How to pay off a $100k debt

[DrBowtie]

A. Obviously nobody has 100K to invest, therefore it makes no sense to consider

B. You would incur taxes which is going to limit your growth, hence, it would not make it 750K.

When repayment starts you better have it.
Opportunity costs should be taken into account.

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[boaz]

100k is pretty good for a graduating med student. In any case, I think the ideal way to handle it is by paying the interest as soon as it starts to take effect. That way you can avoid ballooning debt via compound interest. Obviously it's not possible for everyone, but at least do what you can.

 

[link2swim06]

When repayment starts you better have it.
Opportunity costs should be taken into account.

My point is at age 22...I don't know a single person who has 100K to invest. Therefore there was no opportunity to invest this amount.


However, I understand what you are saying...I am just saying you are grossly overestimating it.

Assuming you were investing over a 10 years period post residency instead of paying off loans. And then contributed nothing to it until you were 60 years old you would have $394,329.20 (assume 5% interest rate....this is interest growth after taxes removed)

$394,329.20-100,000 = $294,329 "opportunity cost".... is not 750,000 as you said though. *I put it in quotes because you never really had the opportunity to invest if you did not have the means to make the cash in the first place.

 

[DrArete]

THE WORLD IS YOURS! - http://www.youtube.com/watch?v=JEvwQgQPkF0

Seriously though, if you want to pay off debt, just keep it down as much as possible by living frugally and not having kids

 

[Parts Unknown]

In any case, I think the ideal way to handle it is by paying the interest as soon as it starts to take effect. That way you can avoid ballooning debt via compound interest.

Say you have 100K in loans and you need $500/month to keep the interest at bay.

If you forbear during a five year residency and it grows to 130K, your monthly payment (25 years at 6%) is $837.59.

If you keep the interest at bay and you pay it off over the same time frame, your monthly payment is $644.30.

The problem is that shelling out $500/month during residency will make you utterly miserable. You will be working your ass off and attempting to manage rent/mortgage payments, car insurance, possibly a car payment, vacation money, going out money, possibly daycare, etc. etc. You will definitely feel the loss of a half a grand every 30 days.

On the other hand, if you forbear, your monthly payment will increase less $200. And it will do so when you are making a lot more money and can absorb the extra expense.

 

[auburnO5]

Say you have 100K in loans and you need $500/month to keep the interest at bay.

If you forbear during a five year residency and it grows to 130K, your monthly payment (25 years at 6%) is $837.59.

If you keep the interest at bay and you pay it off over the same time frame, your monthly payment is $644.30.

The problem is that shelling out $500/month during residency will make you utterly miserable. You will be working your ass off and attempting to manage rent/mortgage payments, car insurance, possibly a car payment, vacation money, going out money, possibly daycare, etc. etc. You will definitely feel the loss of a half a grand every 30 days.

On the other hand, if you forbear, your monthly payment will increase less $200. And it will do so when you are making a lot more money and can absorb the extra expense.

The answer is easy - sugar momma

 

[DrBowtie]

My point is at age 22...I don't know a single person who has 100K to invest. Therefore there was no opportunity to invest this amount.


However, I understand what you are saying...I am just saying you are grossly overestimating it.

Assuming you were investing over a 10 years period post residency instead of paying off loans. And then contributed nothing to it until you were 60 years old you would have $394,329.20 (assume 5% interest rate....this is interest growth after taxes removed)

$394,329.20-100,000 = $294,329 "opportunity cost".... is not 750,000 as you said though. *I put it in quotes because you never really had the opportunity to invest if you did not have the means to make the cash in the first place.

I agree few 22 year olds have 100k lying around to invest. I didn't mean to imply that.

So I did a crude crunching of the numbers and came out drastically different than you.

