DEFAULT...Student Loans

[moderndarwin]

If you can't get a job after college that is no one else's fault but your own. Network + effort = jobs. If you have to sacrifice your "dream" profession to just get any sort of job that is normal/reality. As most above 25+ people would tell you, it is much easier to get a new job once you already have a job. Turning down a job is not an excuse to complain about student loan debt. Being unwilling to relocate for work is not an excuse to complain about student loan debt. The job opportunities available to college graduates in America far outweigh most of what the rest of the world offers.

If you can't afford the payment for student loans you are just bad at managing money and/or living beyond your means. I've seen all sorts of philosophical comments in here but not a single person has posted their finances and quantified why they can't afford paying student loans.

Scenario: Graduate from college and get a 38k a year job. Take home pay after all deductions, taxes, 401k, etc would be 70% of that at $26,600. Per month that is $2,216.
Student loan debt: $45,000


Living with your means:

Rent + Utilities: $700
Student loan payment: $312
Phone: $100
Car: $200
Gas: $100
Insurance: $75
Food: $300
Savings: $300
Fun: $129
Total: $2216

This is all completely conservative model too. It'd be easy to buckle down for 6 months and spend way way way less on all of that and create a little savings nest egg after college (and this simple model includes contributing to a 401k).

 

[yogurt]

I have a question for those who approve of the current system of educational finance. Since graduate and undergraduate education are supposed to be funded privately (through parents, scholarship and student loans), should college prep classes, high school classes, be funded in the same manner?

If deconstructing Proust in grad school is a waste of time and reading Dante in undergrad is frivolous, shouldn't reading Chaucer and studying the Spanish Language and the US Constitution in high school be treated the same way by tax payers? If your parents are wealthy, you may obtain a liberal education in 9th through 12th grade but if your parents are not rich, shouldn't you either have to enter the work force after the 8th grade or undertake your secondary education as a customer who has to pledge his future earning for the right to be student during middle adolescence?

We all know that 15 and 16 year olds have too much leisure time and a sense of entitlement, shouldn't they be working instead of engaging in the four year party that we call high school (we've all seen the movies and TV shows, they are never even studying). Shouldn't Americans who are poor and middle class be forever in debt for choosing to, at the age of 14, be so awful as to read Melville instead of being a full time grocery store clerk? The hard working taxpayers must be spared the damage caused by AP French and P.E. and Homeroom, none of which prepare our youth to be good number crunchers and spread sheet monkeys.

I don't approve of the current system, but here's my opinion anyways:

Kids in high school should have the choice to select what sort of path they wish to take, just like they do in college. Many kids know early on (some by freshman year) what sort of career they want, and even if not, at least have an inclination to arts, or sciences, or something else. For them, high school is the biggest waste because so much energy and time go into these other trivial classes. I'm not downplaying the importance of a well-rounded student, but I'm advocating for letting students with the maturity to choose their own curriculum. For students who don't know what they want to do, they should go with the general curriculum.

I also think trades should be better promoted to students. There's a negative stigma of not going to college and being a plumber, or an electrician, or a carpenter, but the truth is without them, there would be no ivory tower to uphold. These careers are always in demand, can be learned by anyone, and pay a solid wage. 

My main issue with the current system is the rabid push to a 4-year university or get left behind mentality. The fact is, college is extremely expensive today, and will only rise in the future. The cost of tuition has grown like crazy over the past few years, and higher education is a money printing machine. Do schools actually care about the students who walk through the halls? No, they court you to come, then try to get you out of there in under 4 years to keep their statistics up, and subsequently their rankings - so the next batch of kids can come in and pay tens of thousands of dollars.

In microeconomics, there's the idea of a self-regulating market, where everything will eventually settle at a fair price. In my opinion, the price of college (and whether that entails the diploma, the knowledge, the prestige, validation, whatever), is far overpriced. It's being artificially held high by what's essentially a monopoly/oligopoly of schools who just want money. It really shouldn't be this expensive. That's probably the most important takeaway - that schools are not your friend, they are like real estate agents who want to lock you in to an expensive contract.

