Student Loans

Who's got 'em? How much? And what are you doing about it?

Currently have about $90,000 in student loans from a private school that I haven't paid a cent towards since graduating in 2020. With the forbearance continuing, curious if I should take advantage of the no interest period or hope that sleepy Joe makes something happen to forgive a potion in the future.

For background I work at MBB and have a comfortable living but have pushed off making payments to focus on saving and investing.

Anyone have any feedback or advice?

Comments (28)

Most Helpful
Dec 28, 2021 - 3:26pm

Something just rubs me the wrong way about people making over six figures and on a career path to make much more,  asking for their loans to be paid off.  Especially,  when you went to a private institution.  

I mean great for you you seem like in a great position, and probably keep saving while forbearance is occurring. But I would just start saving/investing some cash in a sperate account  with the purpose of paying off your loans  when forbearance is over.   

Dec 28, 2021 - 4:04pm

Don't see the issue here at all. I'm pro-capitalism but we see government bail out or subsidize large corporations all the time - banks, auto manufacturers, big pharma. Yes, I do agree that favorable tax treatment towards these companies incentivizes growth and development (theoretically). The same could be said for college graduates. No matter the income level, if student loans were forgiven, you'd see a massive wave of young people buying houses, being able to afford to have a family, moving out of their parents' homes, just an overall improvement in quality of life, etc. So once again, I don't get why folks are so opposed towards giving normal people a break when it comes to student loans but have no problem giving the farm away to corporations. 

Dec 28, 2021 - 5:12pm

I am not saying that you shouldn't take advantage of them.  Individuals should always use every advantage given to them.  The world is unfair and cut throat.  Now, does that mean I would support student loan forgiveness, not in its current state.  I would actually like to see some more affordable options for education first. 

I guess the other thing that bothers me is that you are not a normal person,  you are already earning in the 1% for your age bracket and if you stay in your career you will be earning well into the 1% for your entire career.  Now granted something I do think about is that you will be paying more taxes and will never be able to recoup the value of those taxes ever again.  So, IDK I didn't come in here and say it immoral or wrong,  It just rubs me the wrong way.  

Dec 28, 2021 - 5:27pm

Urban Mogul

Don't see the issue here at all. I'm pro-capitalism but we see government bail out or subsidize large corporations all the time - banks, auto manufacturers, big pharma. Yes, I do agree that favorable tax treatment towards these companies incentivizes growth and development (theoretically). The same could be said for college graduates. No matter the income level, if student loans were forgiven, you'd see a massive wave of young people buying houses, being able to afford to have a family, moving out of their parents' homes, just an overall improvement in quality of life, etc. So once again, I don't get why folks are so opposed towards giving normal people a break when it comes to student loans but have no problem giving the farm away to corporations. 

John murdered Jack and got away with it; therefore, Lucy should be able to murder Jane without consequence. I see no problem with it.

The government should stay out of the markets. Every industry that the gov't touches becomes more expensive and lower quality; college is no exception. College has become prohibitively expensive because the gov't has provided a loose supply of money for college tuition. Forgiving student debt without reforming the system would not only be a huge miscarriage of justice (future generations taking on the fiscal burden of a prior generation's college education), it wouldn't even solve any problems--it would exacerbate the problem with college costs. We saw this with immigration "reform" under Ronald Reagan in which amnesty was offered without any material reform to the system, thus ensuring another 4 decades of mass illegal immigration and a future amnesty. Forgiving college debt will ensure that costs will continue to outpace inflation and that students in the intervening 30 years will suffer until there is another mass loan forgiveness, and the cycle will continue.  

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Dec 28, 2021 - 4:10pm

It rubs me the wrong way as well because all these folk who attend these private institutions, with a high amount in loans are clearly from a well-off background (because private institutions worth their salt bend over backwards in terms of financial aid for the less fortunate). There's literally no situation where a low-income student can pull out those loans to that degree.

Definitely unfair to people like me and some of those I know who made a conscious effort to save and make money since their early college years and sacrifice certain aspects of the college experience that are only available to those who come from money...all to see people who consciously took on debt get "bailed out." I highly doubt this student loan forgiveness push is going to even benefit the crowd who would've really benefited it -- because they probably were forced to take another path to begin with. 

Nonetheless, I'm in a position whether loans are forgiven or not it's a negligible difference to me so I couldn't care less but that's just my .02. As for the OP, I'll probably just wait until the 0 interest is done and just pay down the minimums. 

  • VP in IB - Gen
Dec 29, 2021 - 10:45pm

My wife and I paid our student loans off long ago, but don't care if student debt is forgiven now. Why?

A) Federal govt should've never gotten involved in student lending in the first place. Why didn't they think colleges/universities wouldn't jack up their prices if people can borrow unlimited amounts of money? 

B) Why is a degree in dance just as much, if not more than a STEM degree? If I was a private student lender, I would definitely underwrite repayment ability. 

C) If the federal government wasn't involved in student lending, I'm willing to bet that student loans wouldn't be exempt from bankruptcy. This would keep private lenders in check.

D) Competition among private lenders would lead to lower interest rate for consumers. We were paying 7-8% interest on our federal student loans. 

E) If unlimited sums could not be borrowed irrationally, colleges and universities wouldn't be able to jack up the price of their services. 

F) It has been said for decades that to make it in America, one must possess a four-year degree. That kind of propaganda has led to students and their families paying whatever price colleges and universities charge. 

G) How is it non-pretedory to let 18 year olds and (their families) borrow tens, if not hundreds of thousands of dollars, at relatively high interest rates, that begins to accrue right away, and can't be discharged in bankruptcy? Literally all other debts-- unsecured credit cards, auto loans, mortgages, you can walk away from with just a hit to your credit report.