For the student who takes out 100k in loans
With 100k Loan Total Debt Interest Rate = 6.8%
Age 22 MS-1 (25k/yr) 25,000 Assume 8500 sub, 16500 unsub
Age 23 MS-2 51122 Assume 17000 sub, 34122 unsub
Age 24 MS-3 78442 Assume 25500 sub, 52942 unsub
Age 25 MS-4 107042 Assume 34000 sub, 73042 unsub
Age 26 Residency 114321 Assuming just deference
Age 27 Residency 122095 Assuming just deference
Age 28 Residency 130397 Assuming just deference
Age 29 Residency 139264 Assuming just deference
Age 30 Payment Yr 1 129089 Monthly Payment @ 1533 1532.87
Age 31 Payment Yr 2 118222 Yearly Payment @ 18394 18394.44
Age 32 Payment Yr 3 106615 Interest Compounded once at end of year
Age 33 Payment Yr 4 94220
Age 34 Payment Yr 5 80982
Age 35 Payment Yr 6 66843
Age 36 Payment Yr 7 51743
Age 37 Payment Yr 8 35617
Age 38 Payment Yr 9 18393
Age 39 Payment Yr 10 -1 Total Paid 183944.4

Thus the total cost of the loan on a standard 10 yr repayment plan without IBR and standard deferment during a 4 year residency is ~184k. Assumes student took out 25k/year.

If a person without the 100k debt invests the same amount as the payments at your stated 5% ROI during those same 10 years, that amount grows to ~645k by age 60.

For student w/o 100k loan who invests an equivalent amount
W/O 100k Loan Total Gain
Age 22 MS-1 (0K/yr) 0
Age 23 MS-2 0
Age 24 MS-3 0
Age 25 MS-4 0
Age 26 Residency 0
Age 27 Residency 0
Age 28 Residency 0
Age 29 Residency 0 Interest Compounded once at end of year
Age 30 Payment Yr 1 18394 Input 18394 per year, ROI = 5%
Age 31 Payment Yr 2 37709 Input 18394 per year, ROI = 5%
Age 32 Payment Yr 3 57988 Input 18394 per year, ROI = 5%
Age 33 Payment Yr 4 79282 Input 18394 per year, ROI = 5%
Age 34 Payment Yr 5 101641 Input 18394 per year, ROI = 5%
Age 35 Payment Yr 6 125117 Input 18394 per year, ROI = 5%
Age 36 Payment Yr 7 149768 Input 18394 per year, ROI = 5%
Age 37 Payment Yr 8 175651 Input 18394 per year, ROI = 5%
Age 38 Payment Yr 9 202827 Input 18394 per year, ROI = 5%
Age 39 Payment Yr 10 231363 Input 18394 per year, ROI = 5%
Age 40 Interest Only Yr 242931 Input 0 per year, ROI = 5%
Age 41 Interest Only Yr 255078 Input 0 per year, ROI = 5%
Age 42 Interest Only Yr 267832 Input 0 per year, ROI = 5%
Age 43 Interest Only Yr 281224 Input 0 per year, ROI = 5%
Age 44 Interest Only Yr 295285 Input 0 per year, ROI = 5%
Age 45 Interest Only Yr 310049 Input 0 per year, ROI = 5%
Age 46 Interest Only Yr 325551 Input 0 per year, ROI = 5%
Age 47 Interest Only Yr 341829 Input 0 per year, ROI = 5%
Age 48 Interest Only Yr 358920 Input 0 per year, ROI = 5%
Age 49 Interest Only Yr 376866 Input 0 per year, ROI = 5%
Age 50 Interest Only Yr 395710 Input 0 per year, ROI = 5%
Age 51 Interest Only Yr 415495 Input 0 per year, ROI = 5%
Age 52 Interest Only Yr 436270 Input 0 per year, ROI = 5%
Age 53 Interest Only Yr 458083 Input 0 per year, ROI = 5%
Age 54 Interest Only Yr 480988 Input 0 per year, ROI = 5%
Age 55 Interest Only Yr 505037 Input 0 per year, ROI = 5%
Age 56 Interest Only Yr 530289 Input 0 per year, ROI = 5%
Age 57 Interest Only Yr 556803 Input 0 per year, ROI = 5%
Age 58 Interest Only Yr 584644 Input 0 per year, ROI = 5%
Age 59 Interest Only Yr 613876 Input 0 per year, ROI = 5%
Age 60 Interest Only Yr 644569 Input 0 per year, ROI = 5%

Feel free to suggest tweaks in the model.

