But...but...student loan debt is GOOD debt...
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  1. #1
    Registered User Greebo's Avatar
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    Angry But...but...student loan debt is GOOD debt...

    http://finance.yahoo.com/college-edu...uing_education

    Uh huh - sure...

    Granted, there's a fair bit of stupid in the story - not paying attention to the fine print being up there - but still... if this woman gets a 6 figure salary and lives on 30k paying 70k to the debt, it's still 10 years or so to pay it off.

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    Registered User Contrary Housewife's Avatar
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    So... she borrows a ridiculous amount of money, not just student loans but personal loans as well, ignores them for 10 years, fails to refinance that 11% (!!!) down to the 4 or 5 available a couple years ago.... racked up credit card debt on top of that... and now wants to cry 'poor me'? Has this girl no sense at all?

    My student loan was a fraction of hers, but I know that if you miss a payment they bombard you with letters and phone calls to remind you, and they constantly send offers to refinance or consolidate at lower rates. She had to have been completely in outer space to miss the warning signs.
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    Registered User Samigirl's Avatar
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    She may have the book smarts to have become a doctor, but talk about being dumb in other areas of life. I wouldn't want someone that ditsy as my doctor.

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    Registered User beks37's Avatar
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    Wow that's crazy! Seems like one of those people that don't think about the consequences of their actions! My dh went a little crazy with student loan debt, but I got it settled down when I was able to. But not that crazy!!

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    Ugh, after reading that I think I can sleep better at night with my debt.

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    Registered User sinopa27's Avatar
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    what a shame. I bet whenever she does get out of debt....in one year....back in it!!

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    Default a question

    Oh I am so glad with this post.
    I can finally ask something that I have wanted to ask for a while.

    Last year an American girlfriend of mine came to visit. She was doing a trip around part of Europe and stayed with me for a couple of days while we showed her some of Holland.
    At one point we were talking about money and debt.
    Our mouths fell open when she told us about her debt and her attitude towards it.

    Firstly some background, she is 37, she has a dh and 1 little girl.
    She has a college degree.
    She was diagnosed with cancer a few years ago and had many surgeries etc.
    She is now cancer free (Thank God) but has some huge medical bills to get rid of since her insurance didn't pay for it all.

    Anyhoo, she said that the only debt that she really counted as REAL debt was the mortgage (big), the cc and her medical bills.
    Her student debt was a 'GOOD' debt and she wasn't worried.
    It was around $160,000.
    As I said, our mouths fell open.
    Okay, the question, how can someone say that 'debt' isn't bad?
    To me, and a lot of people like me, debt is not good and never can be.

    Can someone explain, since I have heard this before, that some debt can be 'good'?

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    Student loan debt can be good debt, I consider our kids' student loans good debt. But, the debt is subsidized (0% while in school), internships can probably pay it off before even graduating (engineer), and we're talking less than $12k in loans total for all 4 years. That's a very small amount vs. the cost of the education. The benefits of the loans outweigh the risk & are actually paying for the schooling, not every day living expenses. But, let's face it....most people don't use student loans this way.

    Some also choose careers with disregard of the financial consequences of being in school for such a long time. Or, they overestimate what they'll actually make upon graduation, or choose an elite school for prestige when it isn't necessary. Also, I find the colleges do tend to exaggerate income potential for some fields, spouting the high-end income potential instead of averages. I can remember ds coming home from college orientation spouting he'd make $80k right out of college. I just laughed and said, no, you'll probably make $45k on your first job (which I consider pretty good), but $80k will take some experience! If he had taken out loans assuming he'd be making that $80k upon graduation, he'd get himself into trouble.

    I know of many that took out loans to live on while attending college just to graduate in a field where the jobs aren't there, or more likely, unwilling to relocate upon graduation. Loans + no job = bad. I've already stressed to our kids not to go to college unless they are willing to relocate to find a job, period.
    Last edited by Pianolady; 02-17-2010 at 11:27 AM.

