Just how bad are these students loans?

[Red Squirrel]

This thread makes me happy that I went to a cheap state school and lived at home for 3 years. Not having debt feels amazing

Yep for sure. So many people are still paying student debt very late in their lives. Kinda sad really.

 

[Mai72]

I love watching those Devry commercials. Awful. A waste of time. Those college only want on thing and that is tuition money. They aren't cheap. When the student gets out of college they owe $40k, $50k and sometimes $100k in student loan debt. They then have to compete against other people who have gone to real schools and who have real degrees.

In the end we are going to have to pay for it. The for-profit colleges are going to make their money and when the sh*t hits the fan they will be protected. The taxpayers are going to have to pay for this mess.

Student had a third grade reading level and was admitted in a for-profit college:
http://www.slate.com/blogs/moneybox...its_a_student_with_a_third_grade_reading.html

Open up your wallet/purse because YOU will have to pay for people who have no intention or the means to pay back their student loans.

 

[Mai72]

Yep for sure. So many people are still paying student debt very late in their lives. Kinda sad really.

Why are you so happy? You're going to have to pay it back in the form of higher taxes. Do you really think these people are going to pay back their large student loans?

 

[Mai72]

From September 2013:

http://www.huffingtonpost.com/2013/09/30/student-loans-default_n_4019806.html

Somebody is going to have to pay for all of this. Who? Me and you. The tax payers.

Enjoy.

 

[manly]

lol does the OP really think most college grads work at FB or GOOG as software engineers making 6 figure bases with generous options?

 

[steppinthrax]

I partially agree with SpatiallyAware. Too many kids take out huge loans and see it immediately as "free money" that they will just "pay off later". Then, they march their fat little asses to the nearest college book store and buy a Macbook Pro, an iPad, and a bunch of other shit while they drink Starbucks every damn day while walking to class in their Nike sweat wicking gear and the latest sneakers thinking they have the world by the tail. All the while, they're spending on borrowed time and insane levels of stupidity thinking they're going to come out with a piece of paper that gets them an immediate $50k+ job.

I see this play out every year at my local state university. I can only imagine how much worse it is out of state or at a private institution.

PS - I was one of those "Army guys who joined because he was too dumb to do anything else" and my out of pocket expenses for my 4-year degree were an occasional book and the tuition for classes when the Army ran out of tuition assistance funds before I enrolled. I did take out $2k in loans at one point because I had loan repayment option when I re-enlisted. It was a nice windfall and one year later the Army started to pay it off.

 

[Mai72]

lol does the OP really think most college grads work at FB or GOOG as software engineers making 6 figure bases with generous options?

It's ATOT. We all make 6 figures, drive Bentleys, and have penthouse models as girlfriends.

Duh!!! :awe:

 

[manly]

It's ATOT. We all make 6 figures, drive Bentleys, and have penthouse models as girlfriends.

Duh!!! :awe:

I realize we all do, but this thread is about the other 99%.

 

[Mai72]

Originally Posted by MarkXIX View Post
I partially agree with SpatiallyAware. Too many kids take out huge loans and see it immediately as "free money" that they will just "pay off later". Then, they march their fat little asses to the nearest college book store and buy a Macbook Pro, an iPad, and a bunch of other shit while they drink Starbucks every damn day while walking to class in their Nike sweat wicking gear and the latest sneakers thinking they have the world by the tail. All the while, they're spending on borrowed time and insane levels of stupidity thinking they're going to come out with a piece of paper that gets them an immediate $50k+ job.

I see this play out every year at my local state university. I can only imagine how much worse it is out of state or at a private institution.

PS - I was one of those "Army guys who joined because he was too dumb to do anything else" and my out of pocket expenses for my 4-year degree were an occasional book and the tuition for classes when the Army ran out of tuition assistance funds before I enrolled. I did take out $2k in loans at one point because I had loan repayment option when I re-enlisted. It was a nice windfall and one year later the Army started to pay it off.

Listen here pops! Those kids need the money. Mommy and daddy said that they were the greatest. How do you expect little junior or suzie q to concentrate on school work if they don't have the latest gadgets and clothes!

 

[LegendKiller]

For federal Student loans my personal opinion is that they shouldn't be charging much in interest.

