Managing Student Loans: Balancing Need and Responsibility

[Mr.Watson]

Did you take it (or are you taking it) in college and if so, then how much? And would are you thoughts about paying it back with small grad school/post doc etc salaries?

 

[Windowmaker]

I am fortunate enough to serve my country and earn the gi bill. I will only have to pay out of pocket for about a year. The goal is not take any loans out so I'm going to save for it. My girlfriend though has about 20k in student loan debt and has just graduated. Her parents has loans of their own. The price of higher education is far to high IMO.

 

[DocHoliday]

I made it through my first year of college on a full ride, my second year I worked and payed it off and can say until this summer (which is the start of classes for the third year) I had no student debt. But when I graduate I still will have around 32K in student debt.

I have talked to my loan advisers on repayment and they informed that for graduate school they will either make your payments very small or have you hold off on repayment until your education is complete. The same might not be with every loaner though, as I went through a more local bank for my loans.

 

[Pythagorean]

I did loans through my U. It's about 40k. Some of them are still gather interest, but I pay it off (don't really cut much into the principle, though). I am in a grace peruiod, so I am not required to pay any of the interest right now (i.e. it won't affect my credit not to) but it can get absorbed into the principle, then your interest rates go up, so I try to keep the interest down.

It's kind of rough. This was all undergrad though. For grad school, I do research assistanceships, so I'm not accruing more, but still hopefully increasing my value. I'm moderately worried about job outcome in this economy though. Academic knowledge is a bit of a luxury. Producing goods might become more important soon, which acedmics will be overqualified for (but not necessarily bad at... maybe I'll grow corn).

 

[gravenewworld]

it's the next massive bubble that's going to bust and ruin a lot of lives.

 

[Pythagorean]

sorry... but by "it" do you mean the market for creditors of student loans or do you mean the whole academic sector?

 

[BobG]

"It" would be massive student loans for degrees that have no market value - or at least results in an increase in monthly pay that's less than the monthly payments.

There's not much analysis of the value of the degree the person is pursuing or even the likelihood of the person completing the degree (quite a lot of people drop out during their freshman/sophomore year either temporarily or permanently).

Without some way of recouping a portion of their money from other source (the government, for example), banks would have to charge an interest rate that reflected the true risk of those loans. That would reduce the number of students able to afford college, driving a lot of the small, private for-profit colleges out of the market, plus having at least some impact for the public colleges (reducing the variety in the programs they offer, for example).

Personally, I think the lives ruined would be those that dropped out after a year, defaulted on their loans, and were unable to complete their degree a fews years later when they were a little more mature. Plus, a lot of professors that teach in programs that have no commercial value would find themselves tossed out into the commercial sector wondering how to make their living doing something other than teaching.

 

[Pythagorean]

I'm going to learn to manufacture paper clips for cheaper than they are being manufactured right now. I'll make a killing.

Anybody want to buy a physics degree?

 

[BobG]

I'm going to learn to manufacture paper clips for cheaper than they are being manufactured right now. I'll make a killing.

Anybody want to buy a physics degree?

If you're banking on coming up with a better design for paperclips, then I'd pay more for your physics degree than I'd invest in your company.

Paperclips have fought off challengers for over 100 years. The only serious challenge I see to paperclips is ...

... a paperless society! (Like that will ever happen. Seems to me that computers have actually increased the amount of paper sitting unread on people's desks.)

 

[physicsboard]

"It" would be massive student loans for degrees that have no market value - or at least results in an increase in monthly pay that's less than the monthly payments.

There's not much analysis of the value of the degree the person is pursuing or even the likelihood of the person completing the degree (quite a lot of people drop out during their freshman/sophomore year either temporarily or permanently).

Without some way of recouping a portion of their money from other source (the government, for example), banks would have to charge an interest rate that reflected the true risk of those loans. That would reduce the number of students able to afford college, driving a lot of the small, private for-profit colleges out of the market, plus having at least some impact for the public colleges (reducing the variety in the programs they offer, for example).

Personally, I think the lives ruined would be those that dropped out after a year, defaulted on their loans, and were unable to complete their degree a fews years later when they were a little more mature. Plus, a lot of professors that teach in programs that have no commercial value would find themselves tossed out into the commercial sector wondering how to make their living doing something other than teaching.

In North America it is very difficult to default on student loans.

 

[Pythagorean]

If you're banking on coming up with a better design for paperclips, then I'd pay more for your physics degree than I'd invest in your company.

Paperclips have fought off challengers for over 100 years. The only serious challenge I see to paperclips is ...

... a paperless society! (Like that will ever happen. Seems to me that computers have actually increased the amount of paper sitting unread on people's desks.)

No, not a better paper clip design, a cheaper manufacturing process.

In reality that just means Ill outsource to China.

 

[Jack21222]

Did you take it (or are you taking it) in college and if so, then how much? And would are you thoughts about paying it back with small grad school/post doc etc salaries?

I took $13,500 in student loans, and you don't have to pay it back while enrolled in grad school. You get a deferment until after you're out of school. I'm quite happy with that number.

 

[Pythagorean]

No, not a better paper clip design, a cheaper manufacturing process.

In reality that just means Ill outsource to China.

I'll also shorten the obsolescence date by 10-15%, increasing sales proportionately.

 

[turbo]

I took out NO loans, but in the late 60s, planning and financing college was far more affordable. I bought, restored, and re-sold guitars and tube amps all through college and played frat parties on weekends. Along with my summer jobs at local mills (and all the overtime I could get), I got out of college with no debt. As soon as I could leave the mandatory (freshman) dorm, I got my own crappy attic apartment and cooked all my own food. Saved a lot of money, and ate 'way better, too. My parents were products of the depression, and they would never willingly take on any debt. I grew up with that philosophy.