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    Registered User Greebo's Avatar
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    The prevailing myths about student loan and mortgage debt is that they are good debt.

    What people think about mortgages is, "I get a tax break, that's good!" and fail to realize that they're paying $1,000 in interest to save $250 in taxes.

    What people think about student loans is, "I'll get into the work force and earn money faster!" - but fail to think, "IF *IF* I graduate (50% drop out rate in 4 year programs) I'll graduate with a buttload of debt that will set me back financially."

    I have run student loan debt comparisons before - and every time I run them it comes up the same - if you take the same student and clone them and the clone uses student loans while the original works, saves, and pays for college, finishing a bit later, the original still ends up financially AHEAD of the clone.

    In Palooka's 12k loan debt its not MUCH ahead - granted - but it's still ahead.

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    Quote Originally Posted by Greebo
    In Palooka's 12k loan debt its not MUCH ahead - granted - but it's still ahead.
    Huh? I've never had student loan debt. I went to trade school and paid cash. I was just talking about my debt in general.

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    Registered User Greebo's Avatar
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    Quote Originally Posted by Palooka View Post
    Huh? I've never had student loan debt. I went to trade school and paid cash. I was just talking about my debt in general.
    Sorry, wrote Palooka, meant to write Pianolady. My bad.

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    No problem. lol I was like what?

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    Registered User frugalfriend's Avatar
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    That story is really unbelievable! I wouldn't be able to sleep at night! I just can't imagine why anyone would set themselves up for failure like that. And since her dad co-signed he was stuck paying for part of her ignorance. It has negatively impacted every area of her life. Yeah, Greebo, if she would live on $30k that would be a much quicker way out instead of carrying it until she is 70 years old! But, doubt she will.

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    Quote Originally Posted by Greebo View Post
    I have run student loan debt comparisons before - and every time I run them it comes up the same - if you take the same student and clone them and the clone uses student loans while the original works, saves, and pays for college, finishing a bit later, the original still ends up financially AHEAD of the clone.
    That may be true in your comparisons financially, but sometimes there's more to consider than money, and I don't think all students are exactly alike. Ds was ready now to go to college, and had the huge scholarships available now that were too good to turn down. Not to go because of a few thousand in 0% loans per year would have been a mistake in the field he is entering. Passing them up to go later may have derailed his career and cost him his scholarships, may not have, one can never really know. He had the desire, ambition, and most the money to go now, sometimes that's as important as the financial aspect.

    Back to the original link & story...yeah, that was nuts. Also, I graduated college with no student loans, twice.

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    Registered User Greebo's Avatar
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    Quote Originally Posted by Pianolady View Post
    That may be true in your comparisons financially, but sometimes there's more to consider than money, and I don't think all students are exactly alike. Ds was ready now to go to college, and had the huge scholarships available now that were too good to turn down. Not to go because of a few thousand in 0% loans per year would have been a mistake in the field he is entering. Passing them up to go later may have derailed his career and cost him his scholarships, may not have, one can never really know. He had the desire, ambition, and most the money to go now, sometimes that's as important as the financial aspect.
    That may be true - but the *reason* I talk about the financial aspect, as I did point out earlier, is to dispel a specific myth- that one should take out student loans in order to get thru school faster and get into the workplace sooner.

    In your son's case, I'm not gonna scream over 12k for a 4 year degree when he got scholarships for most of it. Getting those kinds of scholarships shows the kids got a good work ethic to begin with. He's going to do fine - if he doesn't take on any more debt in his life (except mortgage).

    But when someone takes out loans of 20k+ a year and then maybe doesn't even GRADUATE - or gets 80k in student loans to get a head start on a 35k a year career in social service - you gotta be effing kidding me!

    So thats why I use two clones. I don't say ALL students are alike - I take the SAME student in my forecasting and run them through two different scenarios. In your son's case, I would probably have said that if the schoarships wouldn't let him work part time while in school, and no student loan debt meant no school at all, to take the loans. DR would yell at me for that cause he'd say, delay school.

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