bankruptcy

[AOII Angel]

I think some people think that the point of money is to accrue it and let it sit in the bank. Student loans are a pretty good deal. Some bank gives students with absolutely NO credit a lot of money to get an education that exponentially improves their abilities to make back that money and more in the future. Hmmm...sounds like an investment to me. Some investments are made to start business, some are made into people. $100,000 to fund my medical education was a bargain, and I'm paying it back as slowly as I can...because I can, and I don't give a damn. Money doesn't mean that much to me. Having my education, getting through it in the least amount of time and getting on with my life so my family and I can be happy is the most important thing. Paying interest...so what?

[aggieAXO]

I guess it depends on how you feel about debt. I hate it and pay for eveything in cash or if I use credit will pay it off quickly. To me debt=stress, I literally would have anxiety atttacks thinking about my loans. I felt like I was in prison.

[AOII Angel]

Originally Posted by aggieAXO

I guess it depends on how you feel about debt. I hate it and pay for eveything in cash or if I use credit will pay it off quickly. To me debt=stress, I literally would have anxiety atttacks thinking about my loans. I felt like I was in prison.

The cost of my debt is a drop in the bucket each month. It would cause me more stress trying to pay it off quickly, which is also dumb since it is the lowest financed rate debt you can get. I'd pay off one of my two mortgages before I'd even consider touching my student loan debt. My debt to income level is minuscule anyway. Having debt is not the end of the world. I do agree about the credit cards, though. You should use them to increase you credit rating but pay them off. We use ones with top rated rewards programs (currently Chase Sapphire.)

[excelblue]

Loans can go both ways. I personally love my student loans. They allowed me to live comfortably (instead of just sufficiently) while I was in college.

Then, a few months after I graduated, I managed to make enough money to have the ability to pay off the total amount of the loan immediately if I really wanted to. Instead, that money is currently sitting in a rainy day fund and some stocks.

For me, debt is a tool. As long as I'm not trapped by it, it's awesome.

[Kevin]

Originally Posted by amanda6035

I never said they weren't an option. I said people didn't "need" loans to be able to get an education. And my position hasn't changed on that.

Congratulations on that. I didn't need loans for my undergrad degree either. The music department needed violin players for their orchestra and I was a pretty good one, so I got nearly a full ride. What fiddling didn't earn me, I was easily able to handle with the various jobs I had.

Law school was another story. It started out at around $750/credit hour and ended up at around $1,000/credit hour with all of the tuition hikes over the 4 years I attended part time. At ~$18K/semester and working as a legal assistant, limited by the American Bar Association to 20 hours per week, unless you want to lie to your school and risk expulsion, there is almost no possible way to pay for a legal education as you go.

I did rack up nearly $100K in debt, and while it's a "drop in the bucket" as some say with my increased income, the interest rates tend to be a higher than I'd like them to be, so unlike others, I'm being a lot more aggressive in getting the debt paid.

Not everyone has parents who are willing to loan them that kind of money or to pay that sort of tuition bill. Like others here, my debt is an investment which has paid off big.

[AOII Angel]

Originally Posted by Kevin

Congratulations on that. I didn't need loans for my undergrad degree either. The music department needed violin players for their orchestra and I was a pretty good one, so I got nearly a full ride. What fiddling didn't earn me, I was easily able to handle with the various jobs I had.

Law school was another story. It started out at around $750/credit hour and ended up at around $1,000/credit hour with all of the tuition hikes over the 4 years I attended part time. At ~$18K/semester and working as a legal assistant, limited by the American Bar Association to 20 hours per week, unless you want to lie to your school and risk expulsion, there is almost no possible way to pay for a legal education as you go.

I did rack up nearly $100K in debt, and while it's a "drop in the bucket" as some say with my increased income, the interest rates tend to be a higher than I'd like them to be, so unlike others, I'm being a lot more aggressive in getting the debt paid.

Not everyone has parents who are willing to loan them that kind of money or to pay that sort of tuition bill. Like others here, my debt is an investment which has paid off big.

