It’s not just loan forgiveness; Biden also re-wrote loan repayment terms for many students

One of the things I try to stress to conservative boomers my age is the fact that, when we were young in the 1960s and ’70s, corporations paid something resembling their fair share of taxes, at least with federal taxes.

The federal corporate rate was graduated, with top rates on corporate income over $25,000 topping out between 48 and 52 percent. (It’s now 21 percent tops.)

And that system in the 1960s and ’70s seemed perfectly normal to everyone, and a lot of corporations just paid their taxes because there weren’t all of the overseas tax havens where corporations could claim a post office box in Malta as their headquarters.

(An aside: Malta had been effectively taxing foreign corporations at a rate of 5% even if their “headquarters” was a single-person office above a laundromat. Malta is being punished, at least for now, because of the way it encouraged these kinds of tax crimes. Great article here.)

The point of all of this is that, when corporations were good civic citizens, cities and towns and states had plenty of money to have people on their payrolls who were paid livable wages. Teachers weren’t paying for school supplies, schools had plenty of books and school nurses and guidance counselors and music/art programs. Public parks and street/bridge repairs were adequate to what was needed.

Public universities and colleges were well-funded by the state and federal governments and, in fact, got much of their operating budgets from public funds. So tuition was also low.

Then the Republican Party started to be taken over by right-wing billionaires who financed candidates and ad campaigns to convince Americans that corporate taxes were too high, that private sector workers were somehow inherently more efficient than government employees (they’re not) and that every dollar spent on government was a dollar that corporations could not spend to improve their profits that those corporations would magically “trickle down” to average workers.

Of course none of that money trickled down and today we know that record corporate profits end up nowhere remotely close to average workers, but instead make fabulously rich people even richer.

I bring all this up because my fellow boomers seems to forget how well government functioned before Ronald Reagan was elected. How much more fair it was– to everyone.

And once you realize how much better you had it than college students today, perhaps you can actually be happy about the things outlined in this CNBC article:

The day the Biden administration unveiled its highly anticipated student loan forgiveness plan was a “celebratory day” for Justin Short.

Short, 34, graduated from the University of Missouri in 2012 with a degree in hospitality management, $47,000 in federal student loans and $5,800 in private student loans. Like many borrowers, his college debt has plagued his personal and financial decisions for years.

So while he found relief in many of the announcements coming from the White House on Aug. 24 — $10,000 in debt forgiveness, another payment pause extension through the end of the year — Short was most interested in the announcement of proposed changes to income-driven repayment plans.

The Department of Education’s new plan would cap monthly payments on undergraduate debt to 5% of discretionary income, down from the usual 10% to 15% on existing plans.

The proposal also raises the amount of money considered non-discretionary income and shielded from being used to calculate student loan payments.

It would cover any accrued unpaid interest so that no borrower’s balance would grow if they made a qualifying payment.

And it would forgive loan balances after 10 years of payments, instead of the usual 20, for those with original loan balances of $12,000 or less

This “sleeper” detail of the loan forgiveness plan could be “a game-changer” for millions of borrowers with remaining balances, says Julie Peller, executive director at Higher Learning Advocates, a bipartisan higher education nonprofit.

“I wish people were talking about this more than the $10,000 piece,” Short says, “because this will put more money into the pockets of everyday, middle-class Americans who need that extra help, especially when student loan payments resume on Jan. 1.”

“This has huge implications,” he adds.

As I said earlier, college was cheap for most boomers who attended public universities. So cheap that student loans tended to be small — if you had one at all — and the terms favored students instead of the banks. Unlike today where even some student loan borrowers who pay regularly on their loans watch in horror as the principal barely goes down. (See this article about student loan borrowers who are now paying on student loans into their retirement years.)

If you had suggested to boomers when we went to college that we would have to borrow $100K or more, on terms that meant we would be paying until after we retire, we would have thought you were crazy.

So loan forgiveness seems like simple fairness to today’s students whose only real mistake is that they were born too late to benefit from the way things used to — and still should — operate.

