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Primer For Indebted Students: Here Are Your Options
Last week we brought you the US government’s official message to heavily-indebted students.
In short, the Department of Education is promoting so-called “Income Based Repayment” which allows borrowers to make monthly payments based on their disposable income. In the event a borrower cannot afford to service his or her debt — which is exceedingly likely in an economy characterized by what Moody’s calls “high unemployment rates for recent graduates” — some debtors will be allowed to count payments of $0 towards the 300 “eligible payments” necessary to have the balance of their debt forgiven. In other words, if you don’t make enough money and are willing to wait 25 years, your student loans will be written off at the expense of the US taxpayer.
So that’s one option available to 2015’s graduating college seniors who, as we reported earlier this month, are the most indebted college class in the history of US higher education. There are other options available as well including (gasp), repaying your loan in full and on time, but as the following graphic from the government shows, offloading some of the burden is always a possibility:
Do you have student loans? Calculate what your monthly payments will be: http://t.co/5y2HRfqkfl pic.twitter.com/3AMLzjzmy9
— Federal Student Aid (@FAFSA) May 24, 2015
See the fine print on the graphic shown above. This repayment schedule assumes a "family of 1" in Alabama and a loan balance of $26,900.
The first thing to note about those assumptions is that when it comes to rentals, Alabama ranks fairly low on the list in terms of how expensive it is to pay rent and as we've seen, America is increasingly a nation of renters.
Second, the average amount of student debt for a senior graduating in 2015 is more than $35,000, some 30% above the amount factored into the government's equation shown above.
So if you happen to live in a state where housing is far more affordable than it is in most other states and if your loan balance happens to be 30% below the national average, you can pay off your student debt under an IBR plan in only 240 months with a cost to the US taxpayer of only $2,355.
Now let's look at what the cost to the US taxpayer under IBR would be if you lived in say, Illinois (which is by no means the most expensive place to rent in America) and had a family of three including two parents, each of which carrying the average loan balance of $35,000 and whose combined earnings match the national median household income of $51,000 (in other words, a far more realistic scenario than the hypothetical single guy in Alabama):
Suddenly the cost to taxpayers over the life of the loans jumps by 650% when the assumptions are adjusted to reflect the 'American dream' of a nuclear family, a more realistic figure for the cost of housing, and the actual national average for graduate debt.
Consider that, and consider that if the unemployment rate edges up over the coming years, the US will be looking at some $3.3 trillion in student loans.
Draw your own conclusions.
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Pretty sure old age is a valid excuse for not having to pay them back.
Death is the only surefire default.
Nope. Debt is eternal when it's federalized.
I went back to school and graduated in 2013. I will finish paying them back in 2038. Yes, I am the one guy that is current. Glad to help.
< You and me.
< The man behind the tree.
Who will eventually pay for this mess.
"Death is the only surefire default"
Not necessarily. They will steal it from your spouse and kids if you happen to die before you pay it all off. Probably even your grandkids. Once you marry a debtor, their debts become YOUR debts.
Predatory Payday Loans = Money for a lien on your car.
Federal Ass Fuck Education Loans = Money for a lien on your life.
Give up either to have the loan forgiven, now who is the real predator here?
Only for the suckers among the living.
Get the government the hell out of the student loan business. If loans were given based on ability to repay the system would work and tuition would be MUCH less. Currently, Hillary II can get her "degree" in Womyn's Studies while borrowing $200K, not having any job prospects (OK, she/he/it will get a high paying gubmint job) or capability to repay after her nine years of school.
Right now the "student loan" system is simply a HUGE wealth transfer to nut-job teachers and teacher unions - many of whom are government employees with multimillion dollar pensions waiting for them.
End the government (socialized) student loan system and allow the free market to work. Tuition prices will plummet and degrees of value will be earned. A few spoiled rich kids will continue to get degrees in art history then do drugs for the rest of their lives while living in their parent's basement or second home.
