The first pebble in the student loan default landslide

[HoughMade]

Like I said, "probably kept it going way too long".

However, it was a low interest rate loan, so time value of money, and ... yeah, not Ramsey Approved, but in terms of debt... well, I won't say it's "good", maybe, it's the least "offensive".

I kept it going too long because at 2.85%, it made more sense to put any extra cash into my mortgage which was at a higher rate. For part of this time, I also had a car loan- same thing. Never even close to default, so everyone in the mix got what they bargained for.

 

[Clark & Addison]

I did. Paid it off within two years. Paid for grad school out of pocket. Hoping to be able to help (not completely pay for) my kids when they get to college so that they don't have any debt when they graduate. I want them to have some skin in the game, but not behind before they start real life.

 

[spencer rifle]

How many people in this thread have actually had a student loan before?

Senior year I borrowed $500 from an aunt, paid it back in 6 months. The year before I gifted my parents with $1000 in gratitude for their hard work and love, to do something they wouldn't have done otherwise. From my own money. In 1980, when that was real money. While attending college. And working all summer. And during the school year (stuff like telemarketing and checking tax returns).

Paid for my own MBA in 2007, no loans.

It can be done, but might be harder now due to college expenses going up MUCH faster than inflation for years. Thanks, gov.

 

[DoggyDaddy]

I did. Paid it off within two years. Paid for grad school out of pocket. Hoping to be able to help (not completely pay for) my kids when they get to college so that they don't have any debt when they graduate. I want them to have some skin in the game, but not behind before they start real life.

Tried to rep you, but couldn't. My first go around with college (right out of high school), I had the grades and SAT scores that got me several offers from some very prestigious schools. Ended up going to General Motors Institue. Dad knew someone that worked at Allison's, and got him to sponsor me. At the time, GMI had about the same "prestige" as MIT.

I breezed through high school. Usually had my "homework" done before I went home. At GMI, there were people like me, and there were people that busted their humps in high school to get the grades that came easily to me. Guess which group was gone after the first year (if not the first semester)? Hint: I was gone. Part of it was due to being 18 (in a state where the legal drinking age was 18 at the time) and far away from the parents.

Transferred down to Purdue and kept a co-op position at Allison's for a bit, but wound up screwing around at Purdue too. Had help from the parents at Purdue too, so once that failed, Dad said "enough".

Fast forward 15 years or so, and I went back to school. Dad made me an offer. I had to pay for the first semester (part time, just finishing up enough for an Associate degree), but as long as I maintained at least a "B" average, he'd reimburse me (so I could pay for the next semester). I worked full time when I was working on the Associate. I was fortunate for sure, but I thought that Dad's offer was more than fair, in that he made me "earn" his help. He was a wise man.

 

[Leadeye]

I made sure both of my sons started off life with a college degree, a working car, no debt, some money in the bank and a handgun. I gave up things for that but it was really important. I was really concerned when they didn't elect to go into manufacturing like me, but both have done very well in their respective fields. They are in their 30s now, debt free and earning a good living without any help, makes the old man proud.

 

[soupergenius]

If GM can default on its Bonds to Indiana retirees (thanks Barry), and the FED can bail out AIG for $80B; why not just print money and forgive all the debts. Why is it that only individuals are held to their agreements. I'd like to get some of that corporate treatment once in awhile. Rather then harp on student debt why not focus on the $80B farm bill or the $60B monthly bailout for the repo market. Student loans are a distraction to the real raping and pillaging.

 

[KMaC]

Student loan guarantees total over $1 TRILLION. Not an insignificant distraction.
But you are correct, the Treasury could just print more money (quantitative easing strategy).

 

[CampingJosh]

How many people in this thread have actually had a student loan before?

I did. Low five-digit range on my B.A. when I graduated in 2008 (traditional student path). If you remember, 2008 was not a great time to enter the job market. I worked a low-level job and built skills (and earned certifications) for my career.

Even when I was making $8.50 per hour lifeguarding, I was making more than the minimum payment on my loans. It sucked, but I did it for 8 months.

My debt was paid off in May of 2011 (after misunderstanding how much I needed to pay in estimated taxes for 2010 and way overpaying).

We've since cash flowed a M.S. for my wife, and she is back in school now working towards an M.S.P.A.S. We won't be taking any loans for that, either.

It sucks, but I think it is worthwhile.

 

[two70]

How many people in this thread have actually had a student loan before?

I did, somewhere around $12K for tuition only which I paid off in 3 years after graduation. I worked two jobs to pay for my housing and had help with books and living expenses. I didn't take out loans for extra money so I could go on spring break trips or for other frivolous things and I have little sympathy for those that did. I have even less sympathy for those that chose pointless degrees or that chose to spend ridiculous amounts on tuition to attend private schools.

