@tpike12 the lost opportunity cost on that 200k loan repayment is in the millions. Yet many argue we should limit what doctors make.
Of course, many are suspicious of physicians recommending more or more expensive treatment in order to help pay down their debt. To the extent that this happens, that can increase the overall cost of health care in the US.
In many other rich countries, medical school is subsidized to a much greater level, so that physicians are not as indebted, and may therefore not feel as much debt pressure when making medical recommendations to patients.
For that $30,000 one gets an education. That lasts much longer than a car. It is the ticket to a better life for millions of people. Funny how people will spend a couple … or a few … hundreds of thousands on a house but think $30,000 for an education is too much. Is it ideal to borrow that much? No. Does it make sense for some people to borrow that much? The answer may be yes. It is the only way to get that degree for many, many people.
Finaid.org. Has lots of calculators including a couple just for comparing aid packages. When all of the admissions and aid offers have come in, help her run those.
I graduated with a BS and an M.Ed. in education in 1987 at 20 years old and 45k in debt. Got a job teaching school for a whopping 18k a year…it was a financial disaster. Ruined my credit for years - income-dependent options helped in the short-term, but I am STILL paying off my loans in 2019. (Gosh that’s shocking to see in black and white.)
I wish I had known then what I know now. (I was also a teen mom, so had more financial challenges than most.) Keep educating your daughter about personal finances - this is a subject they should teach in high school and college imo.
@TrendaLeigh Using the Consumer Price Index that $45,000 in 1987 debt becomes $102,000 in today’s dollars.
Checking for clarity…you had you bachelors and masters at age 20…while being a single parent?
Wow!
Back in 1987…where did you go to college? Were you also funding your living expenses with loans? Were you taking Perkins as well as Direct Loans?
And you are still paying loans from 1987? That’s 31 years ago. How is that?
@Thumper1, yes, started as a freshman at 17 when my daughter was 10 months old, finished my BS in 3 and then my Masters in a year. Started teaching at 20 which seems insane in hindsight. 
If I only I had been more educated about money - I had Perkins, Direct, and some institution loans…and yes, was funding rent (Corey Village family housing at UF), childcare, etc. as well as tuition. I did have some Pell grants and OOS tuition waivers, but it all added up. I tried to get through as quickly as possible, but I really couldn’t pay childcare, rent. car payment and student loans on a teacher’s salary. I ended up defaulting. Later, I was able to “recover” the loan to salvage credit, but I paid minimum payments based on income for about 12 years, which maybe covered the interest, but didn’t touch the principal.
Gosh, now I’m depressed…lol…but it’s also why I’m so passionate that we need to educate these kids, particularly those who are first-gen students like i was. I had NO idea what I was doing when I signed for the loans - I was just trying to survive and thought college was the solution - regardless of what it cost.
@TrendaLeigh - thanks for posting, I’ll share with my D and hope others do as well.
In most cases, it’s NOT just college loans that cause financial problems. As noted above @TrendaLeigh defaulted on her loans…and that is always a big problem, not just for college loans but for ANY loan.
I agree that a personal finance course is an excellent elective choice. I would strongly suggest students take this.
One of my kids is a musician, and earns a modest income. He has taken a couple of courses related to personal finances (an elective in his undergrad program), and budgeting/money management for the self employed (required in his grad program). He isn’t rich. He didn’t have college loans to pay himself…but he knows how to manage money…and he does so well.
He says…a lot about this is choices.
In the time since @TrendaLeigh defaulted, new repayment options have been instituted that make it easier to avoid default (the advent of REPAYE has been very helpful in this regard for many). While there are definitely pitfalls to income driven repayment plans (like the fact that taking longer to repay increases the amount repaid in the long run due to interest), they are a means to avoiding defaut that didn’t exist years back.
Correct me if I’m wrong, but I believe that the balance of the loan is forgiven after a certain amount of time. I think this provision is to ensure that people are not forced to forgo long-term work in lower-paying fields like teaching, social work, nonprofit work, etc.
@brantly I believe that it is forgiven after 25 years but the amount forgiven is taxable income that year. Also the income based repayment plan must be renewed each year. If you skip a year (say you win a big lottery prize) then the 25 year clock restarts at year 1.
IDR doesn’t reset the clock - you can go in & out of plans. Same with PSLF. But IDR forgiveness is, as @brantly correctly points out, taxable in the year it’s forgiven. That can be a huge tax hit. PSLF forgiveness is not taxable, but there is no guarantee that a borrower will be able to get through all 120 eligible payments in an eligible job, much less be able to stay in an eligible job until the forgiveness is actually processed (this can take many months). I advise my students to try to pay off loans as quickly as possible.
This may be a little bit of a hijack – and maybe a very naive question – but here goes:
When D graduates, there will be $27k in loans (just the Stafford loans). We are paying the loans for her because we pledged to pay for her undergrad education. We can do it. The loans are in her name, but we will be paying. Who gets the tax deduction? Obviously, I’d like to be able to take it.
I think even way back then I might have had options - if I didn’t bury my head in the sand. Funnily enough, a few years ago, I helped develop a series of online courses for SALT/ASA on student loans. I learned so much about student loans - and thinking of college (and if necessary loans) with an ROI attitude.
If anyone is struggling with loans, lenders really will work with you - and there are now numerous protections for borrowers. BUT, and this is in the course multiple times- ignoring it will not make the problem go away.
I don’t think a parent can take a tax deduction for loans paid off for someone else. At least I wasn’t able to do so when I paid off my daughter’s loans six years ago. And she couldn’t take the deduction because she hadn’t paid off the loans. So nobody got a deduction for this.
@brantly we paid off the college loans…gave our kid the money to do this. He got the deduction. I don’t think you can…since your kid is no longer a dependent.
@thumper1 That’s what I was thinking … gift D the money to pay it off so at least someone can benefit from the deduction.
D gets the tax deduction, if there is one to get.
The deduction for the interest on a student loan is very limited by income, so most parents wouldn’t qualify anyway.