Once universities figured out kids are stupid enough to take out ANY amount of loans to go to college, they jacked the price of tuition sky high. And its going even higher. High school graduates have no clue what an amortization schedule is, or how interest can impact their lives. They think in terms of payments not total cost. I could put you in a Lambroghini for $300 a month, might take you your whole life to pay it off at triple the original cost, but I could do it.
whatever, max out student loans, live the good life for 5-7 years, do the minimum to stay in school, sleep till noon, smoke pot, have unlimited sex. Its a dream. You never repay anything. Work the system, get food stamps, bitch all time, threaten to sue everyone. America the beautiful
Two words: Clawback.
Shit. One word.
Two words: Nail gun.
Or better yet just "gun".
Thank the Lord Wal-Mart gave all the college grad hamsters a raise to poverty wages !
all the kids who get good jobs out of college rarely have loans..they come from money or were on scholarships
the working class kids who thought they would get a degree and become an accountant at the local hvac repairshop are now praying they'll get to be the helper if the mexican immigrant doesnt get the job to clean up copper pipes!
Its not what you know, its who you know. And I don't personally know Mr Yellen, Greenspan, Bernanke, Stanley Fischer...
It's not just who you know - it's who you are as a person. Working class people: dress, manners, taste, values, outlook on life (chip on shoulder), etc. generally don't fit in with the upper middle class.
And that's the 'scam' in a nutshell. Even if Billy Bob by chance does make it into Harvard as opposed to the local third rate college: he still won't be accepted.
This is true.
that rent map says there are a lot of homeless minimum wage workers or why it is easier to go on disability or welfare than work for a living.
No. It says that it takes a min wage worker ~1.5 weeks to earn enough to pay rent for a nice 1 BR apartment. I have NO problem with that. I don't see why anyone else should either. Unless you have children (which you shouldn't with a min wage job), you should have it pretty comfortable in this country doing the easiest and least skilled jobs.
BTW, learn to read.
Is it just me or does it seem like Governments around the world have been setting the system up for a system-wide debt jubilee?
Its not just you.
Should i be loading up on debt then?
Option 1. Take up Arms.
That never works.
At least it has the novelty of generating new and improved problems!
...and some broken windoze. Kruggybear approves.
Accept all offers of Credit Cards. Pay off student loans with them and then file BK.
I have been upvoting the shit out of you on this thread. Maybe you are as smart as you claim to be.
Just don't pay jack shit and when you go on SS (assuming its still there) the law says the maximum amount the govt can garnish is 15 percent. 15 percent of ZERO is ZERO/
Why is it that no matter how badly the banks screw up, it's always the taxpayer who takes the hit? Long ago, the directors of a bank had their personal fortunes at risk, using their own capital to help support the bank's balance sheet. Now, promises that cannot possibly be kept are bundled and sold as "assets," and the bankers take their fees and walk away, telling themselves they are doing God's work. Sickening.
That sounds anti-semitic. Don't you know the chosenites are here to do gods work?
My girl makes minimum wage, $125k in debt.
Adjusted gross income is $16,000 or so. Feds want $600 per paycheck from her, so that leaves her with roughly -$150 per paycheck from the state for living expenses. Oh and student loans can't be forgiven except through death. At times I think the only reason the Government hates payday loans is that they are competition for the most predatory loan vendor.
Student loans CAN be forgiven if you can prove disability.
In fact if you can show you make below poverty wages you can get it down to 5 dollars a month.
Take a good look at this website
https://www.myeddebt.com/
Why the HELL did you let your girl do that?!?!?!?! $125K in debt for a "degree" that earns her minimum wage? What morons were advising her? If it wasn't you, sue the crap out of them for horrific advice. If it was you... ugh - go apologize to your girl and do what you can to make it up to her.
You better learn the laws.
The FEDS cannot take more than 15 percent of take home pay. and if you make below 750 dollars a month they cannot take ANYTHING.
Read the laws and use Google. Read what other people say.
Off-hand, is that gross or net?
I pay a shitload of taxes and some child-support on top of that... "on-the-books" my net is fairly terrible...
'Oh and student loans can't be forgiven except through death'
Better than Sovereign debt, better than the Fed (both of which can default) this is triple A* rated with a fucking cherry on top debt, the last thing the financial system wants is this debt paid off (destroyed).