 

[wakproductions]

It can be done, my wife did it. She attended a four year nursing program and in 2003 walked out of there with her R.N. with B.S. degree and NO debt. She had qualified for a couple grants, not a lot but they helped. Mainly she worked and had a job where she could adjust her hours as needed. I had a good paying job as a toolmaker so that certainly helped. Point being it can be done, hard work on her part and a supportive husband made it possible. This is also when I wanted a new Harley but it got postponed until she was out of school and working.
A few wears later she went back and got a Masters degree and we did it just the same as before and no debt. I am 73 years old so I remember when people got out of high school and worked their way through college. Our son has an engineering degree and guess what he also did it himself. Jim.

That may have worked for past generations, but the cost of a college education has ballooned since then. Wages haven't increased nearly as much as the cost of tuition. That's a big reason why people can't pay back their school loans, or cover the cost of college by working on the side.

https://www.forbes.com/sites/camilo...lmost-8-times-faster-than-wages/#5a1e06eb66c1

 

[wakproductions]

Rare maybe, but FAR from impossible! If these lazy kids would work while in high school AND work while in college, they could easily save and pay their way without loans OR help from mommy and daddy!

Working during college may not be possible depending on the program you're in. My wife just finished nursing school, where the academic expectations were incredibly high. Scheduling of many of the required labs/clinicals/workshops, etc was very erratic and last minute. You're lucky if you can just schedule around those hours. And what kind of part time job would be able to pay enough to cover the thousands of dollars in tuition, books, and living expenses during a program like that? If you are able to get a job that pays that well enough to cover the high costs of college expenses while you're doing it, you probably don't need college.

I think many of the people who think working during college is a way to avoid undertaking any sort of financial assistance don't understand how expensive it is now.

 

[MCgrease08]

Working during college may not be possible depending on the program you're in. My wife just finished nursing school, where the academic expectations were incredibly high. Scheduling of many of the required labs/clinicals/workshops, etc was very erratic and last minute. You're lucky if you can just schedule around those hours. And what kind of part time job would be able to pay enough to cover the thousands of dollars in tuition, books, and living expenses during a program like that? If you are able to get a job that pays that well enough to cover the high costs of college expenses while you're doing it, you probably don't need college.

I think many of the people who think working during college is a way to avoid undertaking any sort of financial assistance don't understand how expensive it is now.

One isn't required to attend a secondary school immediately after graduating high school. Taking a year or two off to work is a good way to pile up some cash before enrolling. Taking prerequisites and general courses at a Community College for two years while living at home with parents another option. Certainly one could work while taking Gen Ed classes.

Heck, my ex-wife was in nursing school for a while but she's lazy and never finishes anything so she dropped out, but plenty of her classmates worked while going through the program. Some even had jobs in the medical field and their current employer was paying for them to get their nursing degree.

There are plenty of ways to go to school debt free.

 

[JettaKnight]

That may have worked for past generations, but the cost of a college education has ballooned since then. Wages haven't increased nearly as much as the cost of tuition. That's a big reason why people can't pay back their school loans, or cover the cost of college by working on the side.

https://www.forbes.com/sites/camilo...lmost-8-times-faster-than-wages/#5a1e06eb66c1

Of course, an 18 year old doesn't do the math to determine if their post graduate wages will allow them to pay off the loan, and I believe the lenders are blind when it comes to issuing loans...

"Getting a degree in basketweaving and an 85% chance of dropping out? Fine, fine. Here's some some money!"

 

[JettaKnight]

There are plenty of ways to go to school debt free.

True, true. But, I do believe those students have a much higher dropout rate.

 

[MCgrease08]

This seems pretty relevant to this thread.

WATCH: Father Asks Elizabeth Warren If He’s Going To Get His Money Back After Paying For Daughter’s Education

“My daughter’s getting out of school, I saved all my money, so she doesn’t have any student debt,” the man says. “Am I going to get my money back?”

“Of course not,” the Massachusetts senator responds.

“So, we end up paying for people who didn’t save any money, then those who did the right thing get screwed,” the father says.

He goes on to describe the actions of his “buddy,” who he says makes more money than him but didn’t use his money responsibly. Meanwhile he worked a “double shift” and carefully put money away in order to make sure his daughter wasn’t burdened with debt.

“So, you’re laughing,” the man says in response to Warren’s reaction. “Yes, that’s exactly what you’re doing,” he says after the senator appears to protest. “We did the right thing — and we get screwed,” the frustrated father says before walking away.

