This student loan debt crisis thingy is starting to scare me

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This student loan debt crisis thingy is starting to scare me

Postby pittsoccer33 on Wed Nov 20, 2013 1:42 pm

The girl I'm dating showed me her student loan paperwork - its really really frightening. Shes looking at almost $800 per month for the next 30 years. Even with a good job thats such a burden and kind of scary that someone let a 17 year old sign for it. Since most of it is private theres no chance at forgiveness in 20 years.

Most of her friends are looking at similar debt loads as well. Paying back that money will keep them from saving for retirement - another coming crisis. They don't have extra money to save for a house, a wedding, a car, or any other economic activity because they signed up for massive loans figuring some millionaire job would be waiting on the other end.
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Re: This student loan debt crisis thingy is starting to scar

Postby viva la ben on Wed Nov 20, 2013 1:48 pm

You have to spend money to make money
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Re: This student loan debt crisis thingy is starting to scar

Postby count2infinity on Wed Nov 20, 2013 1:50 pm

the one guy in my lab told me between he and his wife, they have about $250,000 in student loan debt. That took my breath away. I did everything I could to save money in college... apply for scholarships, transferred to a cheaper school after changing majors, did work-study, etc. I can't imagine what it'd be like to try to pay off that much money.
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Re: This student loan debt crisis thingy is starting to scar

Postby TheHammer24 on Wed Nov 20, 2013 1:51 pm

I agree in large part. I went to law school with plenty of people that are experiencing similar or worse debt load. Most of them have payments only over ten years, and through the federal government.

There is one thing to consider though that I hope will make it seem a little better. $800 a month is $9,000 a year. Let’s assume the average person makes $60,000 - $70,000 a year, which I think is a modest estimate. No one freaks out that they’re only making $52,000 a year (I know I’m skipping the consequences of taxes), suggests they can’t save with that salary, or believes retirement is not an option.

You need to view all of your expenses first, and debt second. Too often debt is viewed a percentage of one’s income. All the financial aid sites do it. Your debt load should not be greater than 10% of your after-tax salary (I’m not sure what the real number is). That’s ludicrous. It’s better to have a $160,000 salary, 40% of which goes to your debt, then to have a $40,000 salary with no debt.

Focus on your expenses. Include debt payments in them. Then figure out what you can spend so that you’re saving appropriately.
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Re: This student loan debt crisis thingy is starting to scar

Postby Defence21 on Wed Nov 20, 2013 1:52 pm

It's very scary. My wife started with nearly $1,000 monthly payments and we've run into some unexpected inheritances that have allowed us to pay off 2 or 3 of the higher interest loans and reduce monthly payments to the $800 level. We're in a situation now where she is going to start working on a Business Administration Associate's Degree at the College I work for. By taking two classes at a time online, she'll be able to defer her federal loans, and while they'll accrue interest, we'll save $300 monthly on payments, allowing her to put that money toward paying off some of the other loans.

The biggest thing we've learned is to pay the bare minimum on the low interest loans and do everything possible to pay off high interest loans. It seems like common sense, but a lot of people might think, "I have $5,000 in hand and that loan is $5,000, so I'm paying off that one." But if that is a low interest loan with a minimal monthly payment, you're not making much progress. On the other hand, if you can chip away $75 or $100 a month by paying off an individual loan, then put that money toward another high interest loan, you'll start to see progress before long.

There also are other creative ways down the line. We're looking to move to our second home, and in doing so, we're planning on using a large chunk of what we get for our house to pay down her student loans, while putting less toward and paying a little more on our mortgage. It's swapping a large debt for slightly smaller debt, but our next home, we hope, will be ours for the next 50 years, so it's a little more palatable -- and we'll still save some money monthly.

If you have some questions, let me know, I can try and help, as my wife has done extensive research to figure this out, and I'd be thrilled to be able to pass it along.
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Re: This student loan debt crisis thingy is starting to scar

Postby count2infinity on Wed Nov 20, 2013 1:53 pm

TheHammer24 wrote:I agree in large part. I went to law school with plenty of people that are experiencing similar or worse debt load. Most of them have payments only over ten years, and through the federal government.

There is one thing to consider though that I hope will make it seem a little better. $800 a month is $9,000 a year. Let’s assume the average person makes $60,000 - $70,000 a year, which I think is a modest estimate. No one freaks out that they’re only making $52,000 a year (I know I’m skipping the consequences of taxes), suggests they can’t save with that salary, or believes retirement is not an option.