 

[leroyjenkens]

I saved up money before going to college. With the pell grant, I usually have to pay an extra 1 or 2k out of pocket to cover the rest of the tuition. I get tuition reimbursement through my job, which gives me a lifetime reimbursement of up to 16k, so that shouldn't run out until after I graduate.
Since it's reimbursement, I would have had to get a loan if I didn't save up the money first.

My parents were products of the depression, and they would never willingly take on any debt. I grew up with that philosophy.

That's a good philosophy. Some people pile on debt as if they're playing a practical joke on their future selves.

 

[edward]

The Student loan Shuffle.

Sallie Mae did a $1.5 billion deal with Goldman Sachs, and there's been talk of Sallie Mae bringing a private student loan securitization to market," he says. "Also, Sallie Mae made some changes in their private student loan program that may ultimately make it easier to securitize private student loans, despite the current icy capital markets.

Bold mine



http://www.bankrate.com/finance/college-finance/doing-the-student-loan-shuffle-1.aspx#ixzz22zGPsPOJ

There are a lot of people scrambling to retrain or get more education due to the job market. So far I haven't read anything good about the private diploma mills.

In the wake of a dismal new report out by National Association of Consumer Bankruptcy Attorneys (NACBA), everyone’s talking about how student loan debt will be the next big bubble to burst. The report found that the national student debt load has reached $870 billion -- that’s more than the nation owes in credit card debt or car loans -- and that one in four borrowers carries a past-due balance on a loan.

http://www.marketplace.org/topics/life/economy-40/profit-schools-add-record-student-loan-debt

 

[physicsboard]

Student loans are an iron bubble. if a student declares bankruptcy they still do not get to default on their student debt. I think the one specific exception is if the institution was offering false diplomas. There may also be a clause allowing for special permission to be given to allow defaulting.

 

[RabbitWho]

I was incredibly lucky to have been born in Ireland and when I was and not 5 years later, because it meant I was still able to go to college for free in Ireland.

Now I'm retuning to college I'm going to Spain, where it's cheaper than the new Irish fees. Looking at American fees I think that traveling and getting a degree abroad would seem like a better option than plunging yourself into debt, but I don't know anything about the American system other than the price of the universities so forgive me if this is not an option for some reason.

You could see what countries allow foreigners to go to state funded universities for local prices, or have a system like in Scotland where you go for free and then you're allowed to pay the university back once you finally start making money with your job. If you never get your income above a certain point the debt expires.

You could always get your undergraduate abroad and your postgrad in the US. Check how well the degree from X country is accepted by universities in your home country.

Am I talking crazy?

 

[physicsboard]

I was incredibly lucky to have been born in Ireland and when I was and not 5 years later, because it meant I was still able to go to college for free in Ireland.

Now I'm retuning to college I'm going to Spain, where it's cheaper than the new Irish fees. Looking at American fees I think that traveling and getting a degree abroad would seem like a better option than plunging yourself into debt, but I don't know anything about the American system other than the price of the universities so forgive me if this is not an option for some reason.

You could see what countries allow foreigners to go to state funded universities for local prices, or have a system like in Scotland where you go for free and then you're allowed to pay the university back once you finally start making money with your job. If you never get your income above a certain point the debt expires.

You could always get your undergraduate abroad and your postgrad in the US. Check how well the degree from X country is accepted by universities in your home country.

Am I talking crazy?

I think this is more or less how it works in the states. If you making your income debt payments for ten years (or 5 if you work for the government) the government bails you out and you are released of the debt. I only just read this the other day though and this may apply to Canadians and not Americans (I forget).

 

[sixholdens]

Income based repayment in the US is for 10 years, then the loan is "forgiven". Better than forbearing it several times and just accruing added interest. As a parent who could not afford to send four children to college, loans are the only way out, even with Pell Grants, Scholarships and any other money that could be found.

 

[Evo]

I think this is more or less how it works in the states. If you making your income debt payments for ten years (or 5 if you work for the government) the government bails you out and you are released of the debt. I only just read this the other day though and this may apply to Canadians and not Americans (I forget).

Income based repayment in the US is for 10 years, then the loan is "forgiven".

Not in the US.

A bill has been introduced to allow forgiveness after 10 years, but it is unlikely to be approved. It only has a 2% chance of approval.

http://www.govtrack.us/congress/bills/112/hr4170

Article describing the proposed bill.

H.R. 4170 would forgive student loan debt for those who have paid 10 percent of their discretionary income toward their loans for 10 years and would cap interest on federal student loans at the current rate of 3.4 percent. Individuals who go into teaching, public service or practice medicine in underserved areas would have their debt forgiven after only five years.

http://www.huffingtonpost.com/2012/...iveness-act-2012-hansen-clarke_n_1415910.html

Perhaps this is what is confusing you

http://money.msn.com/debt-management/can-your-student-loans-be-forgiven-savingsaccounts.aspx

 

[sixholdens]

If not in the US now, what has my daughter been paying on...

 

[Evo]

If not in the US now, what has my daughter been paying on...

I presume she is paying on her student loan. Unless she falls under the public service category that I posted, she isn't going to get her loan forgiven after 10 years.

 

[Dembadon]

I take the subsidized loan offers and work for the rest. I've been lucky enough to have been offered scholarships the past two semesters that covered whatever my loan offer didn't.

I have a couple friends who accept the entire amount offered (both the subsidized and unsubsidized portions) even if it's more than they need to cover tuition and books. I don't understand this.