The Dr has 1/2 million in student loans!

[Calgary_Girl]

Here is one young women who owes $100k and only makes less than $50k.


placing-the-blame-as-students-are-buried-in-debt: Personal Finance News from Yahoo! Finance

Uh, she got a degree in Religion and Women's Studies? Exactly how much money did she think she was going to make after finishing school? I'm sorry but if you are going to have that much in student loans, the least you can do is research the job market BEFORE you pick your discipline and pick a discipline that you enjoy AND that is in high demand.

DH had quite a bit in student loans when he finished but at least his undergrad degree is in Economics and he has an MBA with a focus in Finance (both of which are in high demand in our local economy).

 

[Ronnieboy]

I saw this article earlier today. I can't tell where the tone of the article is going. Part of it says, "yeah, I realize I have huge student loan debt, but I'll find some way to get to paid off, but..." -there is always a but- "someone should have stopped me from getting this far in debt in the first place. Why didn't Citi stop me or the financial aid office?" Someone else is to blame.

I'll just be a professional student for the next 5 years and keep it in deferment. That will make it go away?!?

 

[Gumby]

Uh, she got a degree in Religion and Women's Studies? Exactly how much money did she think she was going to make after finishing school?

As the article says, there was a substantial amount of naivete on the part of both the girl and her mother. This may be a particular problem where the child is the first family member to go to college (although I could not tell if that is the case here).

 

[jIMOh]

She makes monthly payments on those loans—now $209,399—for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.

The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.

I made 39k coming out of college and had about $80k in debt (14k over 6 years of undergrad). My payments were about $800/mo.

Based on the numbers alone, I do not sympathize with her at all (I did not read the article). I paid my loans off in 8 years or less (most had 10 year repayment plans), and if this lady finds 5%-10% of the payment balance, paying them off until age 70 won't happen (meaning pay $100 extra per month, about 10% of payment, and those loans will be gone MUCH sooner).

I rounded up all my payments (sent $200 in when payment was $190, sent $100 in when payment was $95) and it was amazing how quickly the balanced dropped on all my loans (about 10% interest rate was what I was paying).

If she stops complaining, she can pay down that debt with ease. How many here paid down a $500k mortgage, and how long did it take?

 

[skyvue]

As the article says, there was a substantial amount of naivete on the part of both the girl and her mother. This may be a particular problem where the child is the first family member to go to college (although I could not tell if that is the case here).

Somebody should have told this little diva that she didn't need to go to college at all to work for a photographer! There are plenty of better paying jobs than that which require no degree!!

 

[FUEGO]

As the article suggests, maybe she should have considered a great school in the SUNY system.

A good friend of mine followed an eerily similar path as this girl. Seduced by the ivory towers, he went to NYU and earned a Masters in Creative Writing or something like that, and also incurred large student loans (big five figures from what I gather). He is of course not using his degree (he's in business/marketing now), and pissed that he wasted all that time, effort and money (and now is in debt) just to get a frivolous degree from a very expensive school, when he had a great state school available at a fraction of the cost (in a lower cost of living area to boot).

I guess it is hard to resist the appeal of hanging out in Bohemian Greenwich Village after classes are over for the day.

 

[W2R]

Maybe she would be better off if she had chosen to work full time while taking a full load of classes, something that many of us have done in order to get through college. Then after graduating, she could ease right into moonlighting until those (now smaller) loans were paid off.

For some reason, people just seem to think that moonlighting is just out of the question these days, though many of us did so years ago out of necessity and managed to survive the (unpleasant) experience.

 

[haha]

I just read the article. I think it correctly apportions blame. I don't condemn her statement that she does't want to spend the rest of her life trying to pay for an education that she would gladly give back.

People on this board are extremely disciplined, and make choices that many more average people absolutely could not. She was a sheep, she got into an exposed position and the wolves ate her belly.

College is the most overmarketed service there is. It is really a conspiracy to be sure that students and unsophisticated or besotted parents do not understand reality.