 

[45408]

Are student loan repayments not tax exempt?

No. The interest is tax deductible (up to a not-so-impressive $2500), but not if you make more than $70,000.

 

[45408]

This would be ideal, at what point did u consolidate?

A point that you will probably never see. Basically, you can't consolidate your federal Stafford loans below 6.8% now.

 

[link2swim06]

I agree few 22 year olds have 100k lying around to invest. I didn't mean to imply that.

So I did a crude crunching of the numbers and came out drastically different than you.

For the student who takes out 100k in loans
With 100k Loan Total Debt Interest Rate = 6.8%
Age 22 MS-1 (25k/yr) 25,000 Assume 8500 sub, 16500 unsub
Age 23 MS-2 51122 Assume 17000 sub, 34122 unsub
Age 24 MS-3 78442 Assume 25500 sub, 52942 unsub
Age 25 MS-4 107042 Assume 34000 sub, 73042 unsub
Age 26 Residency 114321 Assuming just deference
Age 27 Residency 122095 Assuming just deference
Age 28 Residency 130397 Assuming just deference
Age 29 Residency 139264 Assuming just deference
Age 30 Payment Yr 1 129089 Monthly Payment @ 1533 1532.87
Age 31 Payment Yr 2 118222 Yearly Payment @ 18394 18394.44
Age 32 Payment Yr 3 106615 Interest Compounded once at end of year
Age 33 Payment Yr 4 94220
Age 34 Payment Yr 5 80982
Age 35 Payment Yr 6 66843
Age 36 Payment Yr 7 51743
Age 37 Payment Yr 8 35617
Age 38 Payment Yr 9 18393
Age 39 Payment Yr 10 -1 Total Paid 183944.4

Thus the total cost of the loan on a standard 10 yr repayment plan without IBR and standard deferment during a 4 year residency is ~184k. Assumes student took out 25k/year.

If a person without the 100k debt invests the same amount as the payments at your stated 5% ROI during those same 10 years, that amount grows to ~645k by age 60.

For student w/o 100k loan who invests an equivalent amount
W/O 100k Loan Total Gain
Age 22 MS-1 (0K/yr) 0
Age 23 MS-2 0
Age 24 MS-3 0
Age 25 MS-4 0
Age 26 Residency 0
Age 27 Residency 0
Age 28 Residency 0
Age 29 Residency 0 Interest Compounded once at end of year
Age 30 Payment Yr 1 18394 Input 18394 per year, ROI = 5%
Age 31 Payment Yr 2 37709 Input 18394 per year, ROI = 5%
Age 32 Payment Yr 3 57988 Input 18394 per year, ROI = 5%
Age 33 Payment Yr 4 79282 Input 18394 per year, ROI = 5%
Age 34 Payment Yr 5 101641 Input 18394 per year, ROI = 5%
Age 35 Payment Yr 6 125117 Input 18394 per year, ROI = 5%
Age 36 Payment Yr 7 149768 Input 18394 per year, ROI = 5%
Age 37 Payment Yr 8 175651 Input 18394 per year, ROI = 5%
Age 38 Payment Yr 9 202827 Input 18394 per year, ROI = 5%
Age 39 Payment Yr 10 231363 Input 18394 per year, ROI = 5%
Age 40 Interest Only Yr 242931 Input 0 per year, ROI = 5%
Age 41 Interest Only Yr 255078 Input 0 per year, ROI = 5%
Age 42 Interest Only Yr 267832 Input 0 per year, ROI = 5%
Age 43 Interest Only Yr 281224 Input 0 per year, ROI = 5%
Age 44 Interest Only Yr 295285 Input 0 per year, ROI = 5%
Age 45 Interest Only Yr 310049 Input 0 per year, ROI = 5%
Age 46 Interest Only Yr 325551 Input 0 per year, ROI = 5%
Age 47 Interest Only Yr 341829 Input 0 per year, ROI = 5%
Age 48 Interest Only Yr 358920 Input 0 per year, ROI = 5%
Age 49 Interest Only Yr 376866 Input 0 per year, ROI = 5%
Age 50 Interest Only Yr 395710 Input 0 per year, ROI = 5%
Age 51 Interest Only Yr 415495 Input 0 per year, ROI = 5%
Age 52 Interest Only Yr 436270 Input 0 per year, ROI = 5%
Age 53 Interest Only Yr 458083 Input 0 per year, ROI = 5%
Age 54 Interest Only Yr 480988 Input 0 per year, ROI = 5%
Age 55 Interest Only Yr 505037 Input 0 per year, ROI = 5%
Age 56 Interest Only Yr 530289 Input 0 per year, ROI = 5%
Age 57 Interest Only Yr 556803 Input 0 per year, ROI = 5%
Age 58 Interest Only Yr 584644 Input 0 per year, ROI = 5%
Age 59 Interest Only Yr 613876 Input 0 per year, ROI = 5%
Age 60 Interest Only Yr 644569 Input 0 per year, ROI = 5%