You need to view all of your expenses first, and debt second. Too often debt is viewed a percentage of one’s income. All the financial aid sites do it. Your debt load should not be greater than 10% of your after-tax salary (I’m not sure what the real number is). That’s ludicrous. It’s better to have a $160,000 salary, 40% of which goes to your debt, then to have a $40,000 salary with no debt.

Focus on your expenses. Include debt payments in them. Then figure out what you can spend so that you’re saving appropriately.



Unfortunately there are a lot of people with large amounts of debt that are making half of the 60-70K you're mentioning. That's tough to make it through.
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Re: This student loan debt crisis thingy is starting to scar

Postby columbia on Wed Nov 20, 2013 1:54 pm

It's certainly a concern.

I would hope that those with significant student loans would concentrate on paying them off and forego buying $40K SUVs and lavish vacations, because I'm not interested (as a tax payer) in bailing out irresponsible people.

That hope is probably naive and we certainly might see a significant student loan crisis in the coming years.
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Re: This student loan debt crisis thingy is starting to scar

Postby TheHammer24 on Wed Nov 20, 2013 1:57 pm

count2infinity wrote:
TheHammer24 wrote:I agree in large part. I went to law school with plenty of people that are experiencing similar or worse debt load. Most of them have payments only over ten years, and through the federal government.

There is one thing to consider though that I hope will make it seem a little better. $800 a month is $9,000 a year. Let’s assume the average person makes $60,000 - $70,000 a year, which I think is a modest estimate. No one freaks out that they’re only making $52,000 a year (I know I’m skipping the consequences of taxes), suggests they can’t save with that salary, or believes retirement is not an option.

You need to view all of your expenses first, and debt second. Too often debt is viewed a percentage of one’s income. All the financial aid sites do it. Your debt load should not be greater than 10% of your after-tax salary (I’m not sure what the real number is). That’s ludicrous. It’s better to have a $160,000 salary, 40% of which goes to your debt, then to have a $40,000 salary with no debt.

Focus on your expenses. Include debt payments in them. Then figure out what you can spend so that you’re saving appropriately.



Unfortunately there are a lot of people with large amounts of debt that are making half of the 60-70K you're mentioning. That's tough to make it through.

Yes, you are absolutely correct about that.
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Re: This student loan debt crisis thingy is starting to scar

Postby Sam's Drunk Dog on Wed Nov 20, 2013 1:58 pm

I am very lucky that my parents saved money and were able to pay most of my student loans. I have an $80/month minimum payment that I usually pay $100 on and only have about $8,500 to pay off.

My wife's parents weren't able to afford to pay for her college and she was paying $300/month and after grad school is now paying $650/month.
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Re: This student loan debt crisis thingy is starting to scar

Postby Troy Loney on Wed Nov 20, 2013 2:03 pm

Higher education and healthcare are such drains on the spending power of this country.

But I guess if we're ok just feeding the coffers of university and healthcare adminstrators...things will be fine.

My issue with education is very similar to my issue with healthcare. The suppliers have no incentive to reduce the costs. The consumers (high school grads mostly) come out with nearly inelastic demand because there is no option to going to school. They pay for their service through a third party (US government). They have no connection with the money they are spending each year and then a 6 month grace period after finishing school. At this point, the country needs to seperate the connection between the federal government and paying for education. This will make higher education unattainable for lots of people, but we are sophisticated enough of an economy for other tracts to develop and fulfill that demand for education. The main difference between the two (healthcare and education) is that education is an artificial inelastic demand fueled by social concerns. healthcare is a legitimate inelastic demand that should not have cost inhibitions.
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Re: This student loan debt crisis thingy is starting to scar

Postby Troy Loney on Wed Nov 20, 2013 2:06 pm

columbia wrote:It's certainly a concern.

I would hope that those with significant student loans would concentrate on paying them off and forego buying $40K SUVs and lavish vacations, because I'm not interested (as a tax payer) in bailing out irresponsible people.

That hope is probably naive and we certainly might see a significant student loan crisis in the coming years.



I'm not sure you need to worry about that. The Fed can just take the money out of your paycheck and future tax returns.
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Re: This student loan debt crisis thingy is starting to scar

Postby pittsoccer33 on Wed Nov 20, 2013 2:07 pm

look at Cal U - in an effort to attract students they spent a kabillion dollars building fancy new buildings. thats the crap a high school junior sees on a visit. it doesnt directly impact educating the kid, but it grabs their tuition dollars. which are then higher to pay for that crap.
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Re: This student loan debt crisis thingy is starting to scar

Postby Troy Loney on Wed Nov 20, 2013 2:08 pm

pittsoccer33 wrote:look at Cal U - in an effort to attract students they spent a kabillion dollars building fancy new buildings. thats the crap a high school junior sees on a visit. it doesnt directly impact educating the kid, but it grabs their tuition dollars. which are then higher to pay for that crap.