And college can be a real hurdle to sane family relations. Try to tell the average emotion driven head-strong high school girl that she shouldn't spend $40,000 a year to study Women's Studies. Maybe it gives Dad cold chills, but maybe Mom feels that her husband has suffocated her and squelched her voice with his over-controlling nature. So maybe she supports daughter's choice as a vicarious rebellion of her own. Or maybe Dad is wrapped around his daughter's finger and doesn't want to disappoint his little darling. Or maybe as in Cortney's case Dad is dead and Mom is partly motivated by what "Dad would have wanted for her"

My sister's marriage broke up in part over her husband's flat refusal to pay tuition or co-sign loans for a daughter's journalism education. My niece is a very talented writer and she graduated with an excellent record from a top Midwestern journalism program, but she never could get a well paying job doing that, and now she makes a pretty good salary, with benefits, managing a dry cleaner. She keeps getting promoted to busier and busier locations and in spite of having over $45,000 in private loans she is doing OK and making some headway on her loans. (Dad wouldn't fill out the federal aid form). At age 24 she continues to live at home even though she would love to be farther away from her mother. She is a realistic person, but she absolutely did not ever get a good explanation of what she was gettig herself into with the loans. Many people really are just not interested in personal finance, or any other kind of finance. I think I could have pointed out the flaws in 30 minutes, but then I would be stepping into an already living family conflict. Not for Ha!

My sister is not a bad or immoral person, she is just an emotionally ruled idiot. But also a head-strong and arrogant one. I think her former husband did the best thing he could possibly do for himself and his family of 4 children when he left her. You can't let an unrealistic and deluded person sink the family ship, but you also often cannot reason with or compromise with one either. She thinks that considering money is immoral or impure, which figures as she has always been supported by some man or other.

Our education system is jsut one more example of the giant ball of dysfunction
that we call America. We have been maipulated into a place where our secular religion of non-judgmentalism means that every idea, or delusion presented as an idea, is as good as any other one, as long as none of these ideas violate some taboo on the ever changing PC Taboo List.

No wonder many things do not work.

Ha

 

[Orchidflower]

I've got a good one for you: Friend's daughter gets undergraduate degree at Yale in archeology, grad degree at Harvard $$$$$(paid for by mom and dad). Gets out and can't find a job in her chosen field...because what she degreed in is a job used by museums only...with volunteers!

Met a lady this week at the auto dealer waiting for the old oil/lube/filter job. We start talking, and she tells me her son has a degree in some fancy-type of engineering (sorry, engineers here, but I have no clue what it was), then gets a Masters in some advanced engineering--along with an MBA = 3 degrees$$$. She goes, "but guess what he does now?" He runs a sailing boat excursion company in Key West, loves it and is happy she said. She and I both had a good chuckle over it. She said he was making money, so...."whatever" was her attitude. I agree.

(Is there some degree like biochemical engineering? That's what just popped in my head.)

 

[Texas Proud]

Two stories that I have... that are at the extremes...


the first one was a blue collar worker who was in the navy for many years... his son was graduating from HS... so dad asked 'do you want to go to college?'... his son said he did... so dad held out his hand, shook his son's hand and said 'good luck with that'.... (I heard this from the dad)


This one is from when I first started to work.. I worked at one of the big accounting firms... there was a story about this guy who started to work in the tax dept... his first day they gave him grunt work, which he did not like... went to one of the partners and said he should be meeting with clients and doing higher level work... was told not just yet... so he quit...

He want back and got a law degree... worked for awhile (a couple of years is all I got when I asked)... and decided that he did not like that..

SOOO, he goes back and gets a medical degree and becomes a doctor... I am told he did stick with this...

We used to joke that he was the only doctor who could defend his own malpractice suits and do his own tax returns

I understood his family was rich, so it did not matter about all the wasted money...

 

[ronocnikral]

time out...so you are telling me that I can't travel the world, take some classes, get a few letters after my name and just get paid 6 figures without having to pay for it?