The problem is, it also offers a fairly stable and guaranteed road to a high-paying and respectable career, if you're willing to work hard. There are plenty of kids at the top-15 schools who know exactly what they're getting into when they take out that loan, and they know sacrifices have their merits. If you're smart and disciplined, the monetary loss on a loan can be easily paid off within a few years after graduation. But if you are reckless and do things because "you want to", then you'll have trouble.

 

[pdino]

If you can't get a job after college that is no one else's fault but your own. Network + effort = jobs. If you have to sacrifice your "dream" profession to just get any sort of job that is normal/reality. As most above 25+ people would tell you, it is much easier to get a new job once you already have a job. Turning down a job is not an excuse to complain about student loan debt. Being unwilling to relocate for work is not an excuse to complain about student loan debt. The job opportunities available to college graduates in America far outweigh most of what the rest of the world offers.

If you can't afford the payment for student loans you are just bad at managing money and/or living beyond your means. I've seen all sorts of philosophical comments in here but not a single person has posted their finances and quantified why they can't afford paying student loans.

Scenario: Graduate from college and get a 38k a year job. Take home pay after all deductions, taxes, 401k, etc would be 70% of that at $26,600. Per month that is $2,216.
Student loan debt: $45,000


Living with your means:

Rent + Utilities: $700
Student loan payment: $312
Phone: $100
Car: $200
Gas: $100
Insurance: $75
Food: $300
Savings: $300
Fun: $129
Total: $2216

This is all completely conservative model too. It'd be easy to buckle down for 6 months and spend way way way less on all of that and create a little savings nest egg after college (and this simple model includes contributing to a 401k).

So, I have just about 45k student loan debt on 6.625% interest. Monthly it accrues interest of 268$, that means while I can make payments at 312$, only 44$ would go to principal/monthly. I already consolidated to lower interest, and lowered it .25% by doing direct debit. If any interest is unpaid, it is ADDED to the principal balance monthly. You can eliminate the "fun".

What happens when you need car repair, or if your rent + utilities are way more than 700$?

 

[crcballer55]

 

Scenario: Graduate from college and get a 38k a year job. Take home pay after all deductions, taxes, 401k, etc would be 70% of that at $26,600. Per month that is $2,216.
Student loan debt: $45,000


Living with your means:

Rent + Utilities: $700
Student loan payment: $312
Phone: $100
Car: $200
Gas: $100
Insurance: $75
Food: $300
Savings: $300
Fun: $129
Total: $2216

This is all completely conservative model too. It'd be easy to buckle down for 6 months and spend way way way less on all of that and create a little savings nest egg after college (and this simple model includes contributing to a 401k).

So, I have just about 45k student loan debt on 6.625% interest. Monthly it accrues interest of 268$, that means while I can make payments at 312$, only 44$ would go to principal/monthly. I already consolidated to lower interest, and lowered it .25% by doing direct debit. If any interest is unpaid, it is ADDED to the principal balance monthly. You can eliminate the "fun".

What happens when you need car repair, or if your rent + utilities are way more than 700$?

Have a $1000 emergency fund. Eliminate additional savings, cut the phone plan to $40-50/mo. Cut food to $200 (cooking at home will make that easier). Get rid of the car payment. Assuming no fun too, that's another $780 to put towards your rent/utilities and debt.

 

[pdino]

 
Have a $1000 emergency fund. Eliminate additional savings, cut the phone plan to $40-50/mo. Cut food to $200 (cooking at home will make that easier). Get rid of the car payment. Assuming no fun too, that's another $780 to put towards your rent/utilities and debt.

What happens if you went to private school and have 100,000$ worth of debt?

 

[mr jordan04]

It's possible to attend college and not have to rely on student loans, but If you took 'em out, own up to your responsibilities and pay 'em back. It's that simple.






...

 

[HEATHEN]

What happens if you went to private school and have 100,000$ worth of debt?

Then you went to private school and have $100K in depth.


IDK what some of ya'll expect.

