minimum payments: crazy like a fox?

[DrBender79]

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OK I know this sounds crazy, and it probably is, but I am curious so here goes. I am going to owe about $300,000 in student loans when I'm done with med school. The suggested monthly payments to pay it off in 10 yrs would be $3,500 or in 30 years $2,000. Pretty bad either way.
What I'm wondering is, do I really have to pay it all off, or can I just make the minimum payments every month until I die? I'm guessing the minimum monthly payment will be somewhere around $100. I'll be 32 when I graduate. In the extreme case that I live to 100, that's 68*12*$100= that's only $86,000 I paid. The rest gets wiped away with my ashes right? Aside from maybe lowering my credit score a bit, what's the downside here?
Seems like this way I'd have more money to spend on enjoying life, saving for retirement, kids' college funds, etc...

 

[rbnsafsadgf]

OK I know this sounds crazy, and it probably is, but I am curious so here goes. I am going to owe about $300,000 in student loans when I'm done with med school. The suggested monthly payments to pay it off in 10 yrs would be $3,500 or in 30 years $2,000. Pretty bad either way.
What I'm wondering is, do I really have to pay it all off, or can I just make the minimum payments every month until I die? I'm guessing the minimum monthly payment will be somewhere around $100. I'll be 32 when I graduate. In the extreme case that I live to 100, that's 68*12*$100= that's only $86,000 I paid. The rest gets wiped away with my ashes right? Aside from maybe lowering my credit score a bit, what's the downside here?
Seems like this way I'd have more money to spend on enjoying life, saving for retirement, kids' college funds, etc...

umm. no. that $3.5k or $2k is your minimum payment under a regular or extended re-payment plan. (The $50 minimum payment is for federal loans under $1k total.) Read up about IBR (income based repayment) if you have federal loans.

Read the terms of the loans carefully. In the Federal promissory notes, they give examples of what you minimum payment would be at a given debt level.

 

[yadayadadude]

Good grief. What on Earth makes you think that the minimum payment on $300K in unsecured debt will be $100/month? That's not crazy like a fox, that's plain old crazy. And by crazy, I mean stupid.

 

[odieoh]

Good grief. What on Earth makes you think that the minimum payment on $300K in unsecured debt will be $100/month? That's not crazy like a fox, that's plain old crazy. And by crazy, I mean stupid.

I suspect that someone thinks student loans work like credit cards, ie the minimum payment makes no actual sense toward paying off the loan.

 

[laryngo]

There is also the issue of integrity. You would legitimately owe the money, so pay it. An agreement was made and should be honored. Plus, you don't want Salliemae hanging around your ankle the rest of your life.

Check out www.daveramsey.com

 

[rbnsafsadgf]

oh, the whole moral obligation to debt idea.

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html
http://www.nytimes.com/2010/01/24/business/economy/24view.html?scp=1&sq=walkaway&st=cse

Kinda of relevant, but if what the OP proposed was legal by the terms of the contracts, why not do it? (We both know that what the OP proposed isn't possible, but if it was feasible, why not do it?)

 

[dotdash]

Kinda of relevant, but if what the OP proposed was legal by the terms of the contracts, why not do it? (We both know that what the OP proposed isn't possible, but if it was feasible, why not do it?)

The money he's going to write off (in this imaginary scenario) is at least partly taxpayer money: yours, his aunt Betty's, the guy down the street. He would be ripping us all off. That's why there is a moral issue, even if the imaginary people who wrote the imaginary contract weren't smart enough to close that imaginary loophole.

 

[DrBender79]

Well like I said, it's probably crazy, not probably clever. I was just curious about a hypothetical scenario. Looking at that amount of debt makes you think crazy things. Sounds like it wouldn't work anyway so I'll just pay them back as quickly as I can, as I've been planning to do all along. It would've destroyed my credit anyway.
But as far as the morality thing goes, I have to agree that if it were hypothetically possible, I don't think it would be immoral to pay the minimum that they ask for. They set minimums knowing full well some people will be paying that minimum.
You "owe" a certain amount for taxes each year, but then you take deductions, write-offs, "loopholes", etc... that lower the amount you ultimately pay. I don't view it as stealing! Doesn't mean you're immoral or stealing from Aunt Betty, just means you're smart with your money.

I don't even download illegal movies or mp3s, I'm sure as heck not going to do anything that could be considered stealing hundreds of thousands of dollars.

 

[tablet]

I can sympathize with your position. But what would be your response if you provided an expensive service for one of your patients, sent them a bill, and they responded with, "do I really have to pay it all off, or can I just make the minimum payments every month until I die? I'm guessing the minimum monthly payment will be somewhere around...."

 

[DrBender79]

Paying minimum payments isn't evil or wrong. I wouldn't fault someone for paying the minimum payment on something, if that's what they had to do. If the lowest payment you're willing to accept is more than the minimum you set, then you need to set a higher minimum!
I've been paying minimum payments on my credit cards for a few months now, and surprise surprise Visa and Mastercard aren't complaining about it. LOL
Besides, that would work out to my benefit in the end if patients did that, due to interest. Even at a low minimum payment, most patients would pay it off before they died. I'm planning to go into Gen Surg, and I haven't heard of too many lap chole's or hernias costing $300k! Also, supposedly most people will have insurance by the time I'm practicing.