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Originally Posted by Optomchick
When I was talking to SCCO's financial aid lady, I was asking what happens if students default on a loan and she said in her 40 years no one has ever defaulted...so I'm wondering how is it that with 200k loans and the lacking job prospects, no one has ever NOT been able to pay back their loans?
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1st, they have no way of claiming that they know how many defaults there have been. They don't collect comprehensive data on that. There's a huge difference between "I haven't heard of any..." and "There have been none."
2nd, when you're on IBR, you can make as little as ZERO dollars in repayment and maintain your good standing in the eyes of the lender. Your interest mounts and mounts, and you stand by in blissful ignorance that your balance is ever rising. Please, if you learn nothing else from me, just know that the schools aren't there to give you unbiased information. They're there to collect your money. When the 25 or 20 year period is up under IBR, all is forgiven, even if you have paid nothing into repayment for the entire term. Oh, except don't forget that you owe capital gains taxes on the entire amount forgiven, which would be in the hundreds of thousands (and it's all due the year of forgiveness). Better hope Owe-bama doesn't get the capital gains tax raised as he wants to, or you could be paying 30% or more of many hundreds of thousands of dollars.
3rd, grads know they have no choice but to pay their loans before any other debt. Defaulting on student loan debt creates much more of a nightmare for you than defaulting on just about any other type of loan. If it means you must take a garbage bin optometry job at America's Best (if you can find one), then that's what you'll do. That happens to be what a large majority of new grads are doing today. There's a difference between outright unemployment faced by newly graduated attorneys these days, and vastly UNDER-employed OD grads that are entering the workforce today. It won't be long before new OD grads will be facing the same unemployment problems faced by new attorneys. The numbers guarantee it. Just because you receive training on fancy equipment that's placed in the schools' clinics to impress you and your parents, doesn't mean you'll ever use it once you graduate.