions. However, Quigley denied that. In the end, we’ll never know.

Astrology doesn’t give definite answers or predict the future. But it can help with the timing of things that we are trying to accomplish and guide us in other ways. Wouldn’t it be quite cinematic, if the astrology for this country could help undo the decades of damage done by America’s first actor president?

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Image Credit: ESA/NASA

A Hole In The Massachusetts Earned Sick Time Law

Cup of tea with lemon for sick day

Being a leap year, there’s an extra day standing between us and spring. So, us New Englanders have to tough out winter even longer. February is the worst of the season and we’re still at the beginning. The cold temperatures usually mean that more of us are sick. CBS News recently reported that because the country has close to full employment, the places where we work have an increase in people, so the flu spreads even easier.

Whether it’s a cold, the flu or some other bug, there’s probably a lot of coughing, sneezing and sniffling where you work. Everyone says if you’re sick, don’t go in. Take a day or two off to rest and get better.

But that’s often easier said than done. Especially so soon after the holidays. Money spent on gifts may have left some in a fragile financial state and the holidays themselves may have been unpaid — further exacerbating the situation. Not all workers have paid holidays.

The time frame from the end of November through mid-January (Thanksgiving, Christmas, New Years and Martin Luther King, Jr. Day) often comes with several smaller weekly paychecks due to all the holidays. So taking unpaid time off at this time of year because of illness may not be an option. If anything, some workers may be trying to work extra time to make up for the money lost.

The Massachusetts Earned Sick Time Law is presumably meant to address most workers, but its focus is on permanent employees within larger companies – 11 employees or more. This law may seem fair on its face, but it’s not always fair in its application. Even though I had been working full time, one year, I ended up not having sick time available to use even though I earned it. Contract workers aren’t able to use sick leave in the same way (or sometimes at all) as permanent workers.

Contract vs Permanent

The term contract employee is used interchangeably with temporary employee. Both terms mean that the employee is hired via a contract for a particular job at a set rate of pay. This worker does not become part of the staff where they work and is not a permanent employee.

According to the American Staffing Association, about 17 million temporary and contract employees are hired each year in the United States by staffing companies. Most work full-time and enjoy having a flexible schedule. The average assignment is around two and a half months and can range from a few hours to several years.

Staffing statistics specific to Massachusetts give some insight as well. Annual sales are $4.3 billion. Each week, 68,100 temporary employees are part of the workforce in this state. Annually, that’s 354,200 people doing contract work in Massachusetts.

47% of these workers are in the engineering, IT and scientific sector. 15% are doing industrial work and another 15% are doing clerical and administrative work in an office. 7% are doing professional or managerial work. 12% are part of an uncategorized sector and 4% work in health care.

I’ve been a full-time contract attorney for many years, working at mostly large law firms in the Boston area. I’ve worked on dozens of projects. They have been as short as one day to as long as nearly four years. But as the previously stated statistics say, most recently, my projects have generally been two to three months.

To keep working steadily, I’m signed up with multiple agencies. Depending upon how long a project lasts, I might work for one agency for a year or more. Or I may work for several agencies for a few weeks and then for a few months. Most of these agencies I have worked with over many years. Each project may be new, but I am not a new employee. There is a work history.

The Problem: Using Massachusetts Sick Time

Earned sick time in Massachusetts provides that workers can earn and use up to 40 hours of sick time per year. Workers earn an hour of sick leave for every 30 hours worked. Employers can have their own policies providing more generous leave options than required by law.

Earning sick time isn’t the problem. The problem is using sick time that has already been earned. The regulations give some clarity. Sick time can’t be used until 90 days after the first date of actual work. Also, after a 12 month break in service, the 90-day vesting period starts again.

When a contractor is working on a project on average for about 75 days and works for multiple agencies, they may not return to the same agency for another year or more. In this scenario, the sick time that they earned is probably lost by the time they return to that employer.

This happened to me. It hasn’t happened often, but I went about one year where I couldn’t use the sick time that I had earned. By the next year, I had lost most if not all of it and had to start the 90 days again. This has also happened to colleagues. If this is happening to us, it might be happening to contractors in different sectors of the workforce as well.

According to the Institute for Women’s Policy Research, “approximately 728,000 private sector workers gained access to earned sick time under the law; of those, 431,000 workers lacked paid leave benefits of any kind (including vacation) and are newly eligible to receive leave under the law.”

The Solution: Amend The Law

I’m one of those workers who for the most part didn’t have paid leave benefits before this 2015 law. I’m grateful for it. But hindsight is 2020 and so is the year. Since we’ve had five years to see how this law works, I believe it’s time to take a closer look and amend the law, so it works for more of us.

However, there is another issue. Does anyone care? I’m attuned to the gaps in the law because I have firsthand experience. I was talking to a friend at work about this and she said that nobody cares how it impacts us. It felt quite hurtful, but maybe it’s true.

