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<p>Ok, but mortgages are secured, so the balance will inevitably be repaid when the home is sold. What about interest-only student loans? When are they assuredly repaid?</p>
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<p>My feeling has always been that more people lose money in the stock market than make money.</p>
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<p>US treasury yields for 2012/01/04 are:</p>
<p>1 month = 0.01%
1 year = 0.12%
5 year = 0.89%
10 year = 2.00%
30 year = 3.03%</p>
<p>These were from (of course, they change every day):
[Daily</a> Treasury Yield Curve Rates](<a href=“Interest Rate Statistics”>Interest Rate Statistics)</p>
<p>Since 2011/11/01, I-savings bonds have had a 0.00% fixed rate plus a 1.53% semiannual inflation rate (= 3.06% annual inflation rate). This is from:
[Individual</a> - I Savings Bonds Rates & Terms](<a href=“I bonds interest rates — TreasuryDirect”>I bonds interest rates — TreasuryDirect)</p>
<p>However, you can only purchase up to $10,000 per year of electronic I-savings bonds and?/or? $5,000 in paper I-savings bonds purchased with tax refunds:
[Individual</a> - Purchase Limits](<a href=“http://www.treasurydirect.gov/indiv/research/articles/res_invest_articles_purchaselimits_0406.htm]Individual”>Research Center — TreasuryDirect)</p>
<p>Personal carry trade.</p>
<p>I’m with Shrinkrap. I think it’s remarkable that four years after this thread was started that the subject of the article just happened upon this thread.</p>
<p>My family must have a different standard. We try to pay as much principal as possible as soon as possible.</p>
<p>So what happens when his child wants to go to college? Another loan? Does she get financial aid because the dad is deeply in debt?</p>
<p>He said he’s contributing to a 529 so his kid won’t have the same debt issues he has. Guess he’s making those 529 payments instead of paying off his loans.</p>
<p>Interesting thread. I think it is easier to decide on a lower priced school as an incoming Freshman than as a Junior with a situation change. I wonder if the OP would have made the same decision if he knew before he started college that his dad’s business would fail. Once you are in the middle of things it is harder to make the decision to leave, and I think many of us would try to do whatever we could to make things work out given the same set of circumstances.</p>
<p>On another note, My H is a mortgage banker who turns down people almost daily for home loans because of excess student loan debt. He really sees first hand how difficult it is for many families to make ends meet with these huge student loans. We have had very frank discussions with our kids about college costs and debt, getting out amortization tables to price out what these loans really mean in payments in years to come with some of the expensive schools our kids were considering. Thankfully both of our children selected colleges that can be just about covered with their 529 plans and merit scholarships so both should be able to graduate without loans even if our financial situation changes.</p>
<p>I have the same question as Bay. If only interest is paid, how do these massive students loans ever get paid off?</p>
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<p>I wondered the same thing. Maybe he googled himself.</p>
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<p>Also, the choices may be much more limited when trying to transfer to a less expensive school, especially after completing two years. The set of schools friendly to transfers is smaller than the set of schools one can apply to for freshman admission. And if one had not been planning on transferring in the first place, the courses selected may not be optimal for getting credit in the desired major at the transfer target school. Course and grade requirements to be eligible to transfer at all may also be a problem in this situation. Also, if the family financial troubles happened late in the sophomore year, transfer application deadlines may have already passed.</p>
<p>I understand, at least to a degree, initially taking on the debt. I don’t understand going ahead and getting a mortgage and having a baby when you still haven’t done anything to pay down any of it seven years later. That seems to reflect an entitlement sense – “I deserve the best” – that has certainly gotten a lot of other people in a whole heap of hurt. </p>
<p>I hope his house of cards doesn’t come crashing down on his child.</p>
<p>The carry trade is where you can borrow at a low rate and lend at a higher rate so that you are essentially getting free money. This happens a lot around the world where interest rates are low in one country and higher elsewhere. One difference with doing it with currencies is that interest rates and exchange rates can change which can blow up such deals. To do it in this case requires guaranteed interest rates on the loan and interest-bearing instruments.</p>
<p>Another variant of this was those credit card deals from 10 years ago where you could borrow money interest free on a credit card for a few months. The banks were betting that you wouldn’t be able to pay off the credit card and get you for 18%. Some people with (that I know) borrowed the money and put it in a short-term interest-bearing account for free money.</p>
<p>Can it work? Sure. Commercial organizations do it. Banks do it. Should you do it as an individual? I much prefer to not have any loans at all.</p>
<p>“If you can’t do the time, don’t do the crime–a cautionary tale about debt”</p>
<p>If anything the title of this thread is a cautionary tale for the public, government, banks, and enterprise. Private Student loans 1999-2008 were exactly like Mortgages. Those of us who saw what was happening, didn’t have a large enough voice, and we would be foolish to give up an opportunity.
nuff said.</p>
<p>This is why I’m going back and forth between going back to school or not, I don’t want to leave the Army a year from now only to drown myself in debt to get a freaking degree that might or might not be useful. Bloody hell, I really do need to find out how my GI Bill works…</p>
<p>Yes, by all means, get good and accurate WRITTEN info about the GI Bill. Also find out if it will pay if you do some years at CC or state U & then transfer or what it offers. Be sure you read the fine print so you understand exactly what IS and is NOT covered. I know quite a few people who got very good, expensive educations paid for by serving in the military. My hat is off to all of you!</p>
<p>Here’s a website to start with:</p>
<p><a href=“http://gibill.va.gov/[/url]”>http://gibill.va.gov/</a>
<a href=“http://gibill.va.gov/benefits/post_911_gibill/index.html[/url]”>http://gibill.va.gov/benefits/post_911_gibill/index.html</a></p>
<p>Hope this helps!</p>
<p>If they’re not pulling my leg about that housing allowance which would be a major help, going back to college full time just started looking a little bit more feasible for me.</p>
<p>I don’t understand why in the world the real Jonathon Avidan would identify himself on an anonymous Internet forum and state his (in my opinion) somewhat questionable financial decisions regarding his lack of repayment of his student loans.</p>
<p>eastcoastcrazy- it is because he does not agree with you that his financial decisions were questionable. He defends his decisions. I would like to understand his decision to finance the remainder of his college costs, and how that was beneficial to him. So I hope that all of the negative comments have not chased him away!</p>
<p>Many colleges increased financial aid after the Great Recession started - to keep their current students. </p>
<p>I read about one college that really really tries to keep their students away from high interest rate private loans. The private loan company has to send the college paperwork, which gives the college a chance to talk the student out of it, and seek alternatives.</p>
<p>Starting fall 2012, the Federal government will no longer subsidize loans for graduate or professional school. Also, there is a big question mark about what will happen to the Perkins loan program in fall 2013 - it could completely disappear, depending upon who controls Congress. The colleges are supposed to return all the money to the feds at that time.</p>
<p>$25,000 of federally subsidized loans is reasonable for a high quality undergrad degree in a major that is marketable.</p>