When I got my loans, interest rates for federally sub'd loans were at an all time low. I have rates at 3%. As a resident, you can't pay back loans so you defer, and then spread them out to pay over 30 years like a mortgage. When you make low wages for 6 years, you aren't going to pay off a $100,000 loan. A payment on my 30 year loan is a drop in the bucket and causes me not an ounce of worry.

[Kevin]

I have some loans 3.5%, some at 5.3%, some at 6% and one at 10.5% and due to not having to do a residency and having a decent income, I'm on a 10-year payout. My minimum payment is over $1,000 per month. Affordable, but I know things would be a lot better with that payment gone, so I'm working on that and should have it taken care of next year. I never deferred. I don't think I could have. It's a slightly different scenario, but one that'll work out in the long run.

[AGDee]

Originally Posted by amanda6035

*sigh* Really? This again? Are you still that upset that we disagree about this? Student loans are a stupid tax. They are not an investment. Investments earn you money. Student loans cost you money. You can get a college education without taking out loans. And no, taking out loans so you can learn a skill or gain knowledge to help you "get a better job" is not an investment. Going to school is an investment. Paying for school with debt is not an investment.

It's no secret that I deeply regret my student loans. But I don't have any desire to have them hang around around for 20 years by paying the bare minimum so that I don't have to be responsible for them anymore. Sorry, I have a life to live. And that means livinging extremely frugally right now so I can throw any extra money I have at them to get them out of my life. They are an inconvenience, and I'm taking full responsibility for them. My point in the previous thread is that for young students out there who are worried about their options, there are OTHER options. Debt is not the only option.

Perhaps a better question is, what are the other options?

Lets look at the finances.
If you chose to go to a community college for two years first, that would save money. Here, you'd pay around $6000 for a year of community college and books. If you shared an apartment with someone, you could probably get by on $350 for rent, another $100 for utilities, and $300 for groceries/hygiene/paper goods. You'd need a car, insurance and gas. If you bought a used car with a small car loan, you could probably do all that for around $500 a month or $6000 for the year.
Annual costs:
$6000 - school
$4200- rent
$1200- utilities
$3600- groceries
$6000- car
So your costs, at a minimum, because we didn't include any clothes, unexpected expenses, medical expenses, etc. would be $21,000 per year or $42,000 for two years of community college.

If you made minimum wage... approx. $7.00/hr, you'd only have to work 3000 hours a year to cover your expenses, before taxes. Oh wait, working full time is 2080 hours a year. You'd have to find a job making more than minimum wage to cover your expenses.

After two years, you'd still need to transfer to a 4 year college/university. At that point, school costs would double.

I don't see how you would do this and go to school full time. If this student goes to school part time, then they can cut the school expenses by $3000/year but they double their living expenses over time. So, in 4 years, they accomplish the same thing and their expenses are $72,000, while working at minimum wage type jobs. And they still have to do two years at a 4 year university somehow. So they take another 4 years to finish their bachelor's degree @ 21,000/year = $84,000. Total spent over 8 years- $156,000. THEN they can start making $17.00/hour.

Alternatively, they could eliminate car expenses, spend $60,000 on a 4 year directional public university, finish in that same 4 years and start making (we'll go conservative, like an entry level teacher in this area) $17.00, 4 years earlier.

So, income goes up by $10.00 for 4 years post college @ 2080 work hours/year= $83, 200 more than you'd make during the 4 years that you would have still been finishing your degree.

So you borrowed $60,000 to earn $83,200. Of course, we need to add interest. A loan calculator provided the following for me:
Loan Balance: $60,000.00
Adjusted Loan Balance: $60,000.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $50.00

Monthly Loan Payment: $690.48
Number of Payments: 120

Cumulative Payments: $82,857.94
Total Interest Paid: $22,857.94


So our cumulative payments are $82,856.94 if paid off in 10 years. But, we make $83,200 more than we would have otherwise. That sounds like an investment to me. If motivated and able, you could work 15 hours a week at minimum wage while going to college full time and reduce your loans by $5460 per year or $21,840 over 4 years.