Because, even those of us boomers who had students loans and paid them off were still recipients of government educational assistance. We just never saw it because it went to the universities and colleges to subsidize our low tuition.

College students in the 1970s.

U.S. takes first step toward making filing your taxes as easy as it is in other countries

The United States is an outlier in its tax filing system in that it requires you to fill out tax forms on paper or online which provide the Internal Revenue Service with information it already has in its system for the vast majority of Americans who do not itemize deductions.

With President Biden’s signature on the Inflation Reduction Act, the U.S. has taken its first step toward finally making it easy and customary to file your taxes for free:

The United States has made a small but significant move toward creating a public system to allow millions of Americans to file their taxes for free.

The sweeping domestic policy bill passed by the House and Senate last week mandates that the IRS study options to provide a free tax filing option for Americans. That study represents a threat to the for-profit tax prep industry dominated by TurboTax, a product of the Silicon Valley company Intuit. President Joe Biden said he plans to sign the bill, the Inflation Reduction Act, today, following the party-line vote in the House to approve it on Friday.

The bill provides $15 million to study how the IRS could implement such a program, how much it might cost and how Americans would view it. The report, which must include the input of an independent third party, is due to Congress within nine months of the bill’s passage.

Unlike many developed countries, the U.S. does not offer free tax filing services for taxpayers, who instead pay billions of dollars every year to highly profitable private tax prep companies.

The industry has tried to block or subvert a government free tax filing system for decades.

Through information forms like W-2s, the IRS already has the info on wages and other forms of income in its systems that it would need to provide such a service. A recent study by researchers from the Treasury Department, Minneapolis Federal Reserve and Dartmouth College found that “between 62 and 73 million returns (41 to 48 percent of all returns) could be accurately pre-populated using only current-year information returns and the prior-year return.”

At a Senate hearing in June, Treasury Secretary Janet Yellen said she supported a new free filing service. “We need to develop a new system,” Yellen said in an exchange with Sen. Elizabeth Warren, D-Mass. “There’s no reason in the world that a modern economy shouldn’t have a system that makes it easy for such a large group of taxpayers to file their returns.”

There are reasons why so many tax preparation companies have storefront offices in poor neighborhoods. Residents in these low-income zip codes are far more likely to fall prey to companies that charge high fees — plus a percentage of any tax refund — on a service that is completely unnecessary for most low-income tax filers.

When you’re poor and only getting $300-$500 back with your tax refund, paying $100-$200 in fees can mean the difference between getting only spending money or getting enough money to catch up on utilities and pay for groceries.

Despite its shortcomings, the Inflation Reduction Act is turning out to be the most consequential legislation in decades. These small things are adding up to a revolution in the way the U.S. government approaches its relationship with average citizens.

You can read the rest of ProPublica’s excellent article at this link.

Equifax sends out erroneous credit reports on applicants for auto loans, mortgages and credit cards

If you were turned down for a loan — or were told your score required you to pay higher interest — from mid-March through early April of this year, you might want to find out if they used Equifax to run your credit report.

Equifax Inc. provided inaccurate credit scores on millions of U.S. consumers seeking loans during a three-week period earlier this year, according to bank executives and others familiar with the errors.

Equifax sent the erroneous scores on people applying for auto loans, mortgages and credit cards to banks and nonbank lenders big and small—including JPMorgan Chase & Co., Wells Fargo & Co. and Ally Financial Inc., the people said. The scores were sometimes off by 20 points or more in either direction, the people said, enough to alter the interest rates consumers were offered or to result in their applications being rejected altogether.

The inaccurate scores were sent from mid March through early April, the people said. The company began disclosing the errors to lenders in May, they said.

Equifax said it has since fixed the error, which the company described as a “technology coding issue.” The glitch didn’t alter the information in consumers’ credit reports, the company said.

“We have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue,” Sid Singh, president of Equifax’s U.S. Information Solutions, said in a statement. “For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision.”

Yeah, I don’t think I’d take any credit-reporting agency’s word for it, but especially not Equifax.

You can read the rest of the Wall Street Journal article here.