 

[pdino]

Then you went to private school and have $100K in depth.


IDK what some of ya'll expect.

won't be able to afford the loans in that scenario, be like 600$+ in just interest/month

 

[HEATHEN]

won't be able to afford the loans in that scenario, be like 600$+ in just interest/month

then why go to a private school?


I mean people act like there is NO possible way to avoid incurring such exorbitant debt.


Maybe go to a state university? Instead of going private or out of state?


Ronald Nelson, the kid who got accepted to all eight Ivy League Universities, turned down all of them for a full ride at Alabama State University.


Now not every person is going to get a full scholarship at their local university. Point is, here's an example of a dude who had the opportunity to go to a prestigious ivy league program of his choice but made the financially prudent decision.

He took into account his family's finances, his own finances, and decided to be fiscally responsible.


Lot of people want to degree floss like they badge floss everything else in life they can't afford.


Guess what? You still want that Ivy league or prestigious private school degree? Take your time, go to an inexpensive undergrad school, get your bachelors. Intern, network, get a job. Find someone who is willing to give you tuition reimbursement, save up, THEN you go for your masters degree at that private school you covet so much.



I mean FFS....Slow down people!!!

 

[moderndarwin]

So, I have just about 45k student loan debt on 6.625% interest. Monthly it accrues interest of 268$, that means while I can make payments at 312$, only 44$ would go to principal/monthly. I already consolidated to lower interest, and lowered it .25% by doing direct debit. If any interest is unpaid, it is ADDED to the principal balance monthly. You can eliminate the "fun".

What happens when you need car repair, or if your rent + utilities are way more than 700$?

The model above is only to demonstrate that you can stay afloat. It is not a long term plan. A job implies (and I hope people would infer) that your salary increases eventually. This is at best a 3 year model. Once your salary is higher and you have some money saved up you can pay off way more than the minimum. However, not taking responsibility to get to that point is irresponsible and short sighted.

I am moving to SF and if I can find housing for under 800 then it is completely possible. The lifestyle that is enjoyed in college is not very representative of the real world (no meal plans, no nice dorm rooms/reasonable rent). If you want to get out from under the debt people need to realize that they gotta sacrifice a few months of the "luxuries". Get a place with other people. Stop driving so much (if you live in a city/take the bus/etc). All of the expenses I mentioned could be drastically reduced.

There is no reason to spend $100 toward a phone when you can get away with spending $40 a month on a plan. Same with car + gas. $300 is a pretty high estimate. If you want to save money you buy a beater for $4,000 with a 60 month term and you are at less than $100 per month in car payments. Same with food - it is quite reasonable to buy rice, meat, lentils and vegetables in bulk and eat like 80% of the world and spend less than $180 a month for food. There are a lot of ways that expenses can be reduced. Most people that just graduated college are used to being able to go out and spend $70 at the bar, eat whatever they want, not work a full 8 hour shift everyday, etc.

Again, not saying the above paragraph is how anyone should live their life, but to sacrifice a few months to put yourself into the right place fiscally is just straightforward common sense and self responsibility. If something comes up like repairs etc it happens but you have to prepare ahead to deal with it. Just being blindsided by it because of poor planning is not an excuse against student loans.

Edit: I am moving to SF and will room with other people for $800. Only doing this because my gf/fiance will move there 9 months after me and we both want to save as much as possible those 9 months for our wedding. Sacrificing "luxuries" for what we want, be it education, a house, a wedding, etc That's the main point I'm trying to make above.

 

[socraticprotege]

Student loans may become the next financial bubble to bust, unless the rates come down so that more and more people do not default on the loans. It's something to keep an eye on for the future, definitely.

