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#2224714 - 10/29/19 07:41 PM Re: Random Thoughts #Just Jay
praBSA Offline
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Originally Posted by #Just Jay
And from which consumers will that other 1.8 trillion come from to make you and others whole?

What are the effects to banks, government and other consumers who ultimately foot that bill through higher taxes who will no longer have that money to spend? The debt just doesn't go way. the money has to come from someone and somewhere. What else does the country go without then to make your life easier?



1 less war in another country? I don't know. When's the last time we didn't have a budget deficit? 2001? Seems like the new normal, what's another couple trillion. I believe one of the candidates out there suggest a new speculation tax.

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#2224716 - 10/29/19 07:52 PM Re: Random Thoughts Peepers
#Just Jay Offline
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Cheeseheadland
I am as a much of a Democrat as they come, but I don't know if you terrify me more as a potential employee or a potential borrower.

I still have yet to see you state anywhere where you have any personal responsibility in the decision making in any of this. Is it really just everyone else's fault?
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#2224718 - 10/29/19 08:06 PM Re: Random Thoughts Peepers
raitchjay Online
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OK
Again, i hate to sound so ignorant of these loans, but this discussion has made me curious......

How does one borrow say $50,000, make minimum payments, and end up owing $200,000? Are these student loans designed to be negatively amortizing? That seems.....predatory. Am i totally misunderstanding the concept?
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#2224719 - 10/29/19 08:08 PM Re: Random Thoughts Peepers
raitchjay Online
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OK
Maybe i'm misunderstanding.....i took the line "now your loan is accumulated to $300,000" (probably paraphrasing) to mean that you borrowed much less than that and it grew to that figure.
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#2224720 - 10/29/19 08:09 PM Re: Random Thoughts Peepers
raitchjay Online
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OK
(please know.....i'm asking these questions trying to understand....that's it)
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#2224722 - 10/29/19 08:24 PM Re: Random Thoughts praBSA
SeekingKnowledge Offline
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Originally Posted by praBSA



This isn't an anecdotal/made up story, this is a true story, far from fictitious. It's absurd you suggest that one's choice in wife is the husband's fault and is responsible for the husband not being able to get out of debt. Just a life of bad choices I guess. Come up with a workable scenario to pay $2100 a month in student loans and I will gladly listen, its not possible.


You have misunderstood my post. This implication regarding a choice of spouse was not in my post, I'm sorry you understood it that way. Your story is far from hopeless, even though it may seem that way from your side of it. My offer for help was genuine. I would join the chorus above and direct you to an expert such as Dave Ramsey.

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#2224725 - 10/29/19 08:30 PM Re: Random Thoughts raitchjay
SeekingKnowledge Offline
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Originally Posted by raitchjay
Again, i hate to sound so ignorant of these loans, but this discussion has made me curious......

How does one borrow say $50,000, make minimum payments, and end up owing $200,000? Are these student loans designed to be negatively amortizing? That seems.....predatory. Am i totally misunderstanding the concept?


The government provides a multitude of repayment options which include a 25 year income based repayment plan. In this plan payments are made based on a set percentage of your income. The payment can be below the minimum interest payment each month and therefore one can make the payment and still see the balance rise. After 25 years, whatever is left is written off (but declared as income to the borrower for tax purposes). I believe the fact that your balance may not actually reduce is disclosed, but I cannot speak to that for sure.

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#2224727 - 10/29/19 08:35 PM Re: Random Thoughts Peepers
raitchjay Online
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Thank you SeekingKnowledge. In that scenario, it seems like a moot point (at least to the borrower) that the principal balance is rising. I mean....if you'll never have to pay off the entire balance, what does it matter (to you)? (And yes...i do understand the tax implications, but that is still a discount off the actual balance.)

Thanks again.
Last edited by raitchjay; 10/29/19 08:37 PM.
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#2224734 - 10/29/19 10:04 PM Re: Random Thoughts Peepers
HappyGilmore Offline
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Pulling people out of the ditc...
Quote
Let's take your living off of $50k scenario. How does that happen? Show me a real budget.


many people live well under $50k per year, often with both parents working. They don't take extravagant vacations, their kids don't have cell phones, they own an older car that is paid off, they bring their lunch to work, rarely eat out, don't have cable or only basic cable, and many other things that let them keep their expenses in check.