I have little compunction for this girl. it was her choice and as my pappy told me all the time - you made your bed, now lay in it.

i graduated in 2005 with $42k in SL debt. It all got paid off a year ago. My starting salary was $65k and has balloned over the 6 figure mark in 5 years.

here's the problem, kids skate away from home chasing their dreams of fixing the world. get some crap degree in something lame like photography or history. get out in the real world and figure out working at starbucks doesn't get them into a fancy car, big house and no frills life they see on TV. So...they then go get a master's degree, digging themselves even deeper into debt. a couple years later they pop out of the machine thinking they are entitleted to even more now, because they are more educated. well, teaching 3rd grade with teach for america is starting to wear on them, after all, they are well educated and should be paid more. so now they go to law school thinking they will be ballin' and rolling on 24's if they can become a lawyer. they get out of law school and find out there are lawyers every where and it doesn't pay $1m/yr like they saw on TV. They settle down with their decent salary and are pissed off b/c they are so educated and not making what they are worth. So...they attack the student loans, whine, bicker and complain about how much it is.

my cousin wants to become a patent attorney. he's all pissed off b/c he farted around in undergrad and took 6 years to get his petroleum engineering degree and came out a couple years ago when it was impossible to get a job. so...now he has some crap job with a service company. i asked why he was going to law school. he told me he has always wanted to be a patent attorney. I told him he already has an engineering degree, buy the patent bar study program off of ebay for a couple hundred bucks, study for a couple months, drop a few bills on the test and pass the patent bar. even if you had to retake it, you could still pass the patent bar for under $1000. why go to law school, if all you want to do is file patents? he wants the $40,000 version I guess. not to mention if he would get himself together he could make slightly less than a patent lawyer doing petroleum engineering, no schooling required.

i don't feel too sorry for these people. while it's good to have dreams, a little reality check is nice.

 

[Orchidflower]

ronocnikral, that hits it on the head totally!

 

[Emeritus]

t
my cousin wants to become a patent attorney. he's all pissed off b/c he farted around in undergrad and took 6 years to get his petroleum engineering degree and came out a couple years ago when it was impossible to get a job. so...now he has some crap job with a service company. i asked why he was going to law school. he told me he has always wanted to be a patent attorney. I told him he already has an engineering degree, buy the patent bar study program off of ebay for a couple hundred bucks, study for a couple months, drop a few bills on the test and pass the patent bar. even if you had to retake it, you could still pass the patent bar for under $1000. why go to law school, if all you want to do is file patents? .

An enrolled agent can file patents, but is not a substitute for being a patent attorney.
Its similar to the difference between being a nurse practitioner and an physician. Both useful professions, but by no means the same. I have students who have done both.

 

[plex]

my cousin wants to become a patent attorney. he's all pissed off b/c he farted around in undergrad and took 6 years to get his petroleum engineering degree and came out a couple years ago when it was impossible to get a job. so...now he has some crap job with a service company. i asked why he was going to law school. he told me he has always wanted to be a patent attorney. I told him he already has an engineering degree, buy the patent bar study program off of ebay for a couple hundred bucks, study for a couple months, drop a few bills on the test and pass the patent bar. even if you had to retake it, you could still pass the patent bar for under $1000. why go to law school, if all you want to do is file patents? he wants the $40,000 version I guess. not to mention if he would get himself together he could make slightly less than a patent lawyer doing petroleum engineering, no schooling required.

Oh man, cannot help but chime in on this. As Emeritus said, there is a huge difference between an agent an attorney, it is like the difference between a lab tech and an engineer, faster degree vs. no mobility and much lower starting pay, same field.

That said though, petro engineering is probably one of the worst backgrounds for going into patents, he is going to really have to make up for it with law school grades. This doesn't sound promising if he took 6 years to get an engineering degree, which is near the time limit for him failing out. I knew two guys like this, and they got their engineering degrees with low 2.0s after 6.5 years, and I was surprised they managed that even after retaking 1/3 of their classes. There is also a very wide range in difficulty between engineering degrees (the guys I knew were taking medium+high difficulty ones at least), which is why there are a lot less people with the more desirable ones for patent law.

