Do i have to repay my student loans?
My loans are currently owned by the Department of Education
Practically zero chance of the US defaulting on it’s debts. That isn’t really a practical route to help you get out of your student loans. And if the US does default on it’s debt, paying back your student loans will be the least of your worries…
(ETA: I seem to recall a recent GD thread on the topic of the US defaulting, though I can’t really search right now…you might want to look it up though for more details)
-XT
Yes, you still have to pay your loans. (Although that will be the least of your worries in such an event.)
Longer answers: the U.S. defaulting on its debts has nothing to do with debts that other people owe it. That’s like asking if you need to pay your bills to a company that’s filed for bankruptcy–if they’re still operating, they’ll expect their money from you.
And the longer version of their ending bits: if the economy gets so bad that the U.S. federal government completely repudiates its debts, then most of our economic questions will shift from ‘how can I afford to pay my rent and my student loans and still afford to shop for groceries’, to ‘do I have enough shotgun shells to defend myself from the rioting mobs while still having some left to take down some rats or feral dogs for dinner?’
If the Earth plunges into the core of the Sun, you probably won’t have to pay back your student loans either. So I guess every cloud has a silver lining.
Aside: I think the OP isn’t thinking about the possibility of the “economy being so bad” that the government repudiates its debts, but the rumblings by some members of Congress about voting against raising the debt limit for various political reasons, mostly involving spending and such. So it’s not impossible…
If Congress decides not to raise the debt ceiling, then that means the Treasury can’t issue more debt for a while – until some is paid off. That means the government would find it difficult to finance its operations, but it could still raise taxes to make up the shortfall. That’s not the same as defaulting on existing debt, which would be a disaster.
You have to think of it like this, suppose you owe Bank Of America a $1,000.00
If BoA goes bankrupt, it doesn’t simply cease to exist. First it will have to sell off any of it’s assets. Outstanding loans are assets. So maybe a third party collection company will buy the $1,000 loan you owe BoA for 10¢ on the dollar.
Then this third party collection agency will be after the $1,000 you owed BoA.
A bit oversimplified but basically you’d still be on the hook, just to someone else
On another note President Obama has, I believe passed legislation that allows for some level of federal student loan forgiveness. I think that if you can demonstrate your income is below X amount, you can keep getting a forbearance on repayment. If this goes on long enough (I believe the time span is in years) you can get some measure of forgiveness, but you usually have to had made some payments. I’ll have to check and see if this is something that actually happened or if it was just proposed legislation.
Yes, from what I can see the Obama legislation has created at least these two methods of discharging student loan debt:
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Income Contingent Repayment Plan - Essentially a plan that lets you repay your student loans based on a % of your monthly discretionary income, after 25 years of doing this if your loans still aren’t paid off, they are discharged.
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If you’re a public sector employee (basically you’re employed by government or a non-profit serving the public) then if you’ve made 120 loan payments (10 years of payments) the remaining balance of your loans are discharged.
As far as I know all US debts are owed in US dollars. The US government, assuming the branches are cooperative, can order the Fed and or Treasury to print dollars or put them on the ledger thereby devaluing the dollar and having all the dollars they need to pay people the dollars they are owed.
And on the bright side for the OP, the resulting hyperinflation will make paying back an existing debt fairly easy.
That’s why the Wall Street people who own Washington DC won’t let this happen. They will tax themselves first if they are smart. The dollar’s stability over the last 200 plus years is one of the reasons it is the world’s currency today and that the 2008 crisis did not cause a worldwide depression.