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I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

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Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#41

Post by MaysonL »

Xcelerate wrote: post #18

I agree completely with her grandmother: > Grandmother: “Why did you borrow money you could not repay?” > Her: “I thought I could repay it until the bailouts happened.” > Grandmother: “That is no excuse. You need to repay them.” For some reason, a lot of people my age lack any sense of personal responsibility. It's not the author's fault she couldn't repay her loans. It's everyone else's. Lately I hear more and more…

Calling family members and telling them you owe money is illegal under the Fair Debt Collection Practices Act, and the collection agency knows it. The author however is probably mistaken that no interest is accruing.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#42

Post by ntkachov »

ChuckMcM wrote: post #31

Would love to know the degree/school. It really irritates me when someone says they have to get $200,000 in loans for a worthless degree from a 'big' school. Both the people who advised them that this was a good plan in the first place, and the people who loaned them the money.

Quick LinkedIn search turned her up.

Arkansas Tech University - 09, Judging by her skills on linked in, I would say Journalism or something in the English department.

The University is $8k-11k depending on in/out of state. So thats a top of 88k. But from her linked in profile it looks like she's in state so, worst case, we're looking at $65,000 for the 4 years. So her monthly payments at a whopping 10% apr (which is the highest I've ever seen student loans go) would be $860, had she not defaulted. But since she did shes looking at a monthly payment of $545. I don't know her details but I'm going to say that $860 would be more than she made after taxes.

So, no big name school here. No loan sharks. And a pretty reasonably priced university. And I'm sure that everyone expected her to graduate and make at least $12/hr which would allow her to split rent and still pay her loans (with some food money). Based off that I would say its pretty reasonable to say she got shafted by the economy. Finding work as a journalist after the collapse would be quite hard. But before that it seemed like a genuinely decent field. Sure, its not comp sci or petrol eng but it was a good way to go.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#43

Post by ZoF »

prewett wrote: post #34
ZoF wrote: post #13

Earlier quoted context omitted.

Yeah, I grokked the point, and I strongly disagree with the conclusion. For anyone with a graduate degree that's competent in their field the chances of going 4+years jobless is pretty low. And I would assert that if you get a (well-paying)job earlier than 4 years out of college its worth it to not default on your loans. Why? By the end of the second year of a salaried job I would be highly surprised if that shitty c…

I'm not in favor of defaulting on loans. But having bad credit doesn't necessarily destroy your life. I've never taken out a loan in the past 17 years, yet I've bought several cars (including one new). The only thing I would need a loan for would be a house, but being single and with property tax in my area at 2%, I'd rather not. > Why? By the end of the second year of a salaried job I would be highly surprised if th…

Completely agree, for the proportion of the population that doesn't take loans ever this certainly seems to make some sense.

I'm just saying that, imo, for the vast majority of Americans the ability to get a loan is more important then she implies. Not to mention the fact that Phone-Carriers/Recruitment-Agencies/Utilities-Vendors check credit scores as well.

It's effectively coming to terms with the fact that you won't be getting a new car/home for 7 years unless you can afford to buy it with liquid assets... So, unless your income is so great that you can save up for a car/house on TOP of affording rent + food/clothes/etc + student loans, you won't be getting one until your credit recovers.

You last paragraph is basically my point, limiting oneself is _not_ popular these days, that's exactly why most American's would regret this decision because eventually they would find themselves limited. Perhaps they should be.

I feel like I should state down here that:

a.) I hope I never have to borrow money in my life, but I probably will. I don't think it's the "right" way to live or anything.

b.) I think this does make some sense for certain people.

c.)I don't think bad credit ruins your life, but I do think it has a bigger impact than was implied.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#44

Post by Pinckney »

marincounty wrote: post #29

I totally understand someone who can't pay back the student loans. But please--try to do it right. Right now student loans are not subject to discharge in bankruptcy court. Before you ruin your credit: obtain as many credit cards as possible. It might take a few years to obtain the amount of credit you need. Then pay off you student loans with their money. Wait awhile--then do your own bankruptcy. (I have no sympathy…

Some googling suggests that this is fraud, and that the courts will recognize what you're doing and refuse to discharge such credit card debt.

E.g.: http://www.nolo.com/legal-encyclopedia/will-bankruptcy-rid-c...

