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Student Loan Bubble

Discussion in 'Dental' started by whodat4life, Aug 9, 2011.

  1. whodat4life

    2+ Year Member

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    Hi To All,

    I'm basically trying to start a discussion on what will happen if the student loan bubble bursts. What will happen to loan rates? What will happen to tuition rates? Will students even be able to gain access to student loans? Please, I'm not wanting to turn this into a political debate here...hopefully, we can all agree that Washington isn't doing any of us favors.

    I will owe about 350k when I graduate. Also, any good ideas on paying down student loans? Strategies?

    I've applied to NHSC and other loan forgiveness programs, but when you have a principle as high as 350k, a little measly 30k in loan repayment help is nothing, barely pays off the interest on your loans.

    Here is a look at my debt (categorized):
    -Total Subsidized @ 6.8% = $53,847 -Fed. Stafford Sub.
    -Total Subsidized @ 5.0% = $28,000 -Health Professions Student Loan
    -Total Unsub. @ 6.8% = $159,846 -Fed. Stafford Unsub.
    -Total Unsub. @ 7.9% = $122,856 -GradPlus

    Thanks in advance for any helpful advice! Also, I just checked a consolidation rate, and it was 7.125%. Insane. My friend graduated in 2005 and his rate is 2.5%.
     
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  3. yappy

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    Let me consult my crystal ball... j/k. Who knows man - but it's stressful. To be honest, i'm much less worried about a dentists, doctors, engineers, etc etc. debt than I am degrees that provide little employment opportunities. I think they're more likely to default while you will most likely be loan poor. One thing I think is a result of higher tuition is lower demand due to high loan payments - who can afford to buy a home, car, vacation etc. when they have huge loan repayments to do. The gov is not helping us - but the population votes. I have witnessed state funding for my state school voted down over and over again by the same people who graduated in the 50's-90's that got theirs largely covered by the state.

    I have this fear in the not so distant future you will have to be extremely privlidged to get a college education or attend professional school. If I were you I would look for an area where you can work and get the loan repayment, live in a cheap apartment, and allocate a large percent of your paycheck to your student loans. You can knock this out in 5 yrs if you buckle down.
     
    #2 yappy, Aug 9, 2011
    Last edited: Aug 9, 2011
  4. Bereno

    Bereno Smoking Monkey
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    Well... it used to be that a High school diploma was good enough to do well in the workplace. Then it became that having a baccalaureate degree was needed to do well in the workplace. Now it seems that you need a masters (or "better") is needed to do well in the workplace. Soon enough though I can see it going back to having the baccalaureate because of economic reasons. Seems possible that it could be cyclical like that... who knows though :confused:
     
  5. whodat4life

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    Me too! My wife works as a mortgage loan processor here in Ontario, CA and she told me that the interest rates actually went DOWN on mortgages yesterday. It makes no sense, but then I was watching yesterday on television and they were saying it will take the market up to a couple years to adjust to the credit down grade. I just hope I can get through school before the student loan situation is completely done away with. It would SUCK to get through three years of dental school to find out you can't afford to finish.



     
  6. whodat4life

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    What I think will happen, and I'm not counting on it AT ALL...but I think tuition rates are going to plummet, because that's what happened in the old days as well (right after the Great Depression). My grandpa told me he went to school for a full year for just over $100. And that was at a private school, the most prestigious one within 100 miles of my home, it costs about 40k/year now :eek:

    I think the tuition rates will go down for the simple fact that the government can't afford to keep giving people 80-120k/year for school with the economy like it is. Whether one admits it or not, the government controls tuition rates to a large degree. I read a long article about this and I can't find it now to save my life. Basically, the government needed increased "revenues" so anyone with common sense knows that they make more when one owes 250-400k @ 6.8-7.9%. Either the interest rate (sky high) or the high tuition rate has to go. People simply can't afford to keep paying these astronomical tuition rates, and no one enjoys signing up to be a slave to their debt for the rest of their life.

    They're going to run into a crisis, and I'll tell you where. People are going to see others (dentists) in different countries making great money...and they'll just jet out on their loans. So, this creates two problems...#1) People will not have good access to care here in the US ...especially when the baby-boomer generation dentists finally decide to retire, and #2) They will not receive any of the money they've lended out at high interest rates.

    It's about to get really ugly here, I hate to sound so pessimistic, but sometimes people need to see what may very well be possible.
     
    #5 whodat4life, Aug 9, 2011
    Last edited: Aug 9, 2011
  7. want to drill

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    I've worried about the same thing....getting to my 4th year and suddenly there are no more student loans. They have to know that there aren't too many people going to school that have 75k sitting in the bank to pay for school. The number of bank robberies might just go up wherever dental schools are located!
    :eek:
     
  8. 7 Iron

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    Firstly, you won't have $53k of subsidized loans, because as of 7/1/2012 they won't be available to dental students anymore. So anything over $8500 (for c/o 2015) will likely be tacked onto the unsub Stafford.