Yep, there are no incentives for universities to try and lower costs. Function of inelastic demand.
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Re: This student loan debt crisis thingy is starting to scar

Postby IanMoran on Wed Nov 20, 2013 2:09 pm

<Law student

Even with a good scholarship.. Combined of undergrad / law I'm going to be looking at right around 6 figures of debt.

Combined with the current legal market, I'm pretty scared tbh.
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Re: This student loan debt crisis thingy is starting to scar

Postby IanMoran on Wed Nov 20, 2013 2:14 pm

Troy Loney wrote:Higher education and healthcare are such drains on the spending power of this country.

But I guess if we're ok just feeding the coffers of university and healthcare adminstrators...things will be fine.

My issue with education is very similar to my issue with healthcare. The suppliers have no incentive to reduce the costs. The consumers (high school grads mostly) come out with nearly inelastic demand because there is no option to going to school. They pay for their service through a third party (US government). They have no connection with the money they are spending each year and then a 6 month grace period after finishing school. At this point, the country needs to seperate the connection between the federal government and paying for education. This will make higher education unattainable for lots of people, but we are sophisticated enough of an economy for other tracts to develop and fulfill that demand for education. The main difference between the two (healthcare and education) is that education is an artificial inelastic demand fueled by social concerns. healthcare is a legitimate inelastic demand that should not have cost inhibitions.

Ideally schools would accept less students, or have less schools. One very extreme example, law schools are graduating 999999999999999 lawyers (too lazy to look it up) when only 99999 new law jobs are available every year.

It'd be nicer if they told people they can't have a job before 6 figure debts rather than weeding out after it. Its all just a big business though now
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Re: This student loan debt crisis thingy is starting to scar

Postby Factorial on Wed Nov 20, 2013 2:14 pm

Troy Loney wrote:
columbia wrote:It's certainly a concern.

I would hope that those with significant student loans would concentrate on paying them off and forego buying $40K SUVs and lavish vacations, because I'm not interested (as a tax payer) in bailing out irresponsible people.

That hope is probably naive and we certainly might see a significant student loan crisis in the coming years.



I'm not sure you need to worry about that. The Fed can just take the money out of your paycheck and future tax returns.


Or, I'm guessing, garnish your wages if you don't have a tax return.
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Re: This student loan debt crisis thingy is starting to scar

Postby Troy Loney on Wed Nov 20, 2013 2:17 pm

IanMoran wrote:
Troy Loney wrote:Higher education and healthcare are such drains on the spending power of this country.

But I guess if we're ok just feeding the coffers of university and healthcare adminstrators...things will be fine.

My issue with education is very similar to my issue with healthcare. The suppliers have no incentive to reduce the costs. The consumers (high school grads mostly) come out with nearly inelastic demand because there is no option to going to school. They pay for their service through a third party (US government). They have no connection with the money they are spending each year and then a 6 month grace period after finishing school. At this point, the country needs to seperate the connection between the federal government and paying for education. This will make higher education unattainable for lots of people, but we are sophisticated enough of an economy for other tracts to develop and fulfill that demand for education. The main difference between the two (healthcare and education) is that education is an artificial inelastic demand fueled by social concerns. healthcare is a legitimate inelastic demand that should not have cost inhibitions.

Ideally schools would accept less students, or have less schools. One very extreme example, law schools are graduating 999999999999999 lawyers (too lazy to look it up) when only 99999 new law jobs are available every year.

It'd be nicer if they told people they can't have a job before 6 figure debts rather than weeding out after it. Its all just a big business though now


What do law schools care? Until students stop paying 30,000 / year things will continue as is.
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Re: This student loan debt crisis thingy is starting to scar

Postby mac5155 on Wed Nov 20, 2013 2:18 pm

I'm sitting at around $800 a month for 15 years. I have about $88k and my wife has about $28k. We manage, but it sucks having that much $ go towards them.
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Re: This student loan debt crisis thingy is starting to scar

Postby Factorial on Wed Nov 20, 2013 2:19 pm

pittsoccer33 wrote:look at Cal U - in an effort to attract students they spent a kabillion dollars building fancy new buildings. thats the crap a high school junior sees on a visit. it doesnt directly impact educating the kid, but it grabs their tuition dollars. which are then higher to pay for that crap.



