The end of subsidized loans?

[JimmyChitwood]

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http://www.insidehighered.com/news/...eat_to_subsidized_student_loans_in_debt_talks

Read this article today and wanted to know what you guys think. Assuming subsidized loans are also eliminated for graduate students (I haven't done the number-crunching to see how much more in debt I would be...I'm not sadistic), would you mind taking the hit to benefit the good ole' US of A? Does this make you rethink the importance of the next presidential election?

Also if this thread gets moved I'm done posting forever. Some of the threads that get started are absolutely pointless. Given that most of us already have a good chunk of debt, I just wanted to hear some of your opinions.

 

[OveractiveBrain]

http://www.insidehighered.com/news/...eat_to_subsidized_student_loans_in_debt_talks

Read this article today and wanted to know what you guys think. Assuming subsidized loans are also eliminated for graduate students (I haven't done the number-crunching to see how much more in debt I would be...I'm not sadistic), would you mind taking the hit to benefit the good ole' US of A? Does this make you rethink the importance of the next presidential election?

Also if this thread gets moved I'm done posting forever. Some of the threads that get started are absolutely pointless. Given that most of us already have a good chunk of debt, I just wanted to hear some of your opinions.

I went to a private school for medical school. Most of my debt is unsub. The pennies that there were subsidized were great (all 7500 dollars of a 75,000 a year cost, whoopee!), but honestly, in accumulating 248,000 worth of debt, whats the difference if my interest that capitalizes is 36,000 or 38,500. Yeah, 2500 dollars some would say. (These numbers aren't real, but are close approximations). And, well... I still went to medical school. I still went into internal medicine.

Unsub does not mean private loans. They are still educational loans, just accruing interest that capitalizes upon entering repayment (or forbearance).

I hope that Public Service Loan Forgiveness and Interest-Based-Repayment stays around, otherwise I'm in trouble. Of course, my goal was never to make it rich, but to impact the world in a meaningful way.

So, no. The "lost cost" is insignificant, and, I would hope that people going into medicine go for more than just the money...

 

[circulus vitios]

Education in America is so terrible. When you consider the taxes we pay and all of the money we waste on wars, pork, and dead-end programs it's ridiculous that we don't have free college/university. And not only is it not free, it's ridiculously overpriced with tuition increasing 10% a year funded by government backed loans that somehow seem to go up with tuition (gee, I wonder)...and now they're considering doing away with interest free loans! I can't wait for this country to collapse into it's stupid wasteful self and burn to the ground.

 

[CodeBlu]

Education in America is so terrible. When you consider the taxes we pay and all of the money we waste on wars, pork, and dead-end programs it's ridiculous that we don't have free college/university. And not only is it not free, it's ridiculously overpriced with tuition increasing 10% a year funded by government backed loans that somehow seem to go up with tuition (gee, I wonder)...and now they're considering doing away with interest free loans! I can't wait for this country to collapse into it's stupid wasteful self and burn to the ground.

What's wrong with pork?

 

[mvenus929]

All things considered, $8500/year isn't going to put you into significantly more debt. It'll suck, of course, but it's not going to break you to pay it back.

 

[dyeguy21]

I can't wait for this country to collapse into it's stupid wasteful self and burn to the ground.

You do realize that's detrimental to yourself as well....right?

On topic, it's a semi-bad idea. Unless they start really cracking down on the for-profit schools like Everest/Phoenix. The nurses/MAs that I've met from there can't get jobs because the schools offered them no actual hospital experience and no one will take them. So they are in student debt (can't get out of it even in bankruptcy) and can't find a job that they have sacrificed years of their life and potential financial gain for. The subsidies do help, because compounding interest is a real pain in the maximus.

However, if we are going to avoid the economic collapse that circulus has wished upon himself and the rest of us, we all need to cut back and I'm willing to do my part if everyone else is as well.

 

[circulus vitios]

You do realize that's detrimental to yourself as well....right? .

Medical students are young and educated. I don't think they'll have any trouble finding a way out.

 

[dyeguy21]

Medical students are young and educated. I don't think they'll have any trouble finding a way out.

And what do you plan on using as currency to leave the country assuming a faith based collapse?...O right Bottle Caps 😎

 

[circulus vitios]

And what do you plan on using as currency to leave the country assuming a faith based collapse?...O right Bottle Caps 😎

+1 for a Fallout reference. 😎

 

[Dr Love]

F-ing Eric Cantor.

 

[okdocrx]

Defense spending should be part of the cuts. This is such a tough thing. I don't think anyone imagined the debt spiraling out of control ten years ago.

 

[PostHaste]

All things considered, $8500/year isn't going to put you into significantly more debt. It'll suck, of course, but it's not going to break you to pay it back.

👍

 

[PostHaste]

I don't think anyone imagined the debt spiraling out of control ten years ago.

Really? People on here are worried about the interest on $8500 and you think nobody thought of the impact of interest on $5,723,280,631,657.09 in 2001, particularly when we haven't had a federal surplus since 1956?

