<p>Ben has to drive Ford and many others will have to drive Volt. This has nothing to do with his income.</p>
<p>
</p>
<p>Not necessarily. The website you cited states that he had book royalties last year of between $200k and $2m. Nothing more specific than that. </p>
<p>I’ve never heard here on CC of families taking out student loans so that they could invest their funds in higher-earning investments. Is this really done? Interest rates on student loans look to be higher than what we could manage to get out of investments unless we went for something high-risk. There are probably options for the super-wealthy, but Bernanke’s money right now must be in a blind trust. </p>
<p>He’s a former academic who refi’d a house from an adjustable rate to a fixed rate. That doesn’t sound to me like someone who has a few million around to invest, outside of a retirement account.</p>
<p>Somebody might not want to sell stocks to pay for a college education, especially if they were appreciated and were showing a decent yield.</p>
<p>SlitheyTove–heck yes, people do that all the time. The question is why WOULDN’T you?? Same with the home mortgage, when he took that out he probably had an inkling that the market was going to work in his favor, again, he refinanced at a very, very low interest rate. Any financial adviser worth anything would suggest you do the same. It makes zero financial sense to pay off a 3% mortgage or loan when your investments are earning 5, 10, 20% or better. WAY too much short term thinking going on in the current economy that concepts like this have gotten lost.</p>
<p>Steve,
Some people would not have a cash flow to cover all accumulated debt. At least, we had just that simple idea in mind when we decided to pay off mortgage (with very low rate) before D. started HS and never have car loans for longer than few months and were very pleased that D. decided to go to free UG. All these and many other considerations gave us ability to finance D’s furhter education. There is no way under sky we would be able to do so having mortgage, car loans and having paid for UG (not only hers but also ours - both of ours plus MBA’s were paid by multiple employers). Yes, we do not have savings, but nobody needs them as money are going to be just paper very soon. The faster you spend it, the better.</p>
<p>Miami-you missed the point–the money is sitting in an account earning interest, dividends, whatever above the rate of the loan. You keep the money in the account for however long and then pay off the loan as soon as the first payment is due. Little or No cash flow needed in many cases. </p>
<p>You seriously think that having savings is a bad idea?</p>
<p>Parent PLUS loan rate is 7.9%. Are people really finding investment opportunities these days upwards of this? I’ll even throw in the capital gains for free. :)</p>
<p>I agree there’s no point in paying off a low-rate mortgage, but that’s not the same thing as taking out student loans in order to preserve investment capital.</p>
<p>Doesn’t have to be a PLUS loan with collateral in the bank to back up the loan…</p>
<p>Honestly, if SteveMA hadn’t posted somewhere her gender, I would think she was my husband posting. We often use other people’s money: cars, appliances, anything that offers little or no interest. We would do the same with school loans if it made sense.</p>
<p>Lots of people going to med school have no problem with huge debt.</p>
<p>I think one of the best uses of “other” money was someone that used a Discover card to buy a car. Had the money banked, bought the car with the Discover card, got 1.5% back because of the high amount on the card, paid off the card right away. Smart thinking.</p>
<p>I know people who always paid tuition with credit cards and reaped the benefits…whatever they were. Colleges wized up pretty fast and many now charge a fee (rather the company who manages payment through credit cards charges a fee) to pay with a credit card. I was really looking forward to those frequent flier miles. :)</p>
<p>
</p>
<p>All the time. And yes it has been discussed on cc. Usually, it’s just a question of taking a subsidized stafford – no interest while in college – and then paying it off when the first payment is due.</p>
<p>a my son was just admitted to a great school with 25k scholarship and no financial aid, income about 100k but i live on long island pay taxes and cant get subsidized loans, i can get a useless 5k unsubsidized loan at 7% thats more than a used car loan.Tuition about 58k with 25k scholarship is any education worth 31k/yr out of pocket.Maybe gov could offer everybody 3% loans to cover inflation and take into consideration where they live when doing fasfa.Never carried debt,no big vacations,always made responsible purchases,but at 100k on long island,just surviving.</p>
<p>Steve,
"Miami-you missed the point–the money is sitting in an account earning interest, dividends, whatever above the rate of the loan. You keep the money in the account for however long and then pay off the loan as soon as the first payment is due. Little or No cash flow needed in many cases. </p>
<p>You seriously think that having savings is a bad idea? "
-I do. Money become paper. The only way that makes sense to ME (again, you might have different opinion and different strategy that works for you) is to have $$ in company matched 401K. Then you pay taxes only when you withdraw and sometime it makes sense to increase your income to avoid paying tax penalty, then it is convinient to withdraw from 401K.<br>
Again, I have seen many advertisements from financial advisors. Why they frequently mention that their own mortgage is paid? But we paid it because it made sense for us. Having mortgage before we started paying expansive private HS was a blessing.<br>
Can you educate the rest of us about high interest saving accounts? I do not have anything to put now as I am paying for Med. School, but would like to know in a future. So far 401K is the only way that made sense to me:
- I get company contribution and
- I do not pay taxes on these money</p>
<p>I know! This is absolutely absurd. There’s no way this can continue. I read a mancredible article about this: [College</a> Will No Longer Be a Part of the American Dream - Mancredible | Mancredible](<a href=“HugeDomains.com”>HugeDomains.com)</p>
<p>Something is going to change soon. I really like the statistics you’re referring to. They’re even worse than the ones in the mancredible article LOL</p>
<p>Miami–I can’t even begin to tell you how bad your plan is, I suggest you meet with a financial adviser sooner rather than later so you have the option of retiring some day.</p>
<p>Steve, what works for some, will not work for others. I do not have financial advisor. We have been fine so far, we have only 3 more years to pay for D’s education and are planning to have as much $$ after as a next person in our situation. She is the second one that we are supporting financially, we have been done with the first one for awhile with the same type of financial plan.
I have no plans to retire, I have no idea what I do when I am kicked out of my job (I do not mean financially, I do not know what I will do with my time). Take it easy, do not worry about me, I am OK. Best wishes with your personal plan, mine has been working for me just fine. No debt plan will stay with me for the rest of my life.</p>
<p>blue, I thought that the subsidized Stafford limit was quite low. Could one really go up to $400k using them, coming from a full-pay family?</p>
<p>Bluebayo, maybe taking subsidized student loans and investing funds make sense. But not unsubsidized. The rate is just too high. As to subsdized, I would suggest people remember that student loans are not forgiven in BK. So if you invest borrowed money, one should be doing it and considering risk. IMVHO.</p>
<p>Slythe – I thought no way could someone get that much unsub.</p>
<p>ST, the max for undergrad Staffords is $23,000. For grads, it is $65,500, which includes any outstanding undergrad sub loan amounts.</p>