Also i see no reason kids shouldn't be able to refinance the loans.

Though also i think kids should get counseling on them. Why are kids getting 100k in student loans for some of the idiotic degrees?

Are student loans risky loans? Why should they not be charged much?

The loan rate isn't the problem, tuition is the problem.

They can refinance the loans.

 

[LegendKiller]

I partially agree with SpatiallyAware. Too many kids take out huge loans and see it immediately as "free money" that they will just "pay off later". Then, they march their fat little asses to the nearest college book store and buy a Macbook Pro, an iPad, and a bunch of other shit while they drink Starbucks every damn day while walking to class in their Nike sweat wicking gear and the latest sneakers thinking they have the world by the tail. All the while, they're spending on borrowed time and insane levels of stupidity thinking they're going to come out with a piece of paper that gets them an immediate $50k+ job.

I see this play out every year at my local state university. I can only imagine how much worse it is out of state or at a private institution.

PS - I was one of those "Army guys who joined because he was too dumb to do anything else" and my out of pocket expenses for my 4-year degree were an occasional book and the tuition for classes when the Army ran out of tuition assistance funds before I enrolled. I did take out $2k in loans at one point because I had loan repayment option when I re-enlisted. It was a nice windfall and one year later the Army started to pay it off.

The "other stuff" always existed. However, look at the rate of inflation in tuition. That hasn't always existed.

 

[xeemzor]

Are student loans risky loans? Why should they not be charged much?

The loan rate isn't the problem, tuition is the problem.

They can refinance the loans.

You should take over the whole system so we can finally have someone competent running the show.

 

[LegendKiller]

As far as how bad they are, they are pretty damn bad. In my job I talked to a lot of people, small business lenders/lessors, auto loan companies (prime/subprime), and student loan companies. A lot of them are saying that the default rate among former students is huge, even in other types of debt, to the point that many lenders are cutting them off.

I am part of the minority that think it is having a huge effect on household formation, jobs, and GDP. The problem is systemic and *is* having an effect. Even if you just think about how much $1.2tr in debt costs to service, it's a huge amount. Lets say the WA interest rate is 5%. That's $60bn in interest, per year, spent on student loans.

The problem isn't just a first-order issue. What happens to the parents who co-sign? They now need to worry about their own financial security. There are plenty of stories of garnishment. Look at auto-defaults when the co-signer dies, that practice alone is horrid. Just one more reason why labor force participation is increasing among older workers.

Since they stay in the labor force longer, others cannot move up in the company, making less entry-level job openings.

 

[96Firebird]

I'd like to think my experience paying for college was typical for most. I went to community college for 2 years, paid that out of pocket (2006-2008). Then went to a private college for the next 3 years, but only paid tuition for 2 (we had to co-op for a year total). Tuition was around $35k/year. I ended up with about $45k in student loan debt when I graduated in 2011. I've been working ever since, except for a couple month period after I got laid off from my first job and started my second job. Right now I owe $27.5k. Here is the breakdown of each loan...

Sallie Mae 1 - 8.0% - Original Balance: $3,394 - Current Balance: $2,867
Sallie Mae 2 - 2.8% - Original Balance: $7,000 - Current Balance: $6,326
Sallie Mae 3 - 10.0% - Original Balance: $10,000 - Current Balance: $2,765
Federal 1 - 6.0% - Original Balance: $5,500 - Current Balance: $4,106
Federal 2 - 4.5% - Original Balance: $5,500 - Current Balance: $4,028
Federal 3 - 6.8% - Original Balance: $2,000 - Current Balance: $1,277
Federal 4 - 6.8% - Original Balance: $7,500 - Current Balance: $4,790
Federal 5 - 6.8% - Original Balance: $2,000 - Current Balance: $1,277

I used to pay extra on the 10% Sallie Mae and the 6.8% Federal loans, but I'm trying to save up for a down-payment on a house now so I don't pay as much extra as I used to. I'm really hoping the law passes that allows me to refinance my student loans to the current rate (3.86%), as that will really help out.

 

[manly]

96Firebird, (I guess) owning a house is an admirable goal but I'd knock out the high interest Sallie Mae loans first.