 

[mdeast]

👍

It's not gonna break the bank. But at 6.8% interest....for the 4 years you're in med school that will add almost $6000 in interest to your debt. It was a nice benefit in past to reduce the already high loans by at least a little bit. Considering a lot of residents make say $4000/month and can only contribute at max 1/2 of that to loan payments. That's a minimum 3 months of resident salary loan funds lost to interest alone.

 

[PostHaste]

It's not gonna break the bank. But at 6.8% interest....for the 4 years you're in med school that will add almost $6000 in interest to your debt. It was a nice benefit in past to reduce the already high loans by at least a little bit. Considering a lot of residents make say $4000/month and can only contribute at max 1/2 of that to loan payments. That's a minimum 3 months of resident salary loan funds lost to interest alone.

Or 3% of 1 year attending salary. Yeah, it is a nice benefit, but I'm not going to get too worked up about it. (I know, I know, slippery slope and all...)

 

[Dr Love]

Really? People on here are worried about the interest on $8500 and you think nobody thought of the impact of interest on $5,723,280,631,657.09 in 2001, particularly when we haven't had a federal surplus since 1956?

What are you talking about, there was a budget surplus during the Clinton years. Bush ended that his first year in office and we have continued on the path to fiscal ruin since.

 

[PostHaste]

What are you talking about, there was a budget surplus during the Clinton years. Bush ended that his first year in office and we have continued on the path to fiscal ruin since.

Even counting interest payments?

Maybe my source is BS then. Will confirm shortly...

Edit: My mistake. According to the CBO, we've had 2 years with a budget surplus since then: 1999 & 2000. They were surpluses of $1.9 bill and $86.4 bill vs. a debt of $3,600 billion. Still goes to my point, that nobody in their right mind would think we could manage/decrease the debt with that kind of history.

 

[okdocrx]

Nobody predicted the scope of two wars, a recession that has crippled revenue collection service otherwise would Bush have really given tax cuts to the rich?

five trillion is a lot more manageable than the 14 trillion we are at.

we have desperately tried to maintain the American dream on the backs of future generations who will have to pay huge chunks of interest and they will have less benefits than previous generations.

It seems like every generation prior has paved the way for a better future for their children. Except this generation that has probably hurt future generations. We're arguing about how to curb future deficits for the next few years. The debate going on doesn't even consider how we are going to pay off the debt.

 

[PostHaste]

Nobody predicted the scope of two wars, a recession that has crippled revenue collection service otherwise would Bush have really given tax cuts to the rich?

five trillion is a lot more manageable than the 14 trillion we are at.

we have desperately tried to maintain the American dream on the backs of future generations who will have to pay huge chunks of interest and they will have less benefits than previous generations.

It seems like every generation prior has paved the way for a better future for their children. Except this generation that has probably hurt future generations. We're arguing about how to curb future deficits for the next few years. The debate going on doesn't even consider how we are going to pay off the debt.

Yeah, I was just coming back to concede this point. According to the CBO's site, the 40-year average of debt as % of GDP was ~37% in 2008; by 2011 end it's projected to be 70% or higher. I'll agree that's some pretty daunting numbers.

 

[Suncrusher]

I hope that Public Service Loan Forgiveness and Interest-Based-Repayment stays around, otherwise I'm in trouble.

same. But I have to hope they stay around until 2025

 

[Dr Love]

Even counting interest payments?

Maybe my source is BS then. Will confirm shortly...

Edit: My mistake. According to the CBO, we've had 2 years with a budget surplus since then: 1999 & 2000. They were surpluses of $1.9 bill and $86.4 bill vs. a debt of $3,600 billion. Still goes to my point, that nobody in their right mind would think we could manage/decrease the debt with that kind of history.

Like my man says "Yes We Can" - but it's much harder when a major political party is hellbent on destroying the economy.

http://www.theonion.com/articles/congress-continues-debate-over-whether-or-not-nati,20977/

 

[JimmyChitwood]

Considering a lot of residents make say $4000/month and can only contribute at max 1/2 of that to loan payments. QUOTE]


I think that's high, even as a maximum. That's really beyond the realm of possibility. When you consider taxes, insurance (health, car, home/renters, etc.), rent, food, gas, etc., etc., etc. (not to mention a family, if you have one), you would be more likely able to pay a quarter of that, maximum.

But, I agree with you. It's a small amount in the grand scheme of things and I'm perfectly happy with the added debt, assuming it is for a good cause. However, I'm pretty cynical and imagine there are better ways to cut spending (this being further down the line).

Also, all of these costs keep adding up, and though I won't complain because I know a relatively good income awaits me, it's quite interesting to look at how fast tuition for medical school has increased over the years compared to inflation and physicians' salaries.

So, I guess the better question is, how much is too much?

 

[patel2]

.