Student debt is the finest collateral money can buy. (just lodge it at the Fed and they will give you 119 cents on the dollar)
Huge Growth in Pay-Day Loan Companies. Sponsorship and Advertising.
Who needs a payday loan at 1255%? The latest i sawrrrr on TVEEEEEEEEEEEE last week.
Now even Greece secured 100 times a better deal than that and can't keep up the payments so what chance does Joe Loser have?
The government promised to ' lookie ' into it when WONGA LOANS were charging 600% APR.
Instead of the jugular they've gone for Joe's testicles.
How's it hanging Joe? Long and loose and full of juice.
@fafsa Am A Zambia Male Citizen. Am Askin If I Can Hav A Loan To Study In USA.
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Reeeelaaxxxx! The black messiah will right these loans off 2 months before he leaves the white house.
Or, go to work for the government and after 10 years the debt is forgiven.
Well I have no sympathy for those students that lumber themselves with stupid amounts of debt for 25 years in exchange for a worthless degree.
Read the rules and game the system (that's what the rules are for, you don't need a degree for that))
In the UK entry to University was restricted based on academic achievement, if your grades were good enough then all your fees were paid and they gave you enough money to live on as well.
Then they moved to the 'Let Anybody Go to Uni' as long as they pay for it (guaranteed loan acceptance) model.
Because of the transition period, I managed to get 5 years at Uni getting both grants and loans (double bubble), 3 years spent on a low wage and my loans were written off (grants are not repayable).
The rules are written as they are for the benefit of the elite but there is nothing stopping those who read and understand those rules from taking advantage, the loopholes are available to anybody who wishes to avail themselves of them.
There are a 1000 ways to skin a cat, only 5 get a subsidy and only 2 of those make a profit.
Watch what the rule makers do, not what they say.
All you loan experts on here that keep saying loan is forgiven upon death, I don't think your correct. First depending on the type of loan, there will probably be a cosignee. Upon death the loan is now theirs -- and if they are lucky the loan does not churn (fees and a higher interet rate).
If there is no cosignee then next the immediate family can be chased down, and probate will be held up as any debts for student loans will come out of sales of any property, savings, or accounts that are liquidated.
After that, and depending on the type of loan, I beleive the ZOG will pay the lender any or all the balance of the loan and it will go onto the Federal Debt and anyone who is lucky enough (stupid enough) to be working and paying taxes will take care of the bill.
After that the inflation tax Mericans will absorb anything else.
Merica, The failed ZOG corrupt state paid for by Miltary and Bankster worshiping suckers. Rock on.
These are just numbers on a balance sheet, it is not like we are going to run out of numbers anytime soon.
Try convincing people that 'money' is just a made up concept though and they get quite defensive.
Push the point and they will get violent.
People are seriously fucked up.
At least with the GI Bill, they put your ass to work and a borrower had to risk his life. Now, the borrower can just wait it out.
Oh yea, be a leader in the next victim class, student borrowers, get on TV, bitch and complain about how you didn't understand that the money was loan, you thought it was FREEEEEEEE.
This is terrible! Why should taxpayers have to pay for the irresponsible, self entitled, spoiled, lazy new generation of students who went to college to party, or majored in a useless degree, or did not graduate at all? For those like myself who have paid off our school loans the long and hard way, this is a slap in the face! And how does this teach the new generation anything about responsibility?? It's like saying, don't worry kids if tomorrow you fail someone will be there to bail you out. Life is not like that and students should not get a free pass on paying after they VOLUNTARILY made the choice to borrow money. And forgive me but there is such a thing as community college which for the first two years can save students a ton of money in their college career. Responsible hard working people, should not have to pay for the mistakes of careless students who need a reality check in life. As if welfare amd healthcare were not enough, now this!
This is one of the most ridiculous yet effective ideas. To sell money and get more in return. Really, lenders are amazing people. The sad part is that the majority of students taking loans don't need them. They basically pay for a degree and do absolutely nothing for four of five years. It is a lot better to get some work experience and taste the real life first in my opinion. Latter they can get custom essay writing help to refresh their knowledge and go for higher education if they really need it.