 

[ronocnikral]

i recognize the difference between a patent attorney and a patent agent. my cousin said all he wanted to do was file and write patents.

i would at least get the patent bar under my belt before jumping into the law school thing...

 

[plex]

Probably true, it is like jumping into becoming a doctor when previously you were doing construction work. Completely different types of work, most engineers actually hate the type of work involved in law, because law uses a completely separate and unrelated set of skills from engineering. With how almost universally expensive grad school is, it isn't something that should ever be jumped into without a lot of thought.

 

[Alan]

Met a lady this week at the auto dealer waiting for the old oil/lube/filter job. We start talking, and she tells me her son has a degree in some fancy-type of engineering (sorry, engineers here, but I have no clue what it was), then gets a Masters in some advanced engineering--along with an MBA = 3 degrees$$$. She goes, "but guess what he does now?" He runs a sailing boat excursion company in Key West, loves it and is happy she said. She and I both had a good chuckle over it. She said he was making money, so...."whatever" was her attitude. I agree.

(Is there some degree like biochemical engineering? That's what just popped in my head.)

Yes, there is such a degree and field called biochemical engineering. Its applications are used in the food, feed, pharmaceutical, biotechnology, and water treatment industries.

A sailing boat sails on water - right ?

 

[haha]

Here is some very intersting talkback on Cortney Munna's experience, as well as about the student loan fiasco in general. Goes far beyond "buyer beware, and they should have read the fine print" to deal realistically with the problem. One guy suggests putting the college counselind offices and lendesr on the hook too, rather than the taxpayer who got no benefit from the process. Another guy says that professorial "Follow your bliss" advice borders on malpractice, which I have believed since I was an 18 year old freshman. Also suggested in making bankruptcy possible for student loans. Taking that away was to me an obvious pay-off to the lenders in this space, to the detriment of student borrowers and teh taxpaying public of which I am most unfortunately a member.

The Case for College Accountability Daily Finance's Zac Bissonnette concurs, and argues prior to Lieber's New York Times piece that "Many colleges ... are signing naive students up for levels of loan debt that are destined for failure." When the financial aid offices do this, he argues, "the schools should at the very least share in the financial fallout."

When Drowning in Debt for College Doesn't Pay Off | The Atlantic Wire

 

[Westernskies]

No amount of education will guarantee future earnings. Hard work, high performance, tenacity, ingenuity, an ability to work with others, and making the most of every opportunity are what determines financial success, IMO.

Graduating with a degree (in anything) with no substantive work experience and/or a poor work ethic, a sense of entitlement, lack of responsibility, etc. is a recipe for future disaster. Having that piece of paper isn't the end-all many have been led to believe it is.

Many schools churn out graduates who don't know what it means to work for a living, what a dollar is worth or where that dollar comes from. It reflects a systemic lack of accountability in our educational system, (well-discussed in another thread here on FIRE...) which should also be teaching graduates how to make a living with their expensive higher education; otherwise it's just institutional education for the sake of education. Many profs eschew any type of financial discussion relative to their curriculum, probably because they have been cloistered in academia and don't have a clue what their graduates are going to be facing in the job market.

I've seen this firsthand with a couple of highly-educated family members, and with freshly-minted graduates who show up at interviews with nothing more than a sheepskin and a smug attitude. They believe they should be starting at wages far higher than their peers (degreed or not) with years of relevant work experience and proven track records..... many of these these graduates feel they are entitled to it, after all they have all this education and those damn student loans... hence the OP's story of the doc who feels her loans are just too much of a burden.

Earning a degree doesn't automatically equate to earning a living.

 

[ronocnikral]

most of these graduates are asking us to trust them with the right to vote, yet they are almost asking us not to trust them to take out a loan or select a career? or do they just want to have their cake and eat too?