Can you consolidate the federal loans and get a lower rate? 6.8% sounds a bit high but I'm too old to follow Direct Loan rates closely.

 

[AznAnarchy99]

As far as how bad they are, they are pretty damn bad. In my job I talked to a lot of people, small business lenders/lessors, auto loan companies (prime/subprime), and student loan companies. A lot of them are saying that the default rate among former students is huge, even in other types of debt, to the point that many lenders are cutting them off.

I am part of the minority that think it is having a huge effect on household formation, jobs, and GDP. The problem is systemic and *is* having an effect. Even if you just think about how much $1.2tr in debt costs to service, it's a huge amount. Lets say the WA interest rate is 5%. That's $60bn in interest, per year, spent on student loans.

The problem isn't just a first-order issue. What happens to the parents who co-sign? They now need to worry about their own financial security. There are plenty of stories of garnishment. Look at auto-defaults when the co-signer dies, that practice alone is horrid. Just one more reason why labor force participation is increasing among older workers.

Since they stay in the labor force longer, others cannot move up in the company, making less entry-level job openings.

Parents do not need to co-sign for federal loans. If you are going private that's a different story.

 

[LegendKiller]

Parents do not need to co-sign for federal loans. If you are going private that's a different story.

Thanks. I know that.

But parents *are* signing up for plus loans, which carry a much higher interest rate and their own host of problems.

 

[Hacp]

Worst comes to worst, we can always increase the interest rate on people who have student loans if the default rate is too high.

 

[LegendKiller]

96Firebird, (I guess) owning a house is an admirable goal but I'd knock out the high interest Sallie Mae loans first.

Can you consolidate the federal loans and get a lower rate? 6.8% sounds a bit high but I'm too old to follow Direct Loan rates closely.

I think that's the prevailing rate for pre-floating rate loans. Now that they are floating rate it is lower initially.

My federal interest rate is ~2.8%. That's when the government made the real bright decision of taking the floating interest rate + spread and converting that to a fixed rate at that same interest rate. Silly gov't.

 

[LegendKiller]

Worst comes to worst, we can always increase the interest rate on people who have student loans if the default rate is too high.

I was at a credit card lender and had that exact discussion in 2006.

Me: "So, what happens when the chargeoff rate increases and excess spread (profit) is pressured in the credit card master trust?"

Him: "Why, we increase interest rates more, generating more spread, bolstering the trust, and driving profit for the company"

Me: "Yeah, but then that increases the minimum payment for the borrowers, they'll default more"

Him: "Sure, then we'll just increase the rates again"

He didn't get the problem.

 

[TheVrolok]

350k in loans (currently), all medical school debt, at 7.125% (thievery, right?).

 

[Mai72]

I owe about $9k in student loan debt. Not worried.

I seriously think that Obama or the next president will erase all student loan debt. As the total cost of student loan debt soars I think something will be done.

 

[Mai72]

Thanks. I know that.

But parents *are* signing up for plus loans, which carry a much higher interest rate and their own host of problems.

They are nuts if they are doing this. Do they understand what can actually happen if their child is unable to pay the minimum monthly fee? Sallie Mae comes after their pension, retirement fund and social security. They can even go after property.

 

[Hacp]

I was at a credit card lender and had that exact discussion in 2006.

Me: "So, what happens when the chargeoff rate increases and excess spread (profit) is pressured in the credit card master trust?"

Him: "Why, we increase interest rates more, generating more spread, bolstering the trust, and driving profit for the company"

Me: "Yeah, but then that increases the minimum payment for the borrowers, they'll default more"

Him: "Sure, then we'll just increase the rates again"

He didn't get the problem.

There is one thing that the government has that the credit card company doesn't. You can't discharge student loans in bankruptcy. Worst thing to happen is we garnish the wages of those who are delinquent in paying and deny welfare or any government handouts to anyone who is late on their payments.

 

[LegendKiller]

I owe about $9k in student loan debt. Not worried.

I seriously think that Obama or the next president will erase all student loan debt. As the total cost of student loan debt soars I think something will be done.

ROFL - do you *really* think the government is going to write off principal balance nearly 2.5x what the *entire* TARP program had in loans outstanding?

We are are talking about over $1TR.

Good fucking luck.