Feel free to suggest tweaks in the model.

The reason our models differ drastically I assume consolidation of the loan to a lower interest <3% (which someone says is no longer true...however no reason is given?!?). Basically my model included no more than 15,000 total interest. At the 6.8% interest rate yours holds valid assuming the US does not go under due to debt....i am using http://www.moneychimp.com/calculator/compound_interest_calculator.htm for all my calculations fyi to reference

Anyhow i agree with your opportunity cost point... but my only point was to make the sorta money to have 100K to invest you need medicine to begin with (discounting risky business or financial career possibilities) hence would have to pay tuition

 

[link2swim06]

A point that you will probably never see. Basically, you can't consolidate your federal Stafford loans below 6.8% now.

Is this some sort of regulation or something? If not I would assume in 5 years loan rates will be somewhat low again (assuming a cyclic market cycle).

 

[DrBowtie]

Is this some sort of regulation or something? If not I would assume in 5 years loan rates will be somewhat low again (assuming a cyclic market cycle).

Yes, newish regulations. I think this batch of current interns may have been the last ones able to get that low rate, hence why much of their repayment advice is kinda invalid. You're stuck paying the 6.8%

 

[flip26]

Is this some sort of regulation or something? If not I would assume in 5 years loan rates will be somewhat low again (assuming a cyclic market cycle).

Blame Congress and Obama. They are putting the private student lenders out of business. Interest rates are at historically low levels right now, and Congress/Obama could lower the 6.8 rate this July if they wanted...but they have no intention of doing so.

 

[Geekchick921]

Never get high on your own supply, man.

 

[DrArete]

Never get high on your own supply, man.

 

[Parts Unknown]

Blame Congress and Obama. They are putting the private student lenders out of business.

No, they are simply not continuing to back private lenders with taxpayer money (and they're passing the savings on to students). Private lenders can still lend all they want, but they will be assuming 100% of the risk.

 

[flip26]

No, they are simply not continuing to back private lenders with taxpayer money (and they're passing the savings on to students). Private lenders can still lend all they want, but they will be assuming 100% of the risk.

Sallie Mae, the biggest private lender, is being driven out of the business by the Obama administration.

http://www.foxnews.com/politics/2010/03/30/sallie-mae-blames-layoffs-obamas-student-loan-overhaul/

How are the savings being passed on to the students? What savings are you talking about anyway? You have bought into Obama's BS about how the private lender's have been reaping the benefits of the subsidies - these aren't going to be passed on to the students. The freaking interest rate has nearly tripled in 5 years...and the terms for deferment, forebearance, and repayment have all gotten more stringent, too.

This is nothing more than Obama's ongoing political fight against the "evil" banks and other financial institutions. Just wait until we hear how ****ed up the government loan program is in the next year...if they wanted to do students a favor, they would increase the ridiculously small loan amount with subsidized interest, and/or would lower the interest rate somewhere between a 30 year mortgage rate and the 10 year treasury yield.

