<p>"Margo Alpert is on the 30-year plan. Every month between $500 and $600 is automatically deducted from her salary to pay off college loans. By the time the 29-year-old Chicago public-interest lawyer is in her mid-50s and thinking seriously about retirement, she will finally be free of college debt."</p>
<p>This article leaves out one of the most problematic features of student loans: Unlike most other forms of debt</p>
<p>
[quote]
...for the unwise or the plain unlucky, a student loan can become an inescapable burden. It can almost never be expunged in bankruptcy, and the Supreme Court just ruled that even Social Security income can be garnisheed to pay for defaulted student debt.
[/quote]
</p>
<p>And you gotta love the internet. You have an article warning of the debt trap of student loans. And at the bottom of the page you have ads:
[quote]
Bad Credit Loans
Find Loans, Credit Cards and more! Bad credit / No credit? No Problem.</p>
<p>Top 10 Easy Student Loans
We found the Top 10 Student Loans. Just apply and collect your money.</p>
<p>Bad Credit Student Loans
Learn about Student Finance, Student Loans resource center.
[/quote]
</p>
<p>One big issue is that you spend an insane amount of money in interest when the payments are stretched out. People keep telling me that I shouldn't worry - that I can spread the payments over 20 years - but reality is that you don't reduce your monthly payment very much, and you end up paying an insane amount of interest. At 6% interest, the loan doubles every 12 years.</p>
<p>Student loans are the new child support. (for guys anyways)</p>
<p>ok, I'll bite as to why I don't understand the statement</p>
<p>You create the debt, you have a responsibility to pay it off</p>
<p>You create the child, you have a responsibility have a responsibility to hep pay to take care of the child.</p>
<p>this is rocket science why???</p>
<p>Just the newest "in" thing to get auto deducted out of your checking account. I agree that if you have student loans, you should pay them off.</p>
<p>Where is that article getting the 28 percent rate? My kids' loans are under 5 percent and, even with the impending rise, will not go over 7 percent. What am I missing?</p>
<p>I believe you may be referring to the percent of increase, not the interest rate, though that is a little less as well, 20%.</p>
<p>"The new interest rates will result in payments that are 20 percent higher compared with the 2004-05 rates, doubling the total interest paid over the life of the loan, according to the Project on Student Debt."</p>
<p>Also not reflected in the article is, at least for plus loans, a 2 point interest reduction for automatic withdrawal. Also, one can have a significant impact on loan duration by making a couple of extra payments per year.</p>
<p>Also not reflected in the article is, at least for plus loans, a 2 point interest reduction for automatic withdrawal.
that isn't an option for all plus loans
Our plus loan was sold between dispersal and commencement of payment to a company that does not handle automatic withdrawal- :(</p>
<p>That's ugly!</p>
<p>I get like a QP for automatic withdrawal. Are parents responsible for student loan payments after a kid graduates? That doesn't seem fair.</p>
<p>If you take a PLUS loan, where the parentsare borrowing the money to pay for thier chil's education, depending on the amount of money borrowed, they could still be paying off the loan once their child graduates . Most students are taking out stafford or perkins loans.</p>
<p>aparent5 - I believe the 28 percent was a loan rate cited in a Fortune magazine article about Sallie Mae. Sallie Mae responded to the article in a letter to the editor, disputing that 28% figure. Fortune stood by their figures. It may have been an apr calculation that included all up front fees and used a short payoff assumption. I'm not really sure. </p>
<p>Look, if students know exactly what they are getting into and can handle the payments, fine. The point is that many students are taking on way too much debt without fully understanding all the ramifications. </p>
<p>Debt is a huge part of our culture. Kids see adults with tons of home mortgage debt, auto loans, and credit card debt so they see no problem with piling up huge student loan debt. Even their own parents had student loans, so why shouldn't they? One of the biggest problems that I see is that the worst case scenario with student loans is far worse than other types of debt. Even if the student is unemployed, sick or disabled he will remain saddled with the debt forever, with interest accruing.</p>
<p>I have been with CC quite a while and have never understood the way in which students are willing to go into enormous debt for the right to pay unbelievably high college costs. [Disclosure: I graduated from under-grad with the equivalent of $10,000 (today's money) in student loans. I found even that to be a huge burden for someone starting out and vowed that my kids would not have any debt when they graduated.]</p>