 

[MCgrease08]

And here's a fun one just in case anyone was considering taking on close to $300k in debt to send a kid off to learn to play the tuba.

[video=youtube_share;bw8ZvFb4LZY]http://youtu.be/bw8ZvFb4LZY[/video]

 

[HoughMade]

This seems pretty relevant to this thread.

WATCH: Father Asks Elizabeth Warren If He’s Going To Get His Money Back After Paying For Daughter’s Education

Imagine my PO'd-ness having put one kid through college, being half-way through the second, and planning on doing the same for the other two.

But I'm pretty PO'd about a lot of things the government does and I only have so much PO'd-ness in me.

To be clear, I would not be PO'd that other people got a benefit, if someone used private funds to pay off debt, good for them! I get PO'd because now instead of paying for college for 4 kids, my own, I get to pay for them and a portion for others who, good with their money or not, I did not help create. I get it, not all people can pay for their kids to go to college (if, in fact it is a good thing for their kids), but I fail to see how that makes it my responsibility. I'm already in a group that pays 97% of taxes (top 50% of wage earners...which starts at around $40K, by the way)...so why not?

 

[wakproductions]

Of course, an 18 year old doesn't do the math to determine if their post graduate wages will allow them to pay off the loan, and I believe the lenders are blind when it comes to issuing loans...

"Getting a degree in basketweaving and an 85% chance of dropping out? Fine, fine. Here's some some money!"

Something that I find dumb about this whole debate about student loans is that there seems to be no societal expectation that the lenders perform due diligence when issuing student loans. If purchasing a loan for a car or mortgage, the bank has some responsibility to check that the property being purchased has value, and that the borrower will have the ability to pay it back. Higher risk borrowers pay more interest.

The government has completely broken the way this credit market works by making student loan issuance an entitlement. Rates are artificially priced because the same rate is issued to good students in programs that will likely yield a high postgraduate income vs bad students and students going into worthless areas of study. The loose availability of credit also incentivizes universities to make programs longer and less efficient so they can charge more tuition, rather than streamlining programs so that you can earn a degree more quickly. This is why associates degrees are no longer a thing. This is also why universities offer a smorgasbord of useless degrees, because undergraduate programs are designed to appeal to dumb 18 year olds who are going to school as a fun resort to get away from their parents rather than as a serious career building step to their future.

So what is Congress doing about this? They are making the incentives worse by trying to pass legislation like "Income Sharing Agreements" which will do a lot to protect the business risk of creditors, but absolutely nothing to incentivize better quality loan issuance or accountability on the part of universities. College is now in many ways a trap to turn financially illiterate young people into debt slaves of the banking system.

 

[eldirector]

Working during college may not be possible depending on the program you're in. My wife just finished nursing school, where the academic expectations were incredibly high. Scheduling of many of the required labs/clinicals/workshops, etc was very erratic and last minute. You're lucky if you can just schedule around those hours. And what kind of part time job would be able to pay enough to cover the thousands of dollars in tuition, books, and living expenses during a program like that? If you are able to get a job that pays that well enough to cover the high costs of college expenses while you're doing it, you probably don't need college.

I think many of the people who think working during college is a way to avoid undertaking any sort of financial assistance don't understand how expensive it is now.

I have several acquaintances that had their nursing degree tuition 100% paid by their employer, by working for their local fire or EMT service. Granted, their clinical time was a challenge - lots of late nights and 60+ hour work weeks - but they all made it work.

I do agree that working while earning a degree is incredibly hard, and not an option for everyone. But, opportunities exist in almost every field.

 

[HoughMade]

I have several acquaintances that had their nursing degree tuition 100% paid by their employer, by working for their local fire or EMT service. Granted, their clinical time was a challenge - lots of late nights and 60+ hour work weeks - but they all made it work.

I do agree that working while earning a degree is incredibly hard, and not an option for everyone. But, opportunities exist in almost every field.

#1 Student loans are not binary, either crushing or nonexistent. There are all kinds of way to reduce the amount of loans including working as much as possible even if it's not enough to pay the whole thing. I graduated from law school with a mid-level Camry sized loan. Many friends graduated with a McMansion sized loan. Mine was very manageable and not at all crushing.

#2 Maybe you don't do things you can't afford without making yourself a "debt slave". Who this affects the most is mid-level students from middle class families. Great students from truly poor families will always be able to go to college. There is enough scholarship money for them. However, so what? Having resources affects everything we do. That's simple reality. Some people don't get every advantage and some have to do things others don't in order to get where they want to be.

In the end, we all make choices. Our parents and grandparents made choices and it affects us. That is not unfair (whatever that is), it's reality.