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More Than 40% of Student Borrowers Aren’t Making Payments

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Re: More Than 40% of Student Borrowers Aren’t Making Payments

#431

Post by srj »

iambateman wrote: post #311
srj wrote: post #228

Earlier quoted context omitted.

Federal loan rate history: http://www.finaid.org/loans/historicalrates.phtml I consolidated but I know that some of mine were at 6.8% fixed thanks to this lovely change: 2006-07: Replacement of separate variable in-school/grace and repayment rates on the Stafford Loan with a single fixed rate of 6.8%. Replacement of variable interest rates on the PLUS Loan with a fixed rate of 8.5% (FFELP) and 7.9% (DL).

If you don't mind, was refinancing a good move for you? What rate were you able to get it down to? We're at 6.8% right now.

The consolidation loan rate was the weighted average of the loans consolidated, so it didn't offer any benefit beyond making the rate fixed. I think the rate ended up being ~5.5%.

Consolidation loans also offer a longer repayment timeframe I believe. In this way if you make the payment amount small but pay double, the extra will be entirely on the loan principal.

Back when I consolidated SoFi (and probably others) didn't exist. It might be worth comparing rates and terms with them as well.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#432

Post by rco8786 »

speeder wrote: post #408
rco8786 wrote: post #402

Earlier quoted context omitted.

I took a full time class load and also worked part time through college. It wasn't that bad,(in fact it was good) and it was fairly commonplace at the school I went to. Is this not the case anymore?

I went to college in Brazil, here the class load is fixed for most universities (ie: you don't choose what classes you will go, they will hand to you a list of the ones you are signed up for each semester). Although the classes themselves took half a day (started at 7:30, finished at 13:00) the coursework we had to do was incredibly high, teachers never coordinated, they just assumed that you had all free time of the…

Geez that hardly sounds worth it. I thought folks in the states had it rough with the loans...

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#433

Post by rco8786 »

pc86 wrote: post #406
rco8786 wrote: post #402

Earlier quoted context omitted.

I took a full time class load and also worked part time through college. It wasn't that bad,(in fact it was good) and it was fairly commonplace at the school I went to. Is this not the case anymore?

It depends on the rigor of your institution, of the program you're in, and what constitutes "full time." At the institution I attended, FT was 12-18 credit hours in a semester. You could take up to 21 with permission from the administration and your professors, and up to 24 with permission + paying additionally for the 3 credits. The difference between 12 credits and 18 in terms of work load and scheduling hassles is…

Yea to be fair I always took 12-15 hours with only 2 exceptions. But that's what I had to do to make it through and still pay bills/eat/etc.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#434

Post by speeder »

rco8786 wrote: post #432
speeder wrote: post #408

Earlier quoted context omitted.

I went to college in Brazil, here the class load is fixed for most universities (ie: you don't choose what classes you will go, they will hand to you a list of the ones you are signed up for each semester). Although the classes themselves took half a day (started at 7:30, finished at 13:00) the coursework we had to do was incredibly high, teachers never coordinated, they just assumed that you had all free time of the…

Geez that hardly sounds worth it. I thought folks in the states had it rough with the loans...

The raw loan amount is not high as in US (when you consider USD... for BRL it is comparable if you consider your own income, but even that some people get lower).

But in Brazil you can't ask for bankruptcy, ever... In US Student Loans can't be rid of with bankruptcy, but you CAN make another loan, pay the student loans, and THEN go bankrupt... in Brazil this loophole doesn't exist.

And Brazil has a incredibly high interest rate, credit card interest is 400% year, overdraft and personal credit interest in a bank is 300+% a year, special credit for business with government subsidies are still around 100% per year. (and I never saw anyone that qualified for it).

The effect is that if you are in debt, you are screwed... and if you HAVE money, investing in any business is stupid idea, specially with our high inflation (currently about 11% per year), it makes much more sense to loan to the government (that currently will happily absorb it, and pay interest that is usually at least 14.25% year + inflation), so noone invest in creating business anyway, so you never find jobs, startups are non-existing, creating a startup is bad idea, and so on...

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#435

Post by bduerst »

dredmorbius wrote: post #346
bduerst wrote: post #280

Earlier quoted context omitted.

Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem. Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardia…

At 17 a student is precisely a minor. My understanding of current research is that full intellectual maturity is generally reached in the early 20s. I said P-A was related . Not identical . Again: students are being advised and encouraged by parties with 1) vastly greater access to information, 2) vastly reduced risk (the loans are federally guaranteed in the US), and 3) benefitting from risk diversifictation over la…

P:A problem isn't that complex and what you're describing is not even close.

You're overestimating the amount of information that educators and loaners have access to regarding job markets, and besides: it's not their job to predict what someone will do in four years. Loans are not tied to specific degrees with specific salaries. You don't lose part of a loan because you pick a major or employer.

Making these life decisions is the individual's (and/or their guardian's) responsibility, and just because some make bad decisions doesn't make it "like" p:a.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#436

Post by manyxcxi »

pc86 wrote: post #406
rco8786 wrote: post #402

Earlier quoted context omitted.

