People with $1 million of student debt

[Texas Proud]

Put in Young Dreamers since it more about them than any other forum...


From the article...

A total of 101 graduates in the U.S. owe at least $1 million in federal student loans compared to only 14 owing that much just five years ago.
​

I am surprised how much debt some of these people can have.... I know that my nephew will pay over $500,000 total (principal and interest) whenever he pays off his debt, but he became a doctor... having $1 mill in principal seems a bit high no matter what degree you get....



101 grads owe over $1M in federal student loans, with more students expected to follow suit | Fox News

 

[NW-Bound]

Yes, I also read this article.

What I did not know about was the federal program that forgives the debt after 25 years of underpayment. The debtor is required to make a minimum payment worth 10% of his take-home income. As that is below the interest payment, the debt accumulates, then gets forgiven after 25 years.

The debtor has to pay taxes on the forgiven amount. The tax is estimated to be $700K for the dentist in this article, on the loan amount that will have ballooned to $2M.

The $700K payment after 25 years is not too bad, considering his income. It is going to be hard for him to ER, however.

PS. Not the same article. See my newer post below.

 

[Freedom56]

Our nephew is at Stanford and the tuition is about $46K plus room and board is another $20K. It's about $75K (including other expenses) per year for a 4 year undergraduate degree program. He is drawing from his trust fund to pay. It would take over a decade in a private university to approach $1 million in student debt.

 

[NW-Bound]

My wife's niece is accumulating a debt as she studies to be a doctor. I don't know if she knows about the financial ramifications, as she is having a pretty good lifestyle in school, such as a two-bedroom apartment for when her parents or friends want to visit.

And she does not want to be any doctor, but a specialist in something.

 

[NW-Bound]

Oops, it is not the same article about a dentist that I read.

That one is here: https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975

This man racked up a loan of $600K, because his tuition was $90K/year. And he spent more time in school to be an orthodontist. His loan balance is now $1M, and he is paying only $1,600/month (10% of take-home income). That is less than the interest of more than 7%/yr, which is close to $6K/month.

Again, the ballooning debt will be forgiven after 25 years, and he will pay only the taxes on the loan balance at that point.

 

[Sunset]

This forgiveness thing certainly could encourage a person to rack up the debt, go to the fanciest school.

If they had the same thing for auto's , I could probably afford a Lamborghini or two.

 

[NW-Bound]

Indeed, my wife's niece was advised by a doctor that she worked for. "Do not pay more than the minimum".

When I first heard that, I thought "but then you are never going to pay it off".

Now, I know.

 

[Texas Proud]

Indeed, my wife's niece was advised by a doctor that she worked for. "Do not pay more than the minimum".

When I first heard that, I thought "but then you are never going to pay it off".

Now, I know.

I think you have to apply for the forgiveness program to get rid of the debt...



But yea, seems like a way to go if you have a big debt...


This might be what my niece is doing... I do not know how much she owes, but I do hear from my sister that she keeps saying that her daughter is not paying much on her student loan... but she also does not make much as she works part time as a lawyer...

 

[Texas Proud]

Oops, it is not the same article about a dentist that I read.

That one is here: https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975

This man racked up a loan of $600K, because his tuition was $90K/year. And he spent more time in school to be an orthodontist. His loan balance is now $1M, and he is paying only $1,600/month (10% of take-home income). That is less than the interest of more than 7%/yr, which is close to $6K/month.

Again, the ballooning debt will be forgiven after 25 years, and he will pay only the taxes on the loan balance at that point.

Behind paywall... took me awhile to find one that was not...



It does seem like a bit of bad planning... he was OK (or at least on the plan when he started) until he went for orthodonitics....





Offbeat: Mike Meru has $1 million in student loans: How did that happen? - PressFrom - US

 

[Rustward]

And then . . . there are some students who are enrolled with no intention of getting a degree or any education. They are there for the student loans.

 

[NW-Bound]

I think you have to apply for the forgiveness program to get rid of the debt...

Any particular reason not to apply?

By the way, I did not know the interest rate is as high as it is (7.25% after refinance). Looks like it was to make certain many will default.

 

[ncbill]

Undergrad loans are limited.

These are graduate students who can essentially borrow without limit to cover both school & living expenses.

Borrowers can live pretty well once qualified for the income-based repayment plan, as the article notes.

And any future tax debt is easier to negotiate vs. student loan debt.

 

[Bamaman]

I have a friend that is a radiologist that borrowed heavily. But it wasn't any $1 million. Despite being successful, he was in his 50's before those loans were paid.

I have a relative that went to dental school 1972-1975. Out of a class of 85, only he and one other graduated with no student loans. It was bad enough to have to borrow $50k to furnish a 2 room office to start. But he retired at 30 years while most of his classmate are still working at 43 years on the job. The student loans cost them many years of ER.