Loan Balance: $38,160.00
Adjusted Loan Balance: $38,160.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $50.00

Monthly Loan Payment: $439.15
Number of Payments: 120

Cumulative Payments: $52,697.41
Total Interest Paid: $14,537.41

So then you'd pay $52,697.41 to make $84,000.

That's definitely an investment.

[aggieAXO]

Originally Posted by AOII Angel

The cost of my debt is a drop in the bucket each month. It would cause me more stress trying to pay it off quickly, which is also dumb since it is the lowest financed rate debt you can get. I'd pay off one of my two mortgages before I'd even consider touching my student loan debt. My debt to income level is minuscule anyway. Having debt is not the end of the world. I do agree about the credit cards, though. You should use them to increase you credit rating but pay them off. We use ones with top rated rewards programs (currently Chase Sapphire.)

Interest rates are better these days-I have a friend that only has a 2.1% interest on her school loans and has no plans on paying it off any time soon (she graduated in 2002). I had an 8.9% interest rate (went to 7.9% after 4 years of automatic deduction with no missed payments). After paying on my debt for 8.5 years I had paid 60,000$ total with only 10,000 of that going towards the principal. I felt like I was getting no where. One of my collegaues that graduated a few years before me had an interest rate of over 11%.

I can say that my life has changed completely since I got rid of the debt-I am a much happier person and will be able to go part time in a few years.

ETA I was on the 30 year Sallie Mae plan. I hate Sallie Mae.

[AOII Angel]

Originally Posted by aggieAXO

Interest rates are better these days-I have a friend that only has a 2.1% interest on her school loans and has no plans on paying it off any time soon (she graduated in 2002). I had an 8.9% interest rate (went to 7.9% after 4 years of automatic deduction with no missed payments). After paying on my debt for 8.5 years I had paid 60,000$ total with only 10,000 of that going towards the principal. I felt like I was getting no where. One of my collegaues that graduated a few years before me had an interest rate of over 11%.

I can say that my life has changed completely since I got rid of the debt-I am a much happier person and will be able to go part time in a few years.

ETA I was on the 30 year Sallie Mae plan. I hate Sallie Mae.

If obsessed over it, I'd be happier having it paid off too. Those loans don't even factor into my thoughts on a monthly basis. It comes out automatically from my checking account. It's part of life as much as paying for water, gas and electricity. I don't think about those things either. I can't see how my life would change one iota if I paid off my debt. My credit score wouldn't change. I already have enough money to spend and save for retirement. That money is my education payment and a heck of a cheap one at that.

P.S. And I pay two of them every month since my husband has an equal amount of debt. Debt is just a number if you have greater potential. If you let the fear of debt, like the fear of anything else in life, take over your life, it can become irrational. Money doesn't make you happy.

[aggieAXO]

No money doesn't bring you happiness but it sure does help give you more choices. I no longer feel trapped and can pursue other opportunities in the near future-knowing that I have a choice makes me very happy.

[Munchkin03]

I find it funny that a bankruptcy thread has segued into a discussion about student loans--the one type of debt that can't be discharged in bankruptcy.

[adpimiz]

Originally Posted by aggieAXO

No money doesn't bring you happiness but it sure does help give you more choices. I no longer feel trapped and can pursue other opportunities in the near future-knowing that I have a choice makes me very happy.

My saying is: Of course, money does not bring happiness. But you're gonna be a lot happier with a roof over your head and a car to drive to work everyday than you would be living on the streets.

[AOII Angel]

Originally Posted by adpimiz

My saying is: Of course, money does not bring happiness. But you're gonna be a lot happier with a roof over your head and a car to drive to work everyday than you would be living on the streets.

That, of course, is not the level we are discussing. It's the level of extra money in hand. The idea of debt just can't be handled by some people. I'm not sure what opportunities you might miss out on bc you have student loan debt, but I imagine it's largely self inflicted due to anxiety over debt in general. Student loan debt isn't used to calculate you debt level for mortgages, etc. I can understand saying you just didn't like having debt, but really what opportunities are opened up by discharging that debt?

[adpimiz]

Originally Posted by AOII Angel

That, of course, is not the level we are discussing.

Ha, I know. It was a joke