When MsGilmore and i got married (mid-80s), combined we made less than $20k both working full time, while i was also in school full time, oh, and we quickly had a kid (oops). I switched to working nights as it gave a 10% shift differential, and let us not have child care expenses, and then i started a part time job in the evening before going to my "real" job, and on weekends worked a 3rd part time job. got rid of 2nd car and we shared 1. yeah, it sucked, big time sucked. i lived in a state of perpetual tiredness, wife and I didn't see each other much, and i volunteered for every new task and took every crappy assignment offered at the bank trying to learn as much as possible so i could move up and earn more. it didn't happen overnight, but it did happen. Then i was able to quit part time job #3, and eventually #2 as well.

any overtime i earned went to build a savings, meager that it was. we didn't have cable, broadcast TV only, lived in some pretty interesting apartments that we could afford, rarely would eat a meal out (maybe once a quarter and it was usually something inexpensive like pizza or mexican restaurant). we shared a cell phone, whoever had the car had the phone (thing bag phone that plugged into cigarette lighter).

can it be done? certainly, but it takes sacrifice (keeping up with the Joneses was always in MsGilmores mind), focus, determination, and strict budgeting. Any deviation, or desire for deviation, was a discussion ahead of time. we had a ton of setbacks, we failed a lot, more than once i had to call Bank of Dad for help to get us on track (and he always got paid back). to this day, when payday rolls around, bills get paid first, savings gets paid 2nd, extra payments are done 3rd to reduce any loomg term debt, then we see what we have left in the budget for frivolity for the rest of the month.
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#2224745 - 10/30/19 11:37 AM Re: Random Thoughts Peepers
praBSA Offline
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Let me rephrase. Show me a budget of living off of $50k pre-tax where $2100 post-tax is going to student loans monthly. That nets you LESS than minimum wage from the get go.

Yes there is some personal responsibility. I think the gripe is that every other consumer debt in this country can disappear through bankruptcy. Student Loans are not unique. There are other unsecured debts available out there. Our country was built on escaping the debt from the powers that be. That is why UNIFORM bankruptcy laws are at the TOP of a long list of legislative powers in the Constitution. No one has ever been able to challenge this constitutionality because let's face it, student loan borrowers who need the protections of it, are broke.

Let's face it, 12 years into repayment, there's no catching that debt at this point. So why pay anything other than IBR? I think the smarter move at this point would be to try and plan to be insolvent the year those taxes come due so they do not have to be paid.

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#2224746 - 10/30/19 12:00 PM Re: Random Thoughts Peepers
edAudit Offline
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"Here's another scenario to consider:
17 year old child with a single mother with two jobs and no father figure their whole life. Child is told by counselor in high school that college is the only way to go."

The issue could be described in Twofold

1) IF a student with these potentially negative issues is not smart enough to realize that they need to pay the money back at some time they should are not smart enough to go to a institution that charges 50 to 70k a year and should not have been accepted academically. PS single mom is no excuse I know of some wildly successful people that came out of a single parent environment. Two of my friends without a college degree have consistently made more money than me. One grew up from a single mom (and now is collecting retirement at my current salary) and the other had zero college and has exceeded both our salaries.

2) the school district is at fault for hiring a moron for a counselor.
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#2224747 - 10/30/19 12:04 PM Re: Random Thoughts Peepers
edAudit Offline
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For what it is worth I worked full time and went to school full time and took out loans. My first car cost $200. and I needed it to get to school and it and lasted 2 years. Second car was $100. and lasted eight years while I paid back my loan and then a bit more while I established myself.
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#2224760 - 10/30/19 01:26 PM Re: Random Thoughts Peepers
HappyGilmore Offline
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Pulling people out of the ditc...
heard on NPR this morning that the CFPB is trying to expand their powers to investigate student loan companies...lot's of speculation what this may mean, but not a lot of hard info provided.
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#2224768 - 10/30/19 01:56 PM Re: Random Thoughts Peepers
hmdagal Offline
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I suspect that if student loans could be discharged in bankruptcy, they would be priced to reflect the additional risk.