    That being said... it's difficult to predict. I'm not an economist or anything although I have worked at a bank for a couple of years. I think it's only a matter of a few years before the student loan bubble bursts. When it does, I think there might be a short time when students cannot afford their tuition (mostly affecting for-profit schools, which are actually the biggest contributor to the student loan bubble). Then, if the government exits student loans completely (let's hope so), then private banks will pick up the slack. Interest rates likely will drop since banks will have to compete for your business. And, tuition will drop because a private bank will be very hesitant to lend $400k to someone with just an undergrad degree and no collateral.

    It will be painful for a few years but then the student loan market will become healthier.
     
  9. whodat4life

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    Oh yeah, I actually forgot all about the sub. stafford thing. I sure do hope what you're saying comes true.
     
  10. txaggie03

    txaggie03 Extremely Full of It
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    Talked to the financial aid department today. I asked if the the total amount of Stafford (sub + unsub) that you can take will remain the same. She said that was anybody's guess, and they were still trying to figure it out. She said that everyone seems to think that they will HAVE to bump up the total of unsub Stafford to at least meet the hole left by the sub Stafford.

    Meh, it's just money.;)
     
  11. Dr.Millisevert

    Dr.Millisevert Senior Member
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    All factors in perfectly in place for a massive US brain drain.

    Isn't that what the thread "Other countries where dentists do well" is all about? Also, there is the "International practice rights for American-trained dentists" thread.

    Looks like American dentists are ready to bail on the US and go elsewhere. Crazy.
     
  12. jay47

    jay47 Think Positively!
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    I just have a hard time believing that US dentists "cannot do well". There is plenty of unmet need in the US, you just have to look around. I think that if you want to turn a profit in today's economy, you have to lower costs, first and foremost, increase production levels (not necessarily high dollar items), and increase your efficiency.
    Plenty of rural areas need dentists, it's just no one wants to move to those areas.
     
  13. BlueToothHunter

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    Plenty of those rural areas already have dentists including corporate offices. Smaller rural areas wouldn't be able to support a dentist anyway... the overhead would eat the dentist alive!
     
  14. dental wahoo

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    http://image.exct.net/lib/fefb127575640d/m/2/Student+Lendings+Failing+Grade.pdf

    An interesting and worthwhile read (from Moody's Analytics) about student lending in general. It basically says, while other credit (auto, house, credit card debt) has been decidedly less available since 2008, the total amount of student loans in dollars has been increasing, significantly outpacing inflation, energy prices, and even the real estate appreciation of the early-2000s.
     
    #13 dental wahoo, Aug 10, 2011
    Last edited: Aug 10, 2011
  15. Demeter

    Demeter Senior Member
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    It is difficult to make money when your practice style is to lower fees and increase the number of patients you see. Then the other practices around you start to lower their fees ( go in network with every insurance company)as well. Its lose/ lose situation.
     
    #14 Demeter, Aug 10, 2011
    Last edited: Aug 10, 2011
  16. Demeter

    Demeter Senior Member
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    There is always unmet need, just not enough money to pay for dental work.
     
  17. yappy

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    THIS!

    I'm not a dentist yet; however, I do alot of volunteering as a dental assistant for a free dental clinic. Something that drives me nuts is how people basically do not value dental work. They will show up in extreme pain, have major issues (ie one 22yo only had 2 molars left) yet they will pull up in expensive cars, with freaking starbucks frap' drinks, smart/I-phones, smoke cigs ($$), and wearing stupid expensive things like designer hats or purses. It's not that they cant afford dental work it's that they dont value it.

    Sorry, for the rant. But I just cant stop and think to myself "dang, had they spent 80 bucks on a cleaning or 150 on a filling they could have maybe saved that tooth."


    EDIT: There are alot of people that are really down on their luck and it is nice to see them get work done.

     
  18. whodat4life

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    Sort of, but not really. In this one I was trying to get advice from people (current dentists) on how to pay back loans. The other thread got more political...which wasn't my aim.
     
  19. jay47

    jay47 Think Positively!
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    You are in a rural area, there are not many other dentists around, maybe 1-2. I'm not sure what you guys consider a "rural area" but it's not rocket science. I'm not talking about lowering the fee for a crown to $200, I'm talking lowering the fee from $1000 to $800. Dental practices in rural areas aren't going to "lower their fees too" because you lowered them because their fees are already lower than other dentists in the city.

    It is difficult to make money by "lowering fees and increasing the number of patients you see"????????!!!! Isn't this the entire basis for medicaid practices??? I know lots of docs who do quite well seeing many many patients a day, using low fees. Yes, their work may not be super, but it does provide a clinically adequate service to those with unmet need.
     
  20. jay47

    jay47 Think Positively!
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  21. mike3kgt

    mike3kgt Hopefully scuba diving
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    You are well ahead of the curve. A+. If I were chair of adcoms and you came in saying this I'd take them right away.

    Haha, but seriously, don't bring this up at your interview ;).
     
  22. yappy

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    haha. Yeah - I know. Dont worry I'm a game player. I was a medic prior to going for dentistry so I was jaded a long time ago. People ignoring their health and doing dumb habits is nothing unique to dentistry. It just bugs me because these people can afford treatment but blow their money on dumb stuff.

     
  23. 7 Iron

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    But then it's their problem when they have to charge the service to their credit card ... right? :D
     

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