 

[agentorange]

I see a lot of people in here bashing private universities because of the net prices they see before an aid package is given. In my personal experience and in general private schools give infinitely better financial aid packages than public state universities. At Yale for instance if your household income isnt at a certain number (cant remember what is was) they will cover your financial need either fully or almost. I in general see a lot of people taking out a ton of loans just to attend state universities now. Even my own state university gave me a ****** financial aid package while private schools covered atleast 95% or more of my aid. I think the problem is that even public state universities ( that people used to depend on to still get a good education without paying a high price) are boosting their prices ridiculously and there may not be that same type of funding from the state which causes students to have to take out a lot of loans. Private universities being expensive is nothing new and have always been on the more expensive end of colleges. Look at the university of Michigan for example: the school is a public school but costs the same as a private school... this is the problem.

 

[bartleby929]

michigan is a good school though. it's when crappy schools jack up tuition that you're in trouble. i think it is completely f-ed up to let a 17 year old make a financial decision that can cripple the rest of his/her life. 

it isn't like people go to private schools thinking about 6.8% interest on 120k. they figure 45k a year salary = 3 years debt free. it's stupid but how many dumb things did you do in high school?

as for profiting off the defaults, you could open up one of those for-profit schools and trick people into going 

 

[capital sb]

I thought University of Michigan had some good programs and was a good school?

So you think public schools should be cheap because it's public? Even if it's a top school? Definitely doesn't apply in VA lol see VTech,JMU,GMU,UVA tuitions

Not all schools are the same financial aid wise in terms of public vs private aid. I only received 1 grant out of all the schools I applied to and that grant increased over the years I attended the school on the other hand the private school I attended my first year only gave FAFSA loans.

I only have 2 loans with 6.8% interest, but seeing these interest accrual amounts is making me want to pay off my loans within the next few years.

 

[bartleby929]

At what point do loans default?

never. student loans survive bankruptcy 

 

[agentorange]

I thought University of Michigan had some good programs and was a good school?

So you think public schools should be cheap because it's public? Even if it's a top school? Definitely doesn't apply in VA lol see VTech,JMU,GMU,UVA tuitions

Not all schools are the same financial aid wise in terms of public vs private aid. I only received 1 grant out of all the schools I applied to and that grant increased over the years I attended the school on the other hand the private school I attended my first year only gave FAFSA loans.

Yes it should be cheaper because its public. They get funding from the state whereas private schools rely mostly on endowments. The same reason why public high school is free and you have to pay to go to a private high school.

 

[bartleby929]

Yes it should be cheaper because its public. They get funding from the state whereas private schools rely mostly on endowments. The same reason why public high school is free and you have to pay to go to a private high school.

i think those state schools that have huge alums don't take the state funding or take less of it. i actually know a ******ed amount about student loans but don't quote me on anything

 

[agentorange]

i think those state schools that have huge alums don't take the state funding. i actually know a ******ed amount about student loans but don't quote me on anything

I believe (correct me if I'm wrong) a public university is public because it uses funding and backing from the state.

 

[bartleby929]

I believe (correct me if I'm wrong) a public university is public because it uses funding and backing from the state.

nah but there are different "funding" tunnels. from what i understand. i think at the end of the day it is still the state but there's all kinds of different tiers. i only know about tx, of course. 

 

[bartleby929]

teaching college kids a "tough" lesson about real life is one thing. i mean bankruptcy is a process nobody ever wants to go through. but having student loans and $100,000 mouse-click decisions that survive bankruptcy and basically destroy credit before it even begins is too rough. especially for kids who grew up without money and aren't super financially savvy

as for going to college... it's like...how do you hope to have a career (not a job) without a college degree. double-edged sword. 

 

[jking0821]

@richiecotite
 Our CLEP exam suggestions can pay for up to 46 credits at most schools at $100/ exam. About 15 exams totaling $1500 add in some studying materials $200 max. That is almost 40% of your degree right there for a mere $1700. CC also pays for half of your degree at a very low cost.

The suggestion I made to the one poster was specifically for him, because he currently works at NASA. Easier for him to switch to other agencies.
I know many people that landed federal jobs without knowing someone takes hard work (applying to all postings, career fairs etc.), but it is doable. Still a good suggestion IMO fed govt has the best educational assistance. If you are willing to relocate , but there are also federal jobs all over the country.

