Student Loan Debt Clock
collegedebt.com
collegedebt.com
I took the bus to campus, live at home, and worked while in school.
So part of me says "why should kids who wanted to live in a country-club atmosphere far away from home on borrowed money for 4 years get a bailout?"
However, I also realize the crippling seriousness of the problem.
I think the immediate solution is: The Governments Should Get Out of the Student Loan Business. Now. Allow private companies to give loans, but they're like any other unsecured loan, and you can cover them in a bankruptcy.
Tuition will drop like a rock! And maybe people will realize that not everyone has a "right" to go away to a country club for 4 years on borrowed (or someone else's) money.
Only if the Government stops backing student loans would I be happy with any sort of loan "forgiveness" program. And I think these people's creditworthiness should forever be tarnished.
Not everyone can get scholarships and school isn't easy/cheap enough to make paying for it an option by working through school. Not if you want a real job after school.
Frankly it should be free. Why are you charging people to better themselves and their surroundings. It's obscene that we charge people for healthcare and schools.
The United States is a corporate neocon fantasy world. Low taxes for the rich, student loans for all.
neocon is global war in support of US oligarchical economic interests.
neoliberal is global free markets in support of global oligarchical economic interests
I think the biggest cause for numbers like this is that some of us see it as problem while tons of people see this kind of debt as totally normal. I cringe when I see friends who I know are graduating with large amounts of debt run out and buy a brand new car within months of graduatingbecause they are suddenly making 50-60k and feel like they've got it made.
Most of the time it'll all work out just fine, but I can't help bit think that there's a better way.
Paying off debt early at that point in one's career is more profitable than investing, even.
Not necessarily true. My student loans had an interest rate of around 4%. The market is about double that. This means that if I invest everything, and pay off my loans slowly, I eek out a few extra bucks.
I actually did that math and decided it was wiser to eliminate my debt. Total net worth isn't really the goal, not worrying about money is the goal. And not having to worry about monthly payments, and knowing I have no outstanding debts is much nicer.
The conspiratorial part of mind suggests that finance is more invested in having people in debt than without, and the math is there to beat people over the head saying "you are not playing this game well because this math says you will lose in the end"
That said most people plan to do this, and never get round to it.
I knew I was making a "mistake" when I started putting all my spare money into paying off my mortgage early, in the sense that I could have achieved more money by investing. But it seemed obvious to me that owning my house would let me ride out problems more easily in the future - my bills would suddenly come down to "electricity, food, and little else".
As it happens my wife and I decided at reasonably short notice to change countries. Having paid off my mortgage allowed me to rent out the place, without having to worry about getting permission from the bank, or anything similar. I just had to register as a landlord and switch to a more expensive form of insurance.
After two years of being abroad selling the place made sense, to avoid complex cross-country taxing issues. But by owning the place outright we had the freedom to try renting for a while, and worry less about income.
Rid yourself of "bad" or "marginally bad" debt immediately, manage the "good" debt, then save (rainy day fund, 401K, IRA, speculation). You're doing well if you get to the speculation part.
Alternatively, if you pay off debt, that is a known ROI and doesn't disappear after a bad day or week. And that's not counting the psychological benefits of not being in debt. About 10 years ago, I had a car payment, student loan payments, etc, etc and once it was all paid off, I realized I could make $X000/month less and still have the same quality of life. It was empowering and afforded me the ability to take other risks.
Knocking out debt isn't always the best answer but it's a pretty good one in most scenarios.
That's a tiny fraction of the debt mentioned in the OP. Federal loans are great. Private loans are usurious.
Also, "eke". "Eek" is when the market has a correction that destroys or leveraged plan.
https://practicaltypography.com/alternate-figures.html#tabul...
Our rate at the beginning was 6.8%.
A couple of things...
