STUDENT DEBT: America's Next Bubble?

Well, if there were no loans then the universities would have to accept what those kids could afford or go under. Tuition runs into the thousands at some colleges and not at others. You go to the school you can afford.

Great, let's all get our degrees from Big Bob's House of Diplomas.

You are a dumbass. I was working making $12/hr while going to a state school and still had to take $20k in loans to finish up my last two years. Prior to that, I had paid everything out of pocket. It took me eight years to get my piece of paper.

This is... I don't... What?

She's actually going to finish her Associates at a area Tech School (it's where she got her Tech Certificate which isn't really transferable) and then transferring to Bellevue College (apparently they dropped 'Community' in '09). Just did some looking and HO-LY SHIT! There are almost 40k students there! The damn community college is only slightly smaller than Auburn and Alabama (undergraduate) COMBINED!

Let me guess, if they took your advice you would also complain when the standard of US education drops?

This is enlisted person.

We're used to him...

Kudos to you for sticking it out and finishing. I know a lot of people who gave up when the costs for school got to be too high. When I went through school, it was during George HW Bush's presidency and the recession that we had during that time period.

We were seeing tuition increases every semester of about 10%. Add in the cuts in classes offered and it was a challenge getting the classes you needed to graduate.

By my last year in school, I was working 30 hours a week in order to pay for it. Fortunately, I was working in a job where I was able to tell my bosses what hours I was available to work each semester and it paid me well over the minimum wage at the time.

maybe default wasn't the right word, but I assume he's not talking about garnishments (you can garnish for up to 15% for this), but rather the fact that not even bankruptcy can relieve you of student loan debt. No matter what, you're stuck with that debt for life.

What don't you understand about a quarter million dollars in debt? 3 years. That means between me and my wife we would need to make over $80,000/year net while in law school full time.

I worked while in law school a bit 2nd and 3rd year. 2nd year I worked about 12 hours/week and made about $12/hr. 3rd year I made about $16/hr (same w/ the summer in between 2nd and 3rd year). This let me reduce the loans I took 3rd year and during the summer following 3rd year for the Bar exam which many students take $20,000 loans just to get by (includes cost of Bar, and Bar prep, and the increasing reality you'll have no job once the bar is over).

The sad thing is you can't get your degree repo'd to forgive the debt.

Technically I also graduated with no debts. I never took a loan from the college or university. I only did work study. When they refused to give me work study, I borrowed from my folks and I paid them back in short order.
Of course, back then the cost was not tens of thousands per year.

It can be gotten rid of through bankruptcy, but it's a lot harder. Presumably that's the tradeoff for the loans having much lower interest rates and much more flexible payment plans than consumer loans.

Graduated with a small amount of student loan debt at an outstanding interest rate. Finished paying it off a year ago, though I could have paid it off much earlier if I had to.

That is something I don't understand. Why hold off paying something off if you have the money to pay it off? Paying the additional interest by paying it off later is ridiculous.

Sometimes the money you have now could be put to better use.

Depends on what the stock market is doing. I think most student loans have an interest rate around 4 percent. If the stock market is anemic or falling, you're better off paying down your student loan debt as quickly as you can. But if the market is in a period of strong growth, you might be better off investing that money to capitalize on a bull market even if it delays your final loan payoff.

With credit cards, on the other hand, you're almost always better paying off debt before you invest, because the stock market is pretty unlikely to beat those rates.

I don't know exactly what time period actormike's loans covered, but from 2003-07 (see S&P 500 annualized returns), it was probably a pretty good move. It'd be a good move in today's market as well, because anyone who can get in while others have gotten out and while the market is in recovery phase stands to make decent money.

My interest rates were between 2 and 3 percent. I paid the minimum, and directed extra money into a Roth IRA. I suppose you have some kind of problem with that.

I simply think it is stupid to be paying interest on something when you have the money to pay it off. Whether you have a Roth, or not, you are still in debt and owe to someone when you really don't need to.

Even if, by doing so, you come out ahead?

In my case, I've got the friggin' loans in deferment x.x
But, I'm paying off a credit card (which was used to pay for some of those classes).

le sigh, had I known where this course headed, I think I would have charted a different course :s

For a "business owner," KIRK's grasp of basic economics is shockingly bad.

For me, yes. I don't like owing money. That is why I do not purchase vehicles with loans, that is also why I will use the banks money for a month for free and pay off credit cards. For me the only acceptable debt to hold is for a mortgage and property. Why? Because, shelter is a necessity. If I don't have the money to pay off my credit cards at the end of the month, whatever the purchase I am making, is not needed. If I do not have the money to purchase a car, then I don't need that car.

So long as you have debt, and owe someone money, you are not money ahead.

Right, for a non-business owner, and someone who hasn't owned one before, your statement demonstrates an individual who is simply an inexperienced fool and shouldn't be commenting. You see Mikee, one thing that tends to happen to businesses that operate on credit cards, is they end up going out of business. I think it is time for you to head on out and worship your statue of Stalin now.

I went to college at the local satellite campus of MSU over 20 years ago. Back then I struggled to pay tuition when it was $80 a semester hour. I got Pell grants, but they never covered everything.

Now tuition is 3 times that, I just don't see how kids can afford college nowdays.

Really? Because what I'm doing is using my money to make more money.

I wouldn't know. I don't have any credit card debt.

And time for you to take your medication.

Here's another theory - In 2008 I graduated with $95,000 in loan debt. Because in 2009 I made fairly little, I was unable to afford the $1100/month payment to pay it off in ten years. So I put it on a 25 year plan (or consolidate, or income based, whatever). By 2033 is my $95,000 going to be the same as a 2008 $95,000? Put it another way, in 2033 will my $300/month payment hurt as much as it does in 2008? Or will, thanks to inflation and increased wages, $300 be a drop in a bucket?

KIRK logic in action: Because Mike made a decision that kept him paying interest longer but actually resulted in him having more money in the long run, he worships Josef Stalin.

You gotta love the entertainment.

There are good and bad debts, certainly. Anything that makes you money is good debt; anything that doesn't is bad debt--including the wrong type of mortgage, as many Americans have found out the past four years.

I agree with you, but you can find better shit to dog Actormike for than this.

You were thinking when you decided to do this - others don't. And those were the ones that Kirk was probably considering when he made his comment.
Many don't invest that extra money into an IRA (Roth or otherwise) or in 401K accounts. They spend it on partying and other stuff that should not be considered necessities.