 

[Texas Proud]

Here is some very intersting talkback on Cortney Munna's experience, as well as about the student loan fiasco in general. Goes far beyond "buyer beware, and they should have read the fine print" to deal realistically with the problem. One guy suggests putting the college counselind offices and lendesr on the hook too, rather than the taxpayer who got no benefit from the process. Another guy says that professorial "Follow your bliss" advice borders on malpractice, which I have believed since I was an 18 year old freshman. Also suggested in making bankruptcy possible for student loans. Taking that away was to me an obvious pay-off to the lenders in this space, to the detriment of student borrowers and teh taxpaying public of which I am most unfortunately a member.

The Case for College Accountability Daily Finance's Zac Bissonnette concurs, and argues prior to Lieber's New York Times piece that "Many colleges ... are signing naive students up for levels of loan debt that are destined for failure." When the financial aid offices do this, he argues, "the schools should at the very least share in the financial fallout."

When Drowning in Debt for College Doesn't Pay Off | The Atlantic Wire

This is from the article...

"The Case for College Accountability Daily Finance's Zac Bissonnette concurs, and argues prior to Lieber's New York Times piece that "Many colleges ... are signing naive students up for levels of loan debt that are destined for failure." When the financial aid offices do this, he argues, "the schools should at the very least share in the financial fallout." "


Now... I am all for holding some people to the fire... but let's take a look at the lady in question... Sallie Mae stopped loaning her money... should they take a hit?

The financial aid office does not get any 'income' from the loans... the students are paying for their college just like the ones who are paying cash... so there will need to be a charge to the students who use student loans to pay for their tuition to pay for the deadbeats...

And then do they get hit if they kick someone out and they now can not get a job.. back to our example... if the school kicked her out with 'only' $60k in debt, saying she can not have anymore at their school... and now she does not go to ANY school... do they get paid for what at the time was reasonable debt?

The problem is the rules are set up for someone to borrow that is NOT credit worthy... nobody will lend big sums of money to someone that does not have any means of paying it back (ok, start with the jokes about the subprime mortgages... I can take it ) ... so, you put the full burden on the student...

And even then... there are a number who do not pay... ever...


I think a good suggestion... and I just thought of this... so maybe it will be stupid... but why not limit the amount that can be lent to say... 2X the 'state tuition' amount... so, if you can go to State U for $18K, then the max you can get is $36K (sounds to high... maybe 1.5X... or even X...)... then, if you want to go to a high cost school... you either get grants, scholarships or scrounge around for the money... this will limit the max debt for eveybody...

 

[haha]

This is from the article...

"The Case for College Accountability Daily Finance's Zac Bissonnette concurs, and argues prior to Lieber's New York Times piece that "Many colleges ... are signing naive students up for levels of loan debt that are destined for failure." When the financial aid offices do this, he argues, "the schools should at the very least share in the financial fallout." "


Now... I am all for holding some people to the fire... but let's take a look at the lady in question... Sallie Mae stopped loaning her money... should they take a hit?

The financial aid office does not get any 'income' from the loans... the students are paying for their college just like the ones who are paying cash... so there will need to be a charge to the students who use student loans to pay for their tuition to pay for the deadbeats...

And then do they get hit if they kick someone out and they now can not get a job.. back to our example... if the school kicked her out with 'only' $60k in debt, saying she can not have anymore at their school... and now she does not go to ANY school... do they get paid for what at the time was reasonable debt?

The problem is the rules are set up for someone to borrow that is NOT credit worthy... nobody will lend big sums of money to someone that does not have any means of paying it back (ok, start with the jokes about the subprime mortgages... I can take it ) ... so, you put the full burden on the student...

And even then... there are a number who do not pay... ever...


I think a good suggestion... and I just thought of this... so maybe it will be stupid... but why not limit the amount that can be lent to say... 2X the 'state tuition' amount... so, if you can go to State U for $18K, then the max you can get is $36K (sounds to high... maybe 1.5X... or even X...)... then, if you want to go to a high cost school... you either get grants, scholarships or scrounge around for the money... this will limit the max debt for eveybody...