 

[violincuty]

Hmmm....this is a tough decision, but a great decision to be in the position to make! I am not sure if I can offer concrete advice, but I can tell you what my choices are and what I am choosing to do. I had a fully-funded MD-PhD offer at Dartmouth, a partially funded MD-only offer at UCSD (20k/yr. scholarship), and a fully-funded HPSP offer from the navy for UCSD with a 4 year service committment.

I know LOTS of people who are in debt from college. I was fortunate enough not to have to go into debt for undergrad, and I am extremely skeptical of going into debt for medical school. That being said, I can see from those around me who have done it that they live amazing lifestyles while paying back their loans. First, there are tons of loan repayment programs through the NIH, military, etc. if you realize in medical school or residency that you do not want to have to worry about paying them back. It's up to you to decide if you want to accept a potentially less-than-ideal job in order to make the loans less of a burden. My experience is that almost every professional student goes into debt, and the ones I know are very happy with their decision to do so. In my case, both the MD-PhD offer and the HPSP offer are financially deceiving because they are restrictive and require time that I could have been practicing and making more money (if you're looking at it from a purely economical perspective...I made my decision for non-monetary reasons).

So...my decision: I understand that I may or may not be able to transfer into the MSTP at UCSD, but I am okay with that. The truth is that when I got the Dartmouth acceptance, I was happy/excited to realize that my career goals are attainable, but when I got the UCSD acceptance, it was as though my whole life had changed. I felt a connection with the school right away from the moment I drove into town. I loved the students I met, I love the idea of working with a heterogeneous underserved population, I am passionate about the initiative of the student-run clinic, I love the beach and the ocean, and so much more. In addition, I come from a unique disadvantaged background, and the small amount of family I have is very important to me. Everyone I know, everything that's familiar to me, is on the west coast (in Santa Monica and Las Vegas, specifically). I am not sure if I will regret not having chosen Dartmouth, but I know for certain that I will always look back and wonder what my life would have been like if I do not choose UCSD. I also honestly believe that I will be more productive at UCSD because I am so passionate about the program and serving the people of San Diego. Furthermore, I decided against HPSP (for now, haven't given then a final answer) because I truly value academic freedom. I want to be able to follow my passions and leave room for growth in medical school. I don't think being bound by any sort of service commitment is a good choice for me. In other words, I have decided that would be worse than a financial commitment. But...just because that decision is right for me does not mean it is right for everyone by any means.

I would say in the end- follow your heart. You only live once and this is a part of your training that you will only complete once. If you're responsible with your money, the rest should fall into place naturally. Good luck!

 

[GrantN]

Start by paying off the beamer.

 

[Parts Unknown]

Sallie Mae, the biggest private lender, is being driven out of the business by the Obama administration.

If Sallie Mae cannot compete without government subsidy, I submit that its business model is deeply flawed and it does not need to survive.

How are the savings being passed on to the students? What savings are you talking about anyway?

Do you understand what has been going on for the last 45 years? Okay, by 2004 Uncle Sam was directly lending about $100 billion in student loans, and they were giving about $10 billion is subsidies to private lenders who do pretty much the same thing. Essentially these private lenders were skimming tax dollars to perform a function that the Government was already performing in much larger quantity. Does this make sense? No, it really doesn't, so they stopped it. By withdrawing this artifical support of the private lending market, those dollars will now be redirected into existing loan and Pell grant programs.

There is a nice summary here.

Just wait until we hear how ****ed up the government loan program is in the next year...if they wanted to do students a favor,

If they wanted to do you a favor, eh? You don't have a Consitutional right to have your medical education funded via low cost loans from the Federal Government. It doesn't have to loan you one dime, and it certainly doesn't have to pay your salary and benefits during residency (which are funded through Medicare), but it will.

So before you continue whining about interest rates, recall that you are about to saddle up to the public trough and accept hundreds of thousands of dollars that you are absolutely not entitled to. I'd call that a pretty big ****ing favor.

