Financial Crisis and Us

[Divine Furor]

Well, now that the financial aid bailout has crashed, is anyone else experiencing a muttering and fear at their home school? It's not bad here yet, but there's growing concern about what's going to happen when we apply for loans next year. Has anyone's administration said anything? Any ideas on how we can buckle down?

[UserNameNeeded]

I wish we were a direct-lending school. "Choice" when it comes to financing healthcare and education is total BS-- those two things need to have socialized financing.

[Divine Furor]

Agreed. But even if they were right now, there would still be a financial crisis as our government is trying it's damndest to go into paralyzing debt. I'm trying to alert our administration that the students are worried, but everyone seems so laissez-faire, no pun intended. What, do they need their individual banks to fail before we worry about the future of medical education?

[Bleurberry]

There's a lot to worry about; a lot of incentives and savvy loan products have not only vanished, but the number of lenders have decreased over the last year. And NOW?? Class of 2013 needs to contact their congressman or woman and let them know they ARE concerned.

[Twitch]

Originally Posted by lovepark

There's a lot to worry about; a lot of incentives and savvy loan products have not only vanished, but the number of lenders have decreased over the last year. And NOW?? Class of 2013 needs to contact their congressman or woman and let them know they ARE concerned.

No need to call them. Class of 2013, should tell their FAO -> to go Fed DL, if they haven't already.

[dragonfly99]

Phatib has a point
I think that undergrad AND professional school tuition would go down, or at least inflate much more slowly, if not for the easy availability of student loans. The schools have no reason to control costs in this situation.

I heard that the mortgage industry bailout bill has some provisions to increase the student loan interest tax deduction, which would actually help folks like me who are paying back big student loans. Not sure if this is true. Has anyone else heard about this?

[LADoc00]

Best thing that could happen for students is for the govt to completely END student lending, this would force tuition to come back in line with perceived benefit of the degree rather than the ridiculous 250K some are spending on a degree that wont net them more than a 40K/yr job.

[gstrub]

Originally Posted by LADoc00

Best thing that could happen for students is for the govt to completely END student lending, this would force tuition to come back in line with perceived benefit of the degree rather than the ridiculous 250K some are spending on a degree that wont net them more than a 40K/yr job.

Yeah and that would keep all those poor people out. They should end race based admissions too...then med school will be PERFECT!

[medicinesux]

Student loans are the most toxic loan to be had. I firmly believe there is no such thing as "good debt". That is a bulls!t term coined by the financial industry to pull the wool over your naive eyes. All debt is bad but student loans are a whole different animal. Wake up and smell the friggin PIG POOP! These loans can never be discharged and will follow you to the grave. Institutions of higher learning in this country and these predatory lenders fully know this which has led to mind boggling student debt loads in recent years. This is our next crisis and with interest rates falling again, I see no end in sight to mushrooming tuitions.

[dragonfly99]

I don't think student loans should be done away with...they have allowed people to get higher education who in years past wouldn't have been able to. For example, one of my grandfathers was super smart but never got to go to college because he came from a poor family and had to start working in a factory right out of high school. The other one didn't graduate from college b/c he had a football scholarship and then his college went belly up during the great depression. However....

I don't have any doubt that the unfettered access to almost unlimited amounts of student loans has driven up college tuition, though, as well as grad and professional school tuition. One thing that would help is if student start looking at value (i.e. whether it's worth it to pay for a particular degree at a particular school). I'm not downing private schools b/c I think my private undergrad school was worth every penny of the 14k tuition (I only paid 7k/year due to having scholarships). I don't think my private med school was worth the 33k tuition, nor do I think it was any better of an education than a state school with 15-20k tuition/year. The problem is that when students and parents make these decisions about where to go to school, they often don't know, and don't have enough information and experience to know, whether the money they are spending is well spent. Most all docs will eventually dig themselves out of debt and be comfortable financially (hard to find a 40-something doc not doing well financially, not that there aren't a few out there...). I think in the end the 133k I borrowed for med school was well spent, but if it was 250k instead for JUST med school, then I don't know....if you go into radiology you are OK, but maybe not if you go into peds.

[gstrub]

Originally Posted by medicinesux

Student loans are the most toxic loan to be had. I firmly believe there is no such thing as "good debt". That is a bulls!t term coined by the financial industry to pull the wool over your naive eyes. All debt is bad but student loans are a whole different animal. Wake up and smell the friggin PIG POOP! These loans can never be discharged and will follow you to the grave. Institutions of higher learning in this country and these predatory lenders fully know this which has led to mind boggling student debt loads in recent years. This is our next crisis and with interest rates falling again, I see no end in sight to mushrooming tuitions.

Well duh...so what if they can't be discharged? If you don't want student loan debt and can't afford med school, don't matriculate. The world needs bar tenders and ditch diggers too.

[Twitch]

Originally Posted by medicinesux

Student loans are the most toxic loan to be had. I firmly believe there is no such thing as "good debt". .

No. Good debt = debt rate < inflation rate || < opportunity cost of capital.

Student loans @ current rates are however awful. The fed rate is 1.5%. We pay 6.8% (atleast grad students).

That being said, provisions exist for deferment and forebearance. Try that with a car loan. They aren't as forgiving nor is the general credit market.

Originally Posted by phatib

You guys should actually hope that no loans are available. That will force med school tuition to drop precipitously.

This is silly. If you look at med school financials you'll see that your tuition pays a small portion of total operating budget. Tuition (at most places) is not dependent on how much they can "milk" from you.

Originally Posted by dragonfly99

...I heard that the mortgage industry bailout bill has some provisions to increase the student loan interest tax deduction...

So the original bill was for $700b. The "revised" with sweetners bill tagged on another $100-150b. These are lobbyists with special interest group affiliations. you know the folks who porked this bill? A few examples : the wool industry, special subsides for makers of toy wooden arches.

yes that's where who us and our children and grand children will be paying for.

[Doctor Bagel]

I'm a little worried about this, too. I predict we'll all still be able to get government backed loans next year, but it is a little scary out there. I agree that schools should move to direct lending because that is really the most student friendly and cost effective system out there. Lots of lenders exited the market for this year, and I suspect many more will exit for next year. The ones that are still lending aren't offering any incentives, so direct loans are better for pretty much all students.

[TMP-SMX]

Discover is still giving the incentive of no upfront fees. Better than everyone else and even direct loans.

It's still unfortunate that undergrad stafford interest rates are dropping every year and medical students have the same high 6.8%.

[financeguru09]

I will be applying for the Air Force health professions scholarship. They will pay all tuition, books, fees, and even pay me a monthly salary...just to go to school. They had a high match rate last year as well, so it should be smooth sailin!!! No worries for me on debt.

[dragonfly99]

Can't the moderators do something about this person? He/she is posting on practically every thread about how great the Air Force scholarships are. Sure, it's suitable for some people, but they will get their pound of flesh. And THEY will decide whether you can do the residency that you want...if you want to do ortho but they decide they need a general surgeon, you are SOL.
Sure, the money is nice, but I wouldn't do it unless you damn well understand what you are getting in to.

[confuse]

The financial crisis has already affected us. I just received my refund check today. I was charged 1% origination and 1% guarantee fee for federal Stafford and 3% for Grad Plus loans from my lender THE. These fees were covered by the lender last year, but not so this year. I thought it was only a THE problem so I called Sallie Mae to check, Sallie Mae have also begun charging these same fees. So beware. Your loan disbursements may be lower than what you expect next semester.

[TMP-SMX]

We knew this already. THE was actually not even going to be lending this year but when they did start lending they had fees like almost everyone else.