I plan to contact my state legislators about an amendment — and it may come to nothing. But at least I wrote this and raised the issue. Much like when I wrote about the gap in the Family Medical Leave Act when it comes to siblings. I want others in similar situations to know that they are not alone. It’s happening to other people as well. And even though it may not be most people, someone else does care.

Tax Day: Tax Tips for Bloggers

*This post is not tax or legal advice. See full disclosure below.*

1040 Tax form

It’s Tax Day! At least for those of you not in Maine or Massachusetts. We have until April 19th to file our returns, because of Patriots’ Day today.

Back in 2012 and 2014, I wrote some posts with tax tips for bloggers. Since the subject of blogging income interests me and many readers as well, I thought I’d revisit the topic. There’s always a new crop of bloggers out there!

Generally, if you earn money blogging, that is considered income. You may have accidentally become an entrepreneur by turning your passion project into a job. Or maybe from the beginning, you wanted to earn money by blogging.

The way you think about your blogging work is key, especially when it comes to the IRS. Once you have the intent to make a profit and you treat your blogging like a business, then you may be considered self-employed.

While you may not be earning full-time money that you can live on, it doesn’t matter. You may be considered self-employed even with a part-time business. The threshold for earnings is surprisingly low according to the IRS.

You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement …

There are benefits to treating your blogging as work that you are doing for profit versus a hobby. Below is an IRS rule to remember.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business or for the production of income. Trade or business activities and activities engaged in for the production of income are activities engaged in for profit.

If you are paying to eat at a restaurant, so you blog about your meal and you are earning advertising revenue on your blog, you might be able to deduct the cost of your meal as an ordinary and necessary expense for conducting the business of your blog.

These are just a few things to think about when you earn money from blogging. Below are links to some recent articles that go into more detail. You may find them interesting and helpful as well.

If you already filed for 2015, this post may come to late, but you can always start planning for next year!

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Tax Tips for Bloggers [Intuit Turbo Tax]

Travel Blogger Denied Tax Writeoff For European Backpacking Trip [Forbes]

Tax Time: What Bloggers Need to Know [Katy Widrick]

Business Expenses for Bloggers (What can I deduct?) [Brilliant Business Moms]

Taxes for Food Bloggers: Deductions. [Fervent Foodie]

The Blogger’s Guide to Tax Deductions [Kimi Who?]

Tax Filing Tips for Freelance Bloggers in the US, UK and Canada [Be a Freelance Blogger]

Home Office Tax Deductions for Small Business Owners [NerdWallet]

Favorite tax deductions of personal finance bloggers [PolicyGenius]

Blogging and Taxes – What You Need to Know [Making Sense of Cents]

Tax Tips for Freelancers in 2016 [Artisan Blog]

Blog Tip Thursday: Tax Tips for Bloggers, Part 1 [Healthy Living Blogs]

Blog Top Thursday: Tax Tips for Bloggers, Part 2 [Healthy Living Blogs]

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Disclaimer: While I am a Massachusetts licensed attorney, I’m not in private practice and not seeking clients. This post is not meant as legal or tax advice. Every individual has unique circumstances and questions. While I love comments on this blog and emails, no tax or legal questions will be answered here or via email. Please consult an attorney or accountant licensed in your jurisdiction for specific questions. The information contained in this post is for general informational purposes only and geared toward bloggers in the United States.

Photo: Image courtesy of Arvind Balaraman / FreeDigitalPhotos.net

Top 8 Links: The Business of Sponsored Blog Posts

cash for sponsored blog postsThe blogging community is a very supportive one. Since I’ve found so much good information from other bloggers, whenever I find information that I find helpful, I try to share it too.

My blog posts Tax Tips For Bloggers and Tax Deductions & Food Bloggers seem to be helpful to many.

I just found some posts to help bloggers when it comes to pricing sponsored blog posts. For those of us who try to make money doing what we love, these posts offer some food for thought.

I’ve certainly gained some new insight. Whether you are a food, travel, fashion or any other type of blogger, these links may help you with sponsored blog posts too!

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{Blogging} The Money Equation for Sponsored Post (Wooden Spoons Kitchen)

Reader Q & A: How much should I charge for a blog post or sponsored post? (Secret Blogger’s Business)

Are You Being Conned? Fair Sponsored Blog Post Rates and Best Practice Guidelines (Successful Blogging)

How Much Bloggers Charge to Publish Sponsored Content (MarketingProfs)

Sponsored Post Rates: Are You Undercharging? (Babble)

How Much to Charge for Sponsored Content – is This a Question You’ve Ever Asked Yourself? (ProBlogger)

How To Set A Sponsored Post Rate (Bonjour, Blogger!)

How to price for sponsored post and recipe development (Kitchen Table Mastery)

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Photo Credit: 100 dollar bills by Stockvault.net