Student Debt

[swimcatsmom]

<p>Obviously it was the school’s fault the student didn’t pay any attention to it. Duh.</p>

[standrews]

<p>I calculated the true cost of unsubsidized Stafford loans since it seems like every college cost calculator for schools my HS junior is interested was content to provide the maximum in Stafford loans. Here’s how $27,000 (5500+6500+7500+7500) turns into almost $43,000.</p>

<p>$27,000 current Stafford maximum over 4 years
$31,000 at Graduation: $27,000 + ~$4,000 in interest at 6.8% before repayment begins.
$356/mo payment for 10 years to pay off the loan.
$11,800 in interest paid over 10 years.
$42,800 paid over 10 years.</p>

<p>For every dollar borrowed you end up paying back $1.59. A penny saved is 1.59 pennies earned.</p>

[annasdad]

<p>Doesn’t invalidate your point, but assuming half of each year’s loan is paid to the school in August and half in January, the total interest that will accrue before graduation is about $3,000, not $4,000 - making the monthly payment about $345.</p>

[annasdad]

<p>

The manager explained that the student had completed entrance counseling when she borrowed, and she pointed out the information on the student’s award notifications … as well as the info on the MPN the student signed. The student responded that she didn’t actually pay attention to any of it.

</p>

<p>It’s not just student loan borrowers who go into major debt blindly. When we sold our farm 15 years ago, the young couple buying the place didn’t have a lawyer - even though I’d advised them gently that they should. Our attorney drew up the papers and told us that were we the buyer, he wouldn’t let us sign them. At the closing, the young man said, “I hope this is all on the up and up - I tried to read that stuff and didn’t understand a word of it.”</p>

[lerkin]

<p>

It’s not just student loan borrowers who go into major debt blindly. When we sold our farm 15 years ago, the young couple buying the place didn’t have a lawyer - even though I’d advised them gently that they should. Our attorney drew up the papers and told us that were we the buyer, he wouldn’t let us sign them. At the closing, the young man said, “I hope this is all on the up and up - I tried to read that stuff and didn’t understand a word of it.”

</p>

<p>Some years ago in the middle of the housing boom we were selling a rental we had to our renters. We offered to put them in contact with some people we knew to get for financing. They said that their friend is going to do their mortgage. </p>

<p>At the closing I saw their loan papers and I was flabbergasted by the terms of the loan. Needless to say the house went into foreclosure couple of years later.</p>

[anxiousfather]

<p>The whole college financing issue is complex. I am one of those who dislikes taking out loans to pay for college, however there are other issues to consider. For example, the opportunity cost of liquidating assets, which may end up being more expensive than paying interest. For example, to pay for our first son’s tuition, I sold some Apple stock I had, which has since more than doubled. I would have been better off paying 8% on a PLUS loan. But we don’t have a crystal ball…</p>