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#2224772 - 10/30/19 02:06 PM Re: Random Thoughts Peepers
praBSA Offline
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Or not given with as much frequency, which would in turn lower the costs of tuition and aid in smarter decision making when choosing a school.

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#2224777 - 10/30/19 02:55 PM Re: Random Thoughts Peepers
edAudit Offline
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Actually it would increase cost of tuition as there would be fewer student to make up the economy of scale. A good portion of costs are fixed (facilities, administration costs, teachers pay, retirement costs...) (.)

Scholarships at school level would also increase

Also fewer alumni would mean less donations to the school
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#2224778 - 10/30/19 03:08 PM Re: Random Thoughts Peepers
Inherent_Risk Offline
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More loans/subsidies = More students = higher demand = higher prices
Less loans/subsidies = Less students = reduced economies of scale = higher prices

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#2224799 - 10/30/19 05:12 PM Re: Random Thoughts edAudit
praBSA Offline
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Originally Posted by edAudit
Actually it would increase cost of tuition as there would be fewer student to make up the economy of scale. A good portion of costs are fixed (facilities, administration costs, teachers pay, retirement costs...) (.)

Scholarships at school level would also increase

Also fewer alumni would mean less donations to the school


It worked in the past? Starting about 20 years ago, maybe more, the rising cost of tuition has far outpaced inflation. We could reign that back. Since the government is backing loans and loans have unfettered access, schools have been much less inclined to keep costs in line. Universities are sitting on stockpiles of cash - tens of millions of dollars - and keep adding every year. Lowering the costs of private colleges would make them attractive to those whom might otherwise be inaccessible because they are educated and don't want to take on such high loan amounts and rates.

I agree Inherent, I believe studies have shown that less state funding is actually one of the top drivers for the rise in tuition at public colleges.

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#2224806 - 10/30/19 06:10 PM Re: Random Thoughts Peepers
MB Guy Offline
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Way, way south.
Why would we put caps on tuition at private universities, when there are state subsidized colleges?

I empathize with your situation, but I can't condone putting the bill onto innocent taxpayers who work every day and do what they need to do to feed their families, keep a roof over their heads, and pay for gas to get to and from work. Not sure why anyone would think that it's their issue to pay for the loans someone took independently and of their own volition.

I think maybe some reduction in interest rates would be a reasonable start to addressing this situation, but as I stated, I do have difficulty with the thought process that it's the average taxpayer's (who may or may never have attended college, who may have their own kids in school now that couldn't afford a high-cost university) responsibility to pay for the tuition of someone who made questionable decisions in their education and who now expect to be bailed out.
Last edited by MB Guy; 10/30/19 06:43 PM.
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#2224807 - 10/30/19 06:25 PM Re: Random Thoughts Peepers
edAudit Offline
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Why not MB.
This way I can recoup my lost investment in Thearnos, World-com and Lehman bros. next
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#2224811 - 10/30/19 07:01 PM Re: Random Thoughts Peepers
HappyGilmore Offline
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Pulling people out of the ditc...
Hey Ed - my sister lost a ton in worldcom, she worked their since inception through shut down...significant 7-figure stock value "poof" up in smoke
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#2224814 - 10/30/19 08:04 PM Re: Random Thoughts Peepers
MB Guy Offline
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Way, way south.
That hurts Happy, that hurts bad.
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#2224822 - 10/30/19 08:52 PM Re: Random Thoughts edAudit
Grapetastic Offline
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Originally Posted by edAudit
Actually it would increase cost of tuition as there would be fewer student to make up the economy of scale. A good portion of costs are fixed (facilities, administration costs, teachers pay, retirement costs...) (.)

Scholarships at school level would also increase

Also fewer alumni would mean less donations to the school


Most universities dont work off of economies of scale. The professors are paid for by charity or endowments. Less students would actually reduce the price of tuition by decreased demand.

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#2224824 - 10/30/19 08:59 PM Re: Random Thoughts Peepers
edAudit Offline
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edAudit
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You are here
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#2224842 - 10/31/19 02:40 AM Re: Random Thoughts Peepers
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In this neck of the woods a lot of high schoolers and college kids take online college courses whenever possible. They rack up a lot of basic course credits at a fraction of what they'd pay at a brick and mortar college. They attend classes that give the most bang for their buck.

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