What's Cal U tuition these days? How does it compare to Pitt/PSU?
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Re: This student loan debt crisis thingy is starting to scar

Postby mac5155 on Wed Nov 20, 2013 2:20 pm

Factorial wrote:
pittsoccer33 wrote:look at Cal U - in an effort to attract students they spent a kabillion dollars building fancy new buildings. thats the crap a high school junior sees on a visit. it doesnt directly impact educating the kid, but it grabs their tuition dollars. which are then higher to pay for that crap.



What's Cal U tuition these days? How does it compare to Pitt/PSU?


~$6500 a semester year. For the quality of education you get in comparison to those schools, it aint worth it IMO

Edit: Mis spoke.
Last edited by mac5155 on Wed Nov 20, 2013 2:21 pm, edited 1 time in total.
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Re: This student loan debt crisis thingy is starting to scar

Postby tifosi77 on Wed Nov 20, 2013 2:21 pm

PHEAA is coming after me for debts that I paid off years ago. Currently trying to find out how I deal with this, because they've hit me with an employer wage garnish.

count2infinity wrote:Unfortunately there are a lot of people with large amounts of debt that are making half of the 60-70K you're mentioning. That's tough to make it through.

The average starting salary for a fresh college grad is ~$45k. The average salary overall for those with college degrees is <$60k. That's not a lot of change or upward mobility.

For every marketer or civil engineer who jumps into six figures pretty quickly, there are going to be x number of art history or philosophy majors that turn into professional kiosk managers.
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Re: This student loan debt crisis thingy is starting to scar

Postby IanMoran on Wed Nov 20, 2013 2:21 pm

Troy Loney wrote:
IanMoran wrote:
Troy Loney wrote:Higher education and healthcare are such drains on the spending power of this country.

But I guess if we're ok just feeding the coffers of university and healthcare adminstrators...things will be fine.

My issue with education is very similar to my issue with healthcare. The suppliers have no incentive to reduce the costs. The consumers (high school grads mostly) come out with nearly inelastic demand because there is no option to going to school. They pay for their service through a third party (US government). They have no connection with the money they are spending each year and then a 6 month grace period after finishing school. At this point, the country needs to seperate the connection between the federal government and paying for education. This will make higher education unattainable for lots of people, but we are sophisticated enough of an economy for other tracts to develop and fulfill that demand for education. The main difference between the two (healthcare and education) is that education is an artificial inelastic demand fueled by social concerns. healthcare is a legitimate inelastic demand that should not have cost inhibitions.

Ideally schools would accept less students, or have less schools. One very extreme example, law schools are graduating 999999999999999 lawyers (too lazy to look it up) when only 99999 new law jobs are available every year.

It'd be nicer if they told people they can't have a job before 6 figure debts rather than weeding out after it. Its all just a big business though now


What do law schools care? Until students stop paying 30,000 / year things will continue as is.

They don't. Its why the ABA needs to step in and stop accrediting schools. Need to limit it similar to the LCME (I think that's who accredits them?) does with medical
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Re: This student loan debt crisis thingy is starting to scar

Postby mac5155 on Wed Nov 20, 2013 2:24 pm

tifosi77 wrote:PHEAA is coming after me for debts that I paid off years ago. Currently trying to find out how I deal with this, because they've hit me with an employer wage garnish.

count2infinity wrote:Unfortunately there are a lot of people with large amounts of debt that are making half of the 60-70K you're mentioning. That's tough to make it through.

The average starting salary for a fresh college grad is ~$45k. The average salary overall for those with college degrees is <$60k. That's not a lot of change or upward mobility.

For every marketer or civil engineer who jumps into six figures pretty quickly, there are going to be x number of art history or philosophy majors that turn into professional kiosk managers.


Which is why colleges should consider dropping those programs to be the good "educational" citizen. Not saying that the world doesnt need those, but it needs to be a more strict process. Everyone makes a big deal out of predatory mortgage lending but I am starting to think it's truly criminal giving a 17 year old a student loan for a major that doesn't have a job market...
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Re: This student loan debt crisis thingy is starting to scar

Postby Troy Loney on Wed Nov 20, 2013 2:27 pm

Ah, no. Colleges shouldn't drop the programs. Loan companies should legitmately underwrite education loans instead of handing $60K blank checks to 18 years olds to go party for 4 years.
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Re: This student loan debt crisis thingy is starting to scar

Postby mac5155 on Wed Nov 20, 2013 2:27 pm

pittsoccer33 wrote:look at Cal U - in an effort to attract students they spent a kabillion dollars building fancy new buildings. thats the crap a high school junior sees on a visit. it doesnt directly impact educating the kid, but it grabs their tuition dollars. which are then higher to pay for that crap.


This is why you pay over $1100 PER SEMESTER in FEES.
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