I took a full time class load and also worked part time through college. It wasn't that bad,(in fact it was good) and it was fairly commonplace at the school I went to. Is this not the case anymore?

It depends on the rigor of your institution, of the program you're in, and what constitutes "full time." At the institution I attended, FT was 12-18 credit hours in a semester. You could take up to 21 with permission from the administration and your professors, and up to 24 with permission + paying additionally for the 3 credits. The difference between 12 credits and 18 in terms of work load and scheduling hassles is…

I pretty much always took 12-15 credits. My school was on semesters and I just went year round whereas most people took summer offer. Summer credits were cheaper and you could cram in a bunch of general ed stuff that didn't need a ton of study.

My engineering classes all preached 4 hours of study for every hour of class- I don't think I averaged two for most classes and graduated above a 3.2 GPA. Except EE courses and physics. I had to buckle down for those.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#437

Post by manyxcxi »

devishard wrote: post #380
manyxcxi wrote: post #308

Earlier quoted context omitted.

> This is really a shocking dereliction of duty on the part of teachers and guidance counselors. Playing devil's advocate for a second, what if the teachers and guidance counselors still believe it to be true? They're likely from a previous generation or two, where simply having a college degree opened up most doors. Then again, what if having a college degree really is still better than not? You don't have to spend…

Some of what you're saying is true, but some doesn't quite work out: 1. Work while you study: why work a part time job for $X and go to school part time, when you could finish school in half the time by going full time and spend the remaining time working for $2X? Work study is generally counterproductive. 2. $65K is still a lot of debt. Lots of my peers have that and $20K/yr jobs. The truth is, there simply aren't m…

The average Computer Engineering degree from my university was completed (at that time) in 5 years. I graduated in 5 years and worked, so it didn't take me any longer than average, and I switched majors from CS to CpE- costing me two terms.

So I didn't give up any potential salary earnings I didn't already give up by going in the first place.

My point is that college can still be a good option for lots of people, they just need to focus on the cost/ROI. The horrors stories that we hear about are typically from a dumb kid who went to an out of state or private school, got a a 'general' degree and had no job qualifications. Then they were shocked people were t just handing them money.

I've yet to hear a story about a kid that did two years at a community college, finished up their BS in engineering, and then had life crippling problems with their debt.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#438

Post by qntty »

bduerst wrote: post #280
dredmorbius wrote: post #123

Earlier quoted context omitted.

Information asymmetries put the burden of guilt on institutional actors. The educational and lending institutions which have a strong awareness of true costs and actual employment prospects. Over individual young students who don't, and are often relying on those institutions for information and guidance. Related: principle agent problem.

Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem. Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardia…

I'm curious if you're young enough to have gone through this yourself. The idea that publicly available salary information is enough for a young person who has never supported themselves doesn't really make sense to me. I'm willing to bet that 90% of 18 year olds can't figure out what a reasonable amount to borrow is given salary information. This includes me. The problem isn't an inability to do math, the problem is that there are too many variables that fall under "things you don't know that you don't know." Such as:

What monthly expenses should I expect to pay? (This varies wildly among people I know, there's no easy answer. And knowing rent + utility costs is only part of the puzzle. An 18 year old doesn't appreciate the costs of things that "just come up")

How much money should I plan on NOT spending every month to give myself a buffer against the stress of living paycheck to paycheck?

How much should I expect to be taxed? (Again, the number are out there, but just googling around, I can't find any easy answers that include averages for federal + state + city)

Should I expect to live in an expensive city if I have X career? (Not an easy question to answer for someone who doesn't even know that that career will be)

How much should I really expect to pay for college? (Between yearly tuition increase, variation in scholarships/grants and the differing costs of living on-campus vs off-campus, this is hard to know)

If I have the numbers for the average person in my position, what are the chances that I will be worse off than average?

I guess there's the possibility that I (and many people I know) are exceptionally bad at making personal decisions, despite doing reasonably well in most other aspects of life, but I doubt it.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#439

Post by mrestko »

hodoublesy wrote: post #307
mrestko wrote: post #296

Earlier quoted context omitted.

The amount forgiven is counted as income for that year and is taxed as such. I believe this is what the preceding commenter was asking about.

There are various repayment options available, some incur a tax burden and some do not. The PSLF option does NOT incur a tax burden after 120 payments. It would be smart to research each option available to see what is best for your circumstance.

I was not aware of that. Thanks for clarifying.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#440

Post by devishard »

manyxcxi wrote: post #437
devishard wrote: post #380

Earlier quoted context omitted.

Some of what you're saying is true, but some doesn't quite work out: 1. Work while you study: why work a part time job for $X and go to school part time, when you could finish school in half the time by going full time and spend the remaining time working for $2X? Work study is generally counterproductive. 2. $65K is still a lot of debt. Lots of my peers have that and $20K/yr jobs. The truth is, there simply aren't m…

The average Computer Engineering degree from my university was completed (at that time) in 5 years. I graduated in 5 years and worked, so it didn't take me any longer than average, and I switched majors from CS to CpE- costing me two terms. So I didn't give up any potential salary earnings I didn't already give up by going in the first place. My point is that college can still be a good option for lots of people, the…

Not everyone is a computer scientist or computer engineer.
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