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#45

Post by ZoF »

gnaritas wrote: post #15
ZoF wrote: post #5

Eh, this article doesn't really make sense.... Basically the author defaulted on their student loan instead of deferring and makes an argument as to why it was a good decision for them. The reason I say it doesn't make much sense is that, imo, it really glosses over just how big a deal defaulting on a loan is. While the author is talking about themself, a naive individual might get the idea that this is the right cho…

If 7 years is less than it'd take to pay back the loan without being broke the entire time, default is a viable option. > It seems to be implied that life with bad credit isn't so bad(and it isn't), but we live in a material world. Not everyone is material. > People want to buy shit, often-times shit that's more expensive then they can currently afford, it's why loans exist. Many don't, many like to live within their…

> You presume too much about other people.

Really, do I?

I hope I never take a loan in my life, doesn't mean I can't comprehend that the vast majority of Americans with an income greater than 50K a year rely on loans for their cars/housing.

A bad credit score also affects future jobs/utilities/cellphone/etc...

>If 7 years is less than it'd take to pay back the loan without being broke the entire time, default is a viable option.

Explain this logic please.

>Not everyone is material.

Ok

>Many don't, many like to live within their means and shun such material excess or attempts to keep up with the Jone's. Many laugh at the ignorance of wasting money on shiny rocks and expensive habits and life events.

Read:Not everyone's material

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#46

Post by gamblor956 »

spacehome wrote: post #33
chadcf wrote: post #22

Earlier quoted context omitted.

There's a plan here in Oregon to try and work up a viable system to do this. The idea is called "Pay it Forward" and you would essentially pay a 3% tax for 20 years after you graduate. I'm not entirely sure it will ever come to pass, but it's not a terrible idea IMO. It may not save money, but it does mean you get an automatic income based repayment plan, you can never be in default and you get an automatic deferral…

I don't see how this can make financial sense. 3% for 20 years totals 60% of one year's salary (or the average salary over your first 20 years in career). Average salary is $48k, so that's paying back $29k. ... however it's actually even worse than this meager sum: - Salary increases over your lifetime, and the highest earning decades are 40s and 50s, so I the average salary over the first two decades is probably low…

Average student debt load for college graduates with a BA/BS is approximately $25,000, so the math works out perfectly.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#47

Post by ZoF »

pdonis wrote: post #26
ars wrote: post #19

Sounds like she is defaulting, but paying. The idea of the default is to stop additional interest from being charged. Then pay down the full debt, wait 7 years and done. It's not a terrible strategy actually - although it has some serious drawbacks.

The idea of the default is to stop additional interest from being charged. But interest being charged was part of the original agreement she made. The fact that she was able to exploit a loophole in the system to avoid paying interest does not make it right.

It's not necessarily a loophole given that her credit score is dinged. It's like fouling in soccer, she broke the rules got a yellow card, was it worth it?

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#48

Post by ZoF »

gnaritas wrote: post #17
ZoF wrote: post #6

Earlier quoted context omitted.

Are you from the USA? This is basically a form of strategic default. Because the debtor hasn't renegotiated their loan(deferred) and has stopped paying for their loan, they defaulted(breached contract, failed to meet obligations, w/e). Because there's no contract, they don't charge interest, but they do hit your credit score and go after the money other ways. In the USA your credit score determines your eligibility f…

> In addition defaulting on a loan allows the debtor to garnish wages, tax refunds, etc... That very much depends on the state and kind of loan; many states do not allow this for mortgages.

This thread is about Federal Student Loans.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#49

Post by spacehome »

gamblor956 wrote: post #46
spacehome wrote: post #33

Earlier quoted context omitted.

I don't see how this can make financial sense. 3% for 20 years totals 60% of one year's salary (or the average salary over your first 20 years in career). Average salary is $48k, so that's paying back $29k. ... however it's actually even worse than this meager sum: - Salary increases over your lifetime, and the highest earning decades are 40s and 50s, so I the average salary over the first two decades is probably low…

Average student debt load for college graduates with a BA/BS is approximately $25,000, so the math works out perfectly.

Debt load isn't the same as the cost of school.

Re: I Defaulted On My Student Loans (And It Was The Best Decision Of My Life)

#50

Post by gamblor956 »

spacehome wrote: post #49
gamblor956 wrote: post #46

Earlier quoted context omitted.

Average student debt load for college graduates with a BA/BS is approximately $25,000, so the math works out perfectly.

Debt load isn't the same as the cost of school.

No, but it's the same as the cost to the student, which is the point of reforming the student loan system.
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