I think you took a long way around the barn to reach the same conclusion that I and these other writers did- the responsibility needs to be put on someone who is in a position to understand what it means and who benefits from the lending. The school obviously does benefit (as does any firm whose product gets easy credit financing on someone else’s risk), as does the lender, as does the federal bureaucracy involved as does the student. No matter how perfect and cool and worldly wise and responsible all you tough love advocates think you were at age 18, I know I didn't know jack, and I know many young people don't either. So all parties get benefit, but one party is not truly able to understand the risk by virtue of being barely out of childhood. So which party gets left holding the entire bag? You guessed it, the naive 18 year old student borrower.

 

[Martha]

Also suggested in making bankruptcy possible for student loans. http://www.theatlanticwire.com/opin...wning-in-Debt-for-College-Doesnt-Pay-Off-3824

Of course we can't make bankruptcy the route for all forms of student loans because all those insolvent college grads with student loans could just file bankruptcy and move on. Instead, what we do have is the ability to start a lawsuit in bankruptcy to prove that the loans cause you undue hardship. This is very tough to prove if you have future earning power plus you have to pay for the speculative litigation of the issue. Many bankruptcy courts follow a test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans.

Sometimes there are possibilities to use chapter 13 bankruptcy to at least reduce loan payments for a period of time.

For federal student loans there is the income based repayment plan available: http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp


I disapprove of the private student loans like this woman took out. The lender gets all the bankruptcy law protections but the borrower is limited in restructuring options. I think private student loans should be treated like any other unsecured debt in bankruptcy.


(My brother went to a tech school for a couple of years and did not do well. He left after being diagnosed with autism and getting on SSI. His loans were supposedly forgiven for being disabled. Then about 15 years later the student loan collectors came after him full force. Even though he was disabled and on SSI they wouldn't accept proof. They said there was no evidence the loans were forgiven and we couldn't find any either after so many years. They harassed him and confused him causing much grief. I could have litigated the issue but instead I settled up with them by paying off the loans and getting the collection costs forgiven. Even that was a struggle. So I do have a bad taste in my mouth for the whole system. )

 

[ronocnikral]

i would like to point out that there are already limits in place on federal loans. i'm sure they've gone up, but freshman (by credit hour) can only borrow so much per semester (it is was something like $2300 when i was in school), sophomores can borrow a little more and juniors and seniors can borrow even more. not mention the plus loan system puts the parents on the line as well. and every loan needs someone to co-sign.

maybe a "pay off each degree before you dig yourself into a bigger hole policy." plus, a little dose of the real world never hurt anyone.

i'm surprised no one has brought up the salaries of the profs. i know it's always a touchy subject, but that's part of the inflated tuition costs.

i'm not saying i knew it all when i was 18, even when i was 22. i took out a private student loan my last semester to live a little more comfortably (so i could ski). i wished i wouldn't have. i didn't really understand how much it would truly cost me, but i didn't bicker and whine about it, i sucked it up and paid it off. it kept me up at night once i became a productive member of society.

no one forces anyone to go to college. it's a choice to sign on the dotted line, regardless of outside pressure and forces. removing the consequences (both good and bad) of one's choice benefits no one in the long term.

 

[harley]

I'm with Ha on this one (as I tend to be). At 18 I was an idiot. Even though I'd already been working for 6 years and had a good idea of the value of a dollar, I had no concept of credit, compounding, and especially debt. If I didn't have the cash, I couldn't buy it. Luckily back in my day tuition was cheap enough that I could earn it myself working my way through school. Not anymore.

I'm a huge fan of personal responsibility. But there's also a need for education before taking the responsibility. How hard would it be for a loan officer or college financial advisor to say "if you take on this much in debt, and you make this much in your future job (modified reasonably for the hoped for career), your payments will leave you this pittance to live on. Is it going to be worth it to you?" It would take 5 minutes and would likely avoid an awful lot of the problems we're seeing. They could even run a couple of examples at different take home pay levels to give ranges based on future incomes. Not that hard.