Student Loans Debt

[BaltoAlphaPsi]

Originally Posted by Munchkin03

Student loan interest rates are lower than they've ever been; I honestly don't think they can get any better. Mine were at just under 3%; my savings account has a higher interest rate! I figured it made more sense for me to pay that off and put the money I was paying for loans in savings.

But most student loans have variable interest rates that change every 6 months... they could go back up to 8. And that sucks :-( I pay 15,000 a semester for 5 years... plus summer classes

[Munchkin03]

Originally Posted by BaltoAlphaPsi

But most student loans have variable interest rates that change every 6 months... they could go back up to 8. And that sucks :-( I pay 15,000 a semester for 5 years... plus summer classes

Most people get their loans consolidated after school; usually, after a few years of on-time payments, your interest rate will be lowered. Also, if you agree to do automatic debit, your rate could be lowered as well. My loans--federal and private--were NEVER as high as 8 percent; they hovered somewhere around 2.5-5% before I locked them in.

[UGAalum94]

I think one thing that's being left out of this debate is the cost of attending some schools versus others.

If you elect to attend a pricey private school you probably owe somewhere between four and ten times as much money as a public college grad, with no corresponding increase in your salary. (Sure there could be an increase in your salary, but it's probably much more field of study related rather than cost of school related.)

Why should this decision be subsidized by the government at all?

ETA: am I wrong in thinking of it this way? It's not that I want some system that keeps students who can't afford to write a 100,000-200,000 dollar check for their education out of elite schools, and yet, maybe the schools themselves should help the kids finance it? What was Havard's endowment?

[Munchkin03]

Originally Posted by UGAalum94

ETA: am I wrong in thinking of it this way? It's not that I want some system that keeps students who can't afford to write a 100,000-200,000 dollar check for their education out of elite schools, and yet, maybe the schools themselves should help the kids finance it? What was Havard's endowment?

The schools with the largest endowments, and their peer institutions, do finance it for families who don't pay. Most of the Ivies, along with Stanford, MIT, and others, have essentially waived loans for families making under $100,000. If your family makes less than 60K or so, you're not expected to contribute at all.

[UGAalum94]

Originally Posted by Munchkin03

The schools with the largest endowments, and their peer institutions, do finance it for families who don't pay. Most of the Ivies, along with Stanford, MIT, and others, have essentially waived loans for families making under $100,000. If your family makes less than 60K or so, you're not expected to contribute at all.

Sounds great to me.

Maybe it's because I went to a downscale institution, but if a person wants to individually mortgage his or her future to attend Emory over UGA to study Art History at the undergraduate level, I'm down with that. Live your dreams and I hope it's worth the price difference.

But it is odd to think that we'd have federal programs that would help or regulate it.

[Munchkin03]

Originally Posted by UGAalum94

Sounds great to me.

Maybe it's because I went to a downscale institution, but if a person wants to individually mortgage his or her future to attend Emory over UGA to study Art History at the undergraduate level, I'm down with that. Live your dreams and I hope it's worth the price difference.

But it is odd to think that we'd have federal programs that would help or regulate it.

But, you're not borrowing directly from the government. You're taking loans out from a bank; in the event that you completely default (which is next to impossible since they garnish your wages and/or reduce your income tax refund if you don't pay), the government backs it up. Also, since loans can't be discharged in bankruptcy anymore, it's not as if people are shirking their responsibilities. In my mind, it's no different from a VA or FHA mortgage except you can't foreclose on it.

Oh, most people who go to private schools don't "mortgage their future," either, unless they're going to law or medical school.

[UGAalum94]

Originally Posted by Munchkin03

But, you're not borrowing directly from the government. You're taking loans out from a bank; in the event that you completely default (which is next to impossible since they garnish your wages and/or reduce your income tax refund if you don't pay), the government backs it up. Also, since loans can't be discharged in bankruptcy anymore, it's not as if people are shirking their responsibilities. In my mind, it's no different from a VA or FHA mortgage except you can't foreclose on it.

Oh, most people who go to private schools don't "mortgage their future," either, unless they're going to law or medical school.

What do you mean? Are you saying something about the scale of the loan or the connection to future employment? I just meant, in an offhand way, that one would take a huge financial obligation in the future for something that might provide little tangible reward in the present.

In terms of the loans, I think I knew that they are just federally insured rather than federal loans for the most part. (Do we have any straight federal loans, rather than grants, for low income students?)

Not having a tangible valuable asset changes the nature of the loan quite a bit from a VA or FHA mortgage to me, but I'm with you about how the loans pretty much stay with you forever. I'm not even sure you can default really. Wouldn't you almost have to be a position of drawing no income? I'm not at all concerned that people are ripping off the government or anything.

It's a safe risk for the government to take, but it's still kind of a strange one if you really start thinking about it. If they were tied to high income majors or degrees that were associated with delivering needed services it makes more sense than simply insuring loans regardless of institution or degree. And I say that as a big fan of the liberal arts.

I guess as someone noted earlier your taxable income goes up so it makes sense of that level, no matter what degree you earn.