 

[flip26]

If they wanted to do you a favor, eh? You don't have a Consitutional right to have your medical education funded via low cost loans from the Federal Government. It doesn't have to loan you one dime, and it certainly doesn't have to pay your salary and benefits during residency (which are funded through Medicare), but it will.

So before you continue whining about interest rates, recall that you are about to saddle up to the public trough and accept hundreds of thousands of dollars that you are absolutely not entitled to. I'd call that a pretty big ****ing favor.

Umm, settle down, chief. You are missing the mark by a mile here. You have swallowed the Obama BS whole.

I would be perfectly happy if the federal government didn't do ANY of the damn loan programs or market interventions they do, starting with FNMA, Freddie Mac, VA home loans, and student loan programs including Pell grants.

I also would not have had the govt bail out GM, the banks, et al. The government did big business a big ****ing favor - so it is reasonable to ask why student loan interest rates which are set by the government have nearly tripled in the last 5 years while market interest rates in general have drastically dropped having been suppressed by government intervention (quantitative easing).

You are painting this Obama move as some sort of positive for students. I submit that if they want to do students a favor, they could lower the interest rates and increase the amount that can be subsidized.

 

[flip26]

If Sallie Mae cannot compete without government subsidy, I submit that its business model is deeply flawed and it does not need to survive.

Umm, no business can compete with the government when the government controls the money supply, interest rates, etc.

When private lenders are driven out of business, there are fewer lenders - how is this good for students?

Similarly, if Obama gets his way and we have public health insurance, it will drive private insurers out of business.

Get it?

 

[Parts Unknown]

You have swallowed the Obama BS whole.

I'd say you have swallowed the anti-Obama BS whole.

I would be perfectly happy if the federal government didn't do ANY of the damn loan programs or market interventions they do,

So how will you be funding your medical education?

You are painting this Obama move as some sort of positive for students. I submit that if they want to do students a favor, they could lower the interest rates and increase the amount that can be subsidized.

The rates are already lower than you can get on the private market, and in 2007 the Democrats pushed through a measure that phases in reduced interest rates on new Stafford loans down to 3.4%.

So basically you would be happy if all these programs evaporated, yet you complain that they don't do enough. Strong work.

 

[DrBowtie]

I'd say you have swallowed the anti-Obama BS whole.



So how will you be funding your medical educations?



The rates are already lower than you can get on the private market, and in 2007 the Democrats pushed through a measure that phases in reduced interest rates on new Stafford loans down to 3.4%.

So basically you would be happy if all these programs evaporated, yet you complain that they don't do enough. Strong work.

The new rates do not apply for graduate student loans. Those are fixed at 6.8% for sub and unsub. The government did hose us in the sense that with the variable rate Staffords of old, it was not uncommon to be able to consolidate at 2-3% for your loan. The extra 4-5% makes a lot of difference and puts more pressure on students to pay off their loans quicker. With 2-3% interest, you would be dumb to pay it down since you could be making ~5% on investments.

 

[Parts Unknown]

Umm, no business can compete with the government when the government controls the money supply, interest rates, etc.

I don't see how the government is controlling anything here. If you wanted to scrape together some capital and open up Flip's Student Loan Depot you would be more than welcome to. I'm sure you can find students who either don't qualify for Federal loans or have maxed them out.

It's funny, I hear a lot of general grumbling about how the Gubbmint is incapable of running anything in an efficient fashion. And yet here is a perfect example of a government program that is streamlining a very large and important program, and now what are the critics arguing? That it's bad to let a collection of obligate corporate parasites die off?

This is the same sense of irony one gets when pondering that a large proporiton of Tea Party activists are making heavy use of Social Security, Medicare, unemployment benefits, and a host of other public programs. I guess these are the same geniuses who want to keep the Government out of Medicare.

 

[Parts Unknown]

The new rates do not apply for graduate student loans.

True, and I would never argue that they shouldn't have gone further. But life is uncertain.

 

[DrBowtie]

True, and I would never argue that they shouldn't have gone further. But life is uncertain.