H) The vast, vast majority of student borrowers don't make close to six figures with the prospect of making more.

I) If you already paid off your student loans, congrats! You obviously had the means. Also life isn't fair-- deal with it.

J) Taxpayer money is abused all the time. Bailouts, lack of accountability, bloated budgets, etc. Student loan forgiveness would actually help YOUNG people. It's reasonable to assume people with student debt had good intentions. We need a more educated population for a civilized society.

K) Partial student loan forgiveness would save 40 million+ borrowers ten of billions in aggregate. That would surely stimulate the economy. People will save, invest, or spend the money, which are all productive. 

Dec 29, 2021 - 11:34pm

I just think there has to be a better way to solve this than throwing money at the problem,  and you have hit on it a bit, but one finding a way first to reduce the cost of school (through lending or school) and two maybe finding a better way for repayment,  like making every dollar repaid a tax credit.  

Dec 30, 2021 - 2:58pm

I've never seen someone mix good ideas with absolute absurdity in such a way.

Yes, government seriously f*cked up the system for paying for college. There is absolutely zero chance that loan forgiveness will come with reform of the system--you think the Democratic Party has any intention whatsoever of reforming the system that serves its constituency so well?

I would accept an immoral but necessary compromise where we forgave student debt and sent 3/4 of the existing colleges and universities into bankruptcy, but that's not on the table. What the Dems are advocating for is student loan forgiveness + nothing. That's a complete non-starter. That is the single worst reform possibility on the table.

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  • Principal in RE - Comm
Dec 31, 2021 - 11:48am

The idea of fair and unfair is funny. You can make a bunch of arguments either way. Think about the following:

- You're suggesting OP be penalized relative to peers for finding a high-paying job, also not accounting for the hard work it took to get it and maintain it. What about people who choose not to work? What about people who chose lower paying jobs because the money's not important to them, whereas OP has made a declaration that money is important to them (then wouldn't it be "fair" for them to share in the savings)?

- What about people who had to pay off loans in the last 10 years - fair for them?

- Path to making much more? You have no idea what life brings. You also underestimate the work it takes to get there. Kind of saying OP needs to continue to put the work in and stay on that path but those who decided to earn less should get a break

- This all goes into a pool of tax / government budgeting issues. What about the treatment of estates / inheritances? What about billionaires taking advantage of the treatment of assets and capital gains versus W2 income?

- What about the fact that OP had student loans, compared to kids from wealthy families who didn't need loans and had a much easier path to having the job OP has. Now that OP has it, even though there is a broad opportunity for some bump to their position to get them closer to a level playing field, you're suggesting that's unfair. 

Dec 28, 2021 - 5:57pm

Just do what I do and blame the doctors and lawyers for wrecking the chance to buck student debt for the rest of us. If they weren't so darned savvy to be able to vacuum up all that education debt and then their graduation gift from post-grad was a retainer for a BK lawyer to wipe it all clean, that option would still be on the table for the rest of us. But nooooo...then the gov't came in and not only decided that student debt is no longer dischargeable, but also decided to guarantee all the debt  in the process instead (roads, good intentions, a certain destination...) and let these school run up stupid huge budgets on things like NCAA sports empires (we can leave the student athlete compensation debate for another thread) and outsized employment and retirement benefits for faculty because hey, Johnny down the block can take out all the manner of debt to go to school that they want because the feds will back it and guarantee it so we can charge however umpteen thousands of dollars and ain't nothing nobody can do about it! /rant

Dec 28, 2021 - 6:17pm

K-Peezy

these school run up stupid huge budgets on things like NCAA sports empires

the college I went to is planning to move up a division, and while I don't find it shocking how many people support this, it is a little sad. One of my professors was writing a paper actually about how a lot, maybe most schools are financially worse off after moving up a division and only a select few end up earning significant money on it. I like college football as much as the next guy, but at the same time I feel like there could be another way to organize college sports overall so that it's not nearly as expensive.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

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Dec 29, 2021 - 11:03pm

Student loans used to be dischargeable in BK until 1976. The government changed it due to smarter folks taking advantage of being able to bankroll their way through grad school (or underwater basket weaving degrees) on student loans and then simply declare bankruptcy and walk free. In turn, now knowing that the gov't was guaranteeing these funds the universities started turning up the dial on tuition and fees because f*ck you, pay me.

Dec 29, 2021 - 6:52pm

I believe the most financially sound decision would be to save what you would have paid and invest it in something that's safe and yields a bit more than your loans. All else equal, it's better to have 10k in debt @4% with 10k in safe investments even if it still earning 4% due to the flexibility that offers you (you have a few K in cash that you can use if really necessary). 
 

Taken a step further, you should delay paying anything above the minimum and stretch out the payments if you can invest the difference for a long term in equities or something higher yielding.

That's my current strategy but I understand people who like to have no debt and the peace of mind that brings you.

  • Analyst 1 in IB-M&A
Dec 31, 2021 - 2:14am

I had $93k but I paid off $20k in 2021. I'm just planning to use my bonus to pay off a large chunk and travel with the rest. I figure that yes you can get better returns in equities, but paying off my student loans, I instantly get that 3-5% interest rate. I still have enough to invest in index funds as well. Plus the peace of mind that it will bring me when it's all over.

Dec 31, 2021 - 10:37am

The thing that no one wants to talk about when student loans come up is this:

  • colleges are not increasing your earnings potential well in excess of the value of the loan + 8% interest
  • students are choosing majors that do not add value to their earnings well in excess of the loans + interest
  • the average American student spends college drinking/smoking/tryna scheme instead of making the most of whatever college/education they choose

We're fighting over the wrong thing. American Higher education needs to be closely re-examined.

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