<p>The one thing that I've harped on before is that the debt limits your post-graduation options. Yes, you may think now that you'll have a high salary and have no problems with $500 a month or more in payments, but suppose you want to get married and have (and raise) a child? Suppose you want to take an exciting job at the South Pole, but for minimal pay? Suppose you want to volunteer or teach for a few years? Suppose you find THE MOST INCREDIBLE JOB (but low initial pay) that will take your life in a whole new direction? Sorry - all these options are out because you have those payments to make - for years and years and years.</p>
<p>The thing I've told my sons over and over as they grew up is that they must make choices that do not limit their future options.</p>
<p>Large student debt? IT IS NOT WORTH IT!! (shouting)</p>
<p>digmedia...I understand where you're coming from. However, with your reasoning, no one would go to medical school, law school, or even an ivy undergrad unless their parents could afford to foot the entire bill. Life is about taking calculated chances--I see nothing wrong with large debt for a professional school where the student is committed to working in that field; if they do go to law school and then decide that public interest law is where their heart lies, not the high paying corporate world--then its fine, they are adults and need to step up and do the corporate thing as long as they need to to pay down some of the debt to a manageable level.</p>
<p>I do see something wrong with the debt that students amass while having no clue what they will do. I.E. majoring in a liberal art which doesn't have a defined career path and often the student just ends up in a regular job unrelated to the major. To me, this isn't worthwhile, and it may just be better to study that liberal art in state if you don't have a clear goal in mind.</p>
<p>If we are speaking of undergrad and not professional or some grad school, I tend to agree digmedia. Students should not graduate with huge debt. On the other hand, if parents wish to incur debt so that their child can attend a more expensive school then so be it. Parents do so with eyes wide open, understanding the ramifications. Whether it is worth it or not will be an entirely subjective call, I doubt if there are any objective data that easily suggest if it is worth it.</p>
<p>Let me add to the shouting chorus here! Too much debt is not a good thing! </p>
<p>We have had an amazingly long period of economic expansion since the last little recession in 1990-91. The little dip we had in 3rd quarter '01 and into '02 could hardly be called a recession. </p>
<p>So, I contend that every student preparing to make a decision today regarding college debt was barely out of diapers the last time we had anything approaching a "real" recession. Those students probably are under the impression that long and continuing economic expansions are the norm. Though, as a student of economics, I think there is ample proof that much of this exapansion has been due to an insatiable acquisition of debt by both the American Consumder and the US Gov't and other economic factors that may be shortlived, i.e., the recent explosion in home prices creating home equity piggy banks that have been tapped. </p>
<p>I carried far too much debt going into the economic slump of '90-'91 and ended up bankrupt and living in my mothers basement with a wife and a 3 year old!</p>
<p>Anyone who is saddling themselves with a significant lifetime debt burden to pay for the college of their dreams may have one or more opportunities to live an economic nightmare at some point in the future.</p>
<p>I read many posts on this website from both students and parents who act as if assuming 100K education debt is no big deal. I met a young man recently who did this to pay for a law degree. His dream was to work for the county prosecutors office. However, after doing that for awhile, he discovered that the pay was so low, he would have to get a job in private enterprise that paid more. This person is now working as an investigator for a law firm involved in insurance fraud. His current job pays the bills, but is not the career choice he had envisioned.</p>
<p>State U is looking better and better!</p>
<p>we know many students who are attending state colleges and universities macnyc,and I am not even in CA!
Some states also have reciprocal agreements which have been talked about elsewhere, to cut out of state tuition for those coming from neighboring states.
We did decide to take out PLus loans- one reason is our kids are 8 years apart- and while that means our outlay will be higher than if they were both in school at the same time, it does mean that our monthly payments are lower.
another reason is that we didn't have the opportunity to attend college, and while we weren't able to save as much as we would have liked due to periods of un/underemployment, we still felt that it was our obligation as parents to procure the best education we could for our D.
(Not to mention that our EFC was about the same cost as instate college)</p>
<p>
[quote]
I carried far too much debt going into the economic slump of '90-'91 and ended up bankrupt and living in my mothers basement with a wife and a 3 year old!
[/quote]
</p>
<p>gnusasaurus, that must have been a rough time. Did you actually declare legal bankruptcy? Were your student loans discharged or did you have to continue paying them off? I know I keep beating this point to death, but under existing law a student who has the difficulties you describe would retain the obligation to pay student loans.</p>