But you will agree that now with the fixed rates, we are worse off? Variable rates are at an all time low right now. We could have probably consolidated at 1-2% interest.

 

[flip26]

I don't see how the government is controlling anything here. If you wanted to scrape together some capital and open up Flip's Student Loan Depot you would be more than welcome to. I'm sure you can find students who either don't qualify for Federal loans or have maxed them out.

It's funny, I hear a lot of general grumbling about how the Gubbmint is incapable of running anything in an efficient fashion. And yet here is a perfect example of a government program that is streamlining a very large and important program, and now what are the critics arguing? That it's bad to let a collection of obligate corporate parasites die off?

This is the same sense of irony one gets when pondering that a large proporiton of Tea Party activists are making heavy use of Social Security, Medicare, unemployment benefits, and a host of other public programs. I guess these are the same geniuses who want to keep the Government out of Medicare.

Using your logic, the government should nationalize everything under the sun so that they can streamline every aspect of the economy with the acumen and proficiencies gained from running the post office, the VA, Medicare, Medicaid, and Social Security into insolvency, but at least they will kill off all the corporate parasites once and for all.

 

[flip26]

But you will agree that now with the fixed rates, we are worse off? Variable rates are at an all time low right now. We could have probably consolidated at 1-2% interest.

Nice to see that somebody understands the government hose job against grad students...

 

[Parts Unknown]

Using your logic, the government should nationalize everything under the sun

No, I think the government should act as a promoter of the general welfare in a relatively small number of arenas that the private world is either unwilling or incapable of servicing adequately.

 

[flip26]

So how will you be funding your medical education?

Suffice to say I got it covered, and I will graduate from medical school with no debt.

 

[Parts Unknown]

But you will agree that now with the fixed rates, we are worse off? Variable rates are at an all time low right now. We could have probably consolidated at 1-2% interest.

And what happens when variable rates rise? If this were the early-mid 1980's you would all be consolidating at 14-18%. Would you like a 3/1 ARM with that Las Vegas condo?

 

[Parts Unknown]

Suffice to say I got it covered, and I will graduate from medical school with no debt.

Military? Silver Spoon? Independent wealth? Married well?

 

[DrBowtie]

And what happens when variable rates rise? If this were the early-mid 1980's you would all be consolidating at 14-18%. Would you like a 3/1 ARM with that Las Vegas condo?

Those variable rate loans were capped at 8.5% which is LESS than the current Grad Plus. So your scenario wouldn't have happened.

 

[Infinitydrop]

haha I am pretty curious as well. What school are you going to?

 

[flip26]

Military? Silver Spoon? Independent wealth? Married well?

Wow, what a snob; ever hear of getting a job? Ever hear of personal savings? You have the mentality that success only comes from someone or somewhere else, or in your case, from the benevolence of the government.

I had a successful career in finance - I am a non trad. I am not a 'wet behind the ears' 21 year old who doesn't understand how all of this works.

 

[Parts Unknown]

Those variable rate loans were capped at 8.5% which is LESS than the current Grad Plus. So your scenario wouldn't have happened.

Oh, but the Government can just change anything at any time! Goodbye deferral! They control all the money and make the rules! They control the spice!

Good point, though.

 

[DrBowtie]

Oh, but the Government can just change anything at any time! Goodbye deferral! They control all the money and make the rules! They control the spice!

Good point, though.

Right, they can change the rules at the drop of the hat.

I just want you to admit that the newest rule changes are in fact worse for the medical student.

 

[Parts Unknown]

Wow, what a snob; ever hear of getting a job? Ever hear of personal savings?.

I believe I covered your scenario under "independent wealth."

You have the mentality that success only comes from someone or somewhere else, or in your case, from the benevolence of the government.

I am also a non-trad, two doctorates, have spent the last 15 years slaving in abject poverty. I do not think that success comes from somewhere else (but I appreciate the touch of Glenn Beckian logic, there), I simply choose to recognize that my success was made possible with a lot of help. I have no illusion that I am so self-made as to owe nothing to anyone.