 

[sunset823]

Considering a lot of residents make say $4000/month and can only contribute at max 1/2 of that to loan payments. QUOTE]


I think that's high, even as a maximum. That's really beyond the realm of possibility. When you consider taxes, insurance (health, car, home/renters, etc.), rent, food, gas, etc., etc., etc. (not to mention a family, if you have one), you would be more likely able to pay a quarter of that, maximum.

definitely within the realm of possibility. I lived at home for a year, working for a salary less than that of a resident's, after grad school and managed to pay off 60% of my debt within that year. If I match where my family lives, I'll move back home with my parents (yes, well into my early-to-mid 30s) and use 90% of my salary towards loan payments. If I don't get that lucky, I'm targeting cheap cities with nothing to do to spend money on (here's looking at you, Mayo) and will make it about 50%. I have no commitments and no furniture, it's not that hard.

And I'm in the same boat as a couple of people mentioned, if PSLF and income based repayment are gone (which I'm getting the feeling is getting more and more likely), I'm going to be submerged in serious fecal matter. Sometimes I wonder what I got myself into, but I remember that the only way I'm making this work is living alone for life, and loving it. Anybody who wants a family, get out. Now.

 

[bige11]

What are you talking about, there was a budget surplus during the Clinton years. Bush ended that his first year in office and we have continued on the path to fiscal ruin since.

There was a budget surplus due to entitlement cuts and a booming economy. However, we were still in debt, and the original stat posted is correct. We havent had a surplus in governmental funds since the 1950s.

 

[Dr Love]

There was a budget surplus due to entitlement cuts and a booming economy. However, we were still in debt, and the original stat posted is correct. We havent had a surplus in governmental funds since the 1950s.

So we agree there was a budget surplus. That is what we were talking about. If your point was that America still had debts to pay off, well there is no need to point out the obvious.

 

[mdquestion]

getting rid of subsidized loans entirely would drastically help students in the long run as tuitions would decrease when med schools are forced to restructure.

Obviously, the incoming class in the first few years would be screwed over but in the long run (decade+), costs would stop increasing at ridiculous rates that surpass inflation, and tuitions would once again be afforable. Without the guarantee loans backed by the govt, medical/dental/law/graduate school could not just raise tuition and fees every single year at whatever level it feels like "just cuz".

I seriously doubt med schools would cut tuition because of a cut in subsidized loans.

 

[SoundofSilver]

As someone alluded to earlier, government backed loans are the reason why schools can increase tuition by 10% every year because they are always guaranteed to get their money and it does not affect them if their students eventually default on those loans. The system is essentially broken at this point.

A few things that could be done to remedy this terrible situation: force the schools to heavily subsidize government backed loans. That way, schools will actually have a financial stake in whether or not their students will pay back their loans. I guarantee the steep increases in tuition we see every year will not be so steep.

A more dramatic approach: do not offer government loans to students at schools that have 30-40% percent or more of their graduates defaulting over a five year period. All of those for profit schools will go out of business immediately.

Of course, I don't see anything being done in the near future. Schools, especially public institutions, will continue to get more and more expensive.

Just be glad you're not going to law school. At least we actually have a shot at paying back our loans.

 

[Elbowstoopointy]

http://www.insidehighered.com/news/...eat_to_subsidized_student_loans_in_debt_talks

Read this article today and wanted to know what you guys think. Assuming subsidized loans are also eliminated for graduate students (I haven't done the number-crunching to see how much more in debt I would be...I'm not sadistic), would you mind taking the hit to benefit the good ole' US of A? Does this make you rethink the importance of the next presidential election?

Also if this thread gets moved I'm done posting forever. Some of the threads that get started are absolutely pointless. Given that most of us already have a good chunk of debt, I just wanted to hear some of your opinions.

Too long didn't read. Obama sucks though...lol @ libs

 

[Medicine4Bruhs]

The amount of debt the government has borrowed is staggering. It means paying 42 cents in interest for every dollar borrowed. Wrap your heads around that next time you try to pay for something.

 

[JohnGT]

Its really a shame when I look at the %increase in tutition even over just the last 12 years (when I graduated medical school). It's far exceeded the rate of inflation.

Unfortunately, with state budgets getting hit, I don't see how tutition is gonna stop going up anytime soon (take a look at UC systems).

 

[ccmonopolies]

so would already pre-existing subsidized loans convert to unsubsidized loans?

 

[robu058]

I went to a private school for medical school. Most of my debt is unsub. The pennies that there were subsidized were great (all 7500 dollars of a 75,000 a year cost, whoopee!),

Ah, you must have gone to DREXEL!!! lol

 

[DoctwoB]

Of course every school can fill their spots every year, and once you're committed after that first year there's nothing you can do if they raise rates. I've always found it ridiculous that you're not locked into a rate for 4 years, as future tuition increases could affect which school you would choose to go to.

When is someone going to open up a discount med school. I don't need super fancy facilities, and multi-million dollar sim lab, hours upon hours of 1 on 1 time with standardized patients, etc. just a syllabus, lectures (I don't even need these, and they could easily be standardized video lectures used across multiple schools taught by experts in the field that are actually screened for lecturing ability), and sites to do clinical rotations. It would just be fantastic if schools would compete on price, and not just on features.

 

[patel2]

,