My last semester in a large.state university was $192.50,/and it was paid by my working on campus as a lifeguard. Those were some good.times.

 

[Out of Steam]

I know someone through work with two sons who are completing training in cardiology. He says they have run up about $400K each, which would have been higher if he hadn't worked beyond normal retirement age to assist with their living expenses.

 

[Texas Proud]

Any particular reason not to apply?

By the way, I did not know the interest rate is as high as it is (7.25% after refinance). Looks like it was to make certain many will default.

No, but you have to know about it to get it...



If you think you are going to have your debt forgiven in 25 years and finally get there to find out you did not apply......

 

[NW-Bound]

Students of some other disciplines who take up other careers might not be in the know.

It's highly unlikely doctors and dentists who are in debt for a million bucks do not know about this loan forgiving program. They talk among colleagues, and even my wife's niece who just entered medical school was advised about it.

 

[Walt34]

It's highly unlikely doctors and dentists who are in debt for a million bucks do not know about this loan forgiving program. They talk among colleagues, and even my wife's niece who just entered medical school was advised about it.

There are other ways out too. One of DW's cousins is a surgeon who came out of school with heavy debt. He found out about a hospital in TN that would pay off his student loans if he worked there for five years. They like the area so much they're still there 25+ years later.

 

[Red Badger]

This forgiveness thing certainly could encourage a person to rack up the debt, go to the fanciest school.

If they had the same thing for auto's , I could probably afford a Lamborghini or two.

From Investopedia:
Prior to the Affordable Care Act, a majority of student loans originated with a private lender but were guaranteed by the government, meaning taxpayers foot the bill if student borrowers default. In 2010, the Congressional Budget Office (CBO) estimated 55% of loans fell into this category. Between 2011 and 2016, the share of privately originated student loans fell by nearly 90%.

Prior to the administration of Bill Clinton, the federal government owned zero student loans, although it had been in the business of guaranteeing loans since at least 1965. Between the first year of the Clinton presidency and the last year of George W. Bush's administration, the government slowly accumulated about $140 billion in student debt. Those figures have exploded since 2009. In February 2016, the U.S. Treasury Department revealed in its annual report that student loans account for 31% of all U.S. government assets.
Read more: Who Actually Owns Student Loan Debt? | Investopedia

Assets that are likely to be largely written off. Then, us taxpayers will be asked (with a gun to our head) to make whole these assets.

 

[ugeauxgirl]

My assistant is about to have her college student loans forgiven. I figured it up- she did pay enough to have repaid the entire principal in 25 years- just not the interest. I don't really know why she went to college- she only used her degree for a year or two and has only chosen jobs that didn't require one since that time.

 

[Sunset]

Put in Young Dreamers since it more about them than any other forum...


From the article...

A total of 101 graduates in the U.S. owe at least $1 million in federal student loans compared to only 14 owing that much just five years ago.
​

I am surprised how much debt some of these people can have.... I know that my nephew will pay over $500,000 total (principal and interest) whenever he pays off his debt, but he became a doctor... having $1 mill in principal seems a bit high no matter what degree you get....



101 grads owe over $1M in federal student loans, with more students expected to follow suit | Fox News

I know a Doctor who went to Med school in GA, some small name school, not a fancy big name one.
He graduated with zero debt.
He works in a hospital beside other doctors earning the same $$, but the other doctors all owe huge student debts.

 

[Chuckanut]

A friend of mine got his MD in the 70's courtesy of the US Navy and a Federal program to get doctors into areas that lacked them.

He spent four years sailing the world in 'Boomer' submarines. I guess he didn't see very much. But, he did have his own personal quarters with what passed for a shower. Then he spent two more years as a doctor on a reservation in the South West.

Having paid back Uncle Sam, he was debt free and had a ton of interesting stories to tell.

 

[Breedlove]

On the other side when we first moved to Houston in the early 1980s we had a friend who decided to become a doctor . He was in his late 30s so he could not get into any
U.S. schools . He ended up going to school in Guadalahara Mexico . He explained how tough it was for him . When he entered school he did not speak Spanish. His first Intern was in NYC in the Ghettos . Years later we run into him and his wife he practices as a GP in North Texas . He told us he accepts no government programs , this was before Obama Care because he had put so much of his life into becoming a doctor . When he started practicing everyone thought he was seasoned because he was older Old Doc XXXXX

 

[MikeD]

A friend of mine got his MD in the 70's courtesy of the US Navy and a Federal program to get doctors into areas that lacked them.

He spent four years sailing the world in 'Boomer' submarines. I guess he didn't see very much. But, he did have his own personal quarters with what passed for a shower. Then he spent two more years as a doctor on a reservation in the South West.

Having paid back Uncle Sam, he was debt free and had a ton of interesting stories to tell.

My Internist for 33 years was originally a sub commander and second in his class at the naval academy. He has retired. He was a really, really great doctor.