- the student loan interest tax write-off is limited to $2,500/year. The first year of paying off loans, we paid $17,800 in interest. Ergo, I had to pay income tax on the interest I paid to the government for the privilege of an education. It's bizarre to me that we incentivize going to school and then charge income tax on the interest paid. Wealthy folks get to write off all their mortgage interest on their million-dollar mortgages while we pay. It's ridiculous.
- Loan companies provide way too many attractive-looking ways to "reduce your monthly payment" by extending your loan. It's called "income-based repayment." They're creating the appearance of being helpful, while extending the loan and causing interest payments to skyrocket. I get that these services can be crucial to the financial health of some folks but the way they push them makes me uncomfortable.
- Student debt can be a wonderful, life-changing tool. There's no way my wife could have a graduate degree without it. Now she's a fantastic therapist using her considerable skills and abilities to make people's lives better. Do I wish the education didn't cost us 6% of our careers to pay off? Yes I do. But I wouldn't trade it for anything.
- It does feel like we're headed toward a cliff...a cliff where parents are paying off their own student debt while their children are racking up their own.
https://ynab.com/referral/?ref=pnPV1oqAP-ZfH0oI&utm_source=c... (disclosure: referral link. If that makes you feel gross, http://ynab.com)
The budget allows me to confidently spend thousands of dollars each month on student loans, without wondering if I have enough to cover living expenses. Plus, most budgeting tools now will auto-import your bank stuff, which is splendid.
Yes, there is. It's how people did it before YNAB and the Internet, and it's called "don't buy stuff you don't need".
https://en.wikipedia.org/wiki/The_Millionaire_Next_Door
* Spend less than you earn
* Avoid buying status objects or leading a status lifestyle
* Take financial risk if it is worth the reward
The mortgage interest deduction has been capped (at $750k iirc?) in the latest tax law so that should get less absurd.
Doesn't that imply you got a pretty good deal? Or would you have been able to get a similar level of income without the education?
It certainly isn't evidence of people having trouble paying off debt before their children go to college. (that evidence seems to exist, but your experience is pretty contrary to it...)
Mortgage interest deductions should just go away entirely.
It's a big plus the wifey is on the same page.
https://www.federalreserve.gov/data/mortoutstand/current.htm
I can't do anything with a student loan. I can't sell my education. I can't discharge the loan in bankruptcy - something that could be done with a mortgage if I were somehow underwater. There's no way to escape it, and it mostly impacts the young who both have lower income available to deal with it and should putting away as much for retirement as possible.
[1]: https://fred.stlouisfed.org/series/HHMSDODNS [2]: https://fred.stlouisfed.org/series/HOOREVLMHMV
The exploitation of the old by the young is the bedrock of civilization. An "old person" invented the computer you post to HN on.
[1]: https://www.fonts.com/content/learning/fontology/level-3/num...
The font they're using is "Varela Round" which isn't fixed width to begin with; so whether it's missing or not is largely irrelevant.
edit: another comment indicates that tabular numbers can be a feature of even a non fixed width/monospace font. Dunno if Varela Round uses those.
Calculated as a linear extrapolation with debt intercept of $883,000,000,000 on 01 June 2010 and a gradient of $2853.8/sec.
The student loan "crisis" is fake news. The largest loans are for high income professional degrees like law and medicine.
It certainly is not "fake news".
http://www.ibtimes.com/student-debt-crisis-2016-new-graduate...
https://financialaid.umbc.edu/types-of-aid/federal-loans/sta...
Unseen in the $13,000 number are the Parental Plus loans that parents (and grandparents) are taking out that aren't in the student's name, but are just as unforgivable.
It includes people who had 50k in debt and paid it down to 13k not just people who graduated with 50k. It even includes people who failed out an now owe 10k without getting a degree and people that went to Trucking schools.
PS: Parents take on 10k of debt and kid takes on 50k, that's now 2 households with debt etc.
> That's easily paid by most working professionals over a decade or so.
So most people can start saving money around 30? That's a regression from past generations. When are they going buy a house, start a family, and eventually retire?