None of the companies I've looked at made you wait to start getting tuition assistance benefits, so I wasn't aware of that. You can also send your school a tuition deferment letter in which they allow you to pay once your employer compensates you.

Only ways that I know to make college completely free is to receive grants, scholarships, work at the university, or save up. 

All of my loans are private. The loan pay off programs run by the federal agencies are strictly for government loans. If all of your loans are federal you have a lot of options. They have income based repayment plans as well. But due to all of mine being private loans through Sallie Mae i am basically stuck going through them for any options unless i get out a private loan to pay off sallie mae

 

[antidope]

 

@richiecotite@richiecotite<!--bluecoat_old_onload = window.onload;window.onload = function() { if (bluecoat_old_onload != null) {try {bluecoat_old_onload();} catch (e) {}}bluecoat_fixpopups();};//-->
 Our CLEP exam suggestions can pay for up to 46 credits at most schools at $100/ exam. About 15 exams totaling $1500 add in some studying materials $200 max. That is almost 40% of your degree right there for a mere $1700. CC also pays for half of your degree at a very low cost.

The suggestion I made to the one poster was specifically for him, because he currently works at NASA. Easier for him to switch to other agencies.
I know many people that landed federal jobs without knowing someone takes hard work (applying to all postings, career fairs etc.), but it is doable. Still a good suggestion IMO fed govt has the best educational assistance. If you are willing to relocate , but there are also federal jobs all over the country.

None of the companies I've looked at made you wait to start getting tuition assistance benefits, so I wasn't aware of that. You can also send your school a tuition deferment letter in which they allow you to pay once your employer compensates you.

Only ways that I know to make college completely free is to receive grants, scholarships, work at the university, or save up. 

All of my loans are private. The loan pay off programs run by the federal agencies are strictly for government loans. If all of your loans are federal you have a lot of options. They have income based repayment plans as well. But due to all of mine being private loans through Sallie Mae i am basically stuck going through them for any options unless i get out a private loan to pay off sallie mae

You should. Interest rates are lower than they were back then you would be much better off refinancing your loans right now.

I refinanced my private loans and got away from Sallie Mae and chase and got a lower interest rate and my minimum monthly payment got cut in half.

 

[bartleby929]

 
You should. Interest rates are lower than they were back then you would be much better off refinancing your loans right now.

I refinanced my private loans and got away from Sallie Mae and chase and got a lower interest rate and my minimum monthly payment got cut in half.

was there a transaction fee? 

 

[capital sb]

All of my loans are private. The loan pay off programs run by the federal agencies are strictly for government loans. If all of your loans are federal you have a lot of options. They have income based repayment plans as well. But due to all of mine being private loans through Sallie Mae i am basically stuck going through them for any options unless i get out a private loan to pay off sallie mae

Have you looked into refinancing? I have heard a lot of people refi with a Peer 2 Peer loan such as SoFi.com

 

[antidope]

 

 
You should. Interest rates are lower than they were back then you would be much better off refinancing your loans right now.

I refinanced my private loans and got away from Sallie Mae and chase and got a lower interest rate and my minimum monthly payment got cut in half.

was there a transaction fee? 

Nope not a one. I went through Citizens Bank

http://www.citizensbank.com/student-loans/education-refinance-loan.aspx

Heres a list of some of the companies that specialize in this service.

https://studentloanhero.com/tag/sofi/

 

All of my loans are private. The loan pay off programs run by the federal agencies are strictly for government loans. If all of your loans are federal you have a lot of options. They have income based repayment plans as well. But due to all of mine being private loans through Sallie Mae i am basically stuck going through them for any options unless i get out a private loan to pay off sallie mae

Have you looked into refinancing? I have heard a lot of people refi with a Peer 2 Peer loan such as SoFi.com

SoFi is a good one, once some of these hard inquiries fall off my credit report I may look into it. When I was doing my research on it, something specifically about SoFi rubbed me the wrong way, but now I cant remember what it is for the life of me.

Once some of these hard inquiries drop off my credit report I will definitely look into refinancing again, if I can get a better rate than I am now I will definitely do it again.