 

[Parts Unknown]

I just want you to admit that the newest rule changes are in fact worse for the medical student.

So you want me to admit that things fluctuate? Okay, they fluctuate. If you're lucky you're better off than if you're unlucky. Happy?

 

[DrBowtie]

So you want me to admit that things fluctuate? Okay, they fluctuate. If you're lucky you're better off than if you're unlucky. Happy?

You can't admit that they are fluctuations when there is deliberate legislation behind the change. It isn't a flip of the coin.

Just admit that this current legislation is worse for us than the previously accepted model from 1994-2008.

 

[Parts Unknown]

You can't admit that they are fluctuations when there is deliberate legislation behind the change. It isn't a flip of the coin.

Just admit that this current legislation is worse for us than the previously accepted model from 1994-2008.

Of course a fixed rate is worse than a variable rate when the variable rate is lower. But when the government fixed rate is lower than the private fixed rate I think you just have to suck it up and see the glass as half full.

Perhaps everyone should sign up for the newly legislated IBR plan and forget about the whole mess.

 

[45408]

Is this some sort of regulation or something? If not I would assume in 5 years loan rates will be somewhat low again (assuming a cyclic market cycle).

Yes, it is.

 

[45408]

So before you continue whining about interest rates, recall that you are about to saddle up to the public trough and accept hundreds of thousands of dollars that you are absolutely not entitled to. I'd call that a pretty big ****ing favor.

No, they screwed us over. Tuition would NOT be anywhere near as high as it is if the government hadn't made lending so easy. I had to jump through a dozen more hoops to get a mortgage than I did for student loans, and that's because the government wants everyone to get as much money as they possibly need.

So what does that do? Makes every institution of higher learning decide that they can raise tuition. I have no idea why my school charges $38,000/year.

 

[flip26]

I believe I covered your scenario under "independent wealth."

Not quite - you never even imagined that someone may have made their own money to pay for med school.

I am not wealthy; just financially successful. I have invested my money wisely. I will be attending a state school, in a town where I already live and own a condo. The tuition is manageable on my savings, and I will live a very frugal existence. I may take out the subsidized loans for a little extra spending money, but I will avoid the unsubsidized, and I think people who take out those grad plus loans are crazy, as well as anybody who is taking out loans in the $200k+ range.

 

[45408]

Wow, what a snob; ever hear of getting a job? Ever hear of personal savings?

Not quite - you never even imagined that someone may have made their own money to pay for med school.

I am not wealthy; just financially successful. I have invested my money wisely. I will be attending a state school, in a town where I already live and own a condo. The tuition is manageable on my savings, and I will live a very frugal existence. I may take out the subsidized loans for a little extra spending money, but I will avoid the unsubsidized, and I think people who take out those grad plus loans are crazy, as well as anybody who is taking out loans in the $200k+ range.

That sounds like being independently wealthy (enough) to me...

 

[flip26]

No, they screwed us over. Tuition would NOT be anywhere near as high as it is if the government hadn't made lending so easy. I had to jump through a dozen more hoops to get a mortgage than I did for student loans, and that's because the government wants everyone to get as much money as they possibly need.

So what does that do? Makes every institution of higher learning decide that they can raise tuition. I have no idea why my school charges $38,000/year.

That is exactly what is going on. The "easy money" loans are what drives up tuition at college and beyond.

 

[DrArete]

That sounds like being independently wealthy (enough) to me...

You don't know what the phrase means.

 

[Parts Unknown]

No, they screwed us over. Tuition would NOT be anywhere near as high as it is if the government hadn't made lending so easy. I had to jump through a dozen more hoops to get a mortgage than I did for student loans, and that's because the government wants everyone to get as much money as they possibly need.

Yup. Hell is paved with good intentions.

I would agree that undergraduate education assistance might be better handled with something like vouchers, but with 2-3x as many med school applicants as seats, we have no leverage. Schools can jack tuition with or without educational loans and still fill their seats.

 

[45408]

You don't know what the phrase means.

Thank you for the update.