Student loans as % of your income

[ReconRat]

I got GI Bill in two years. A bargain. Pay was in the range of 2000-8000 annual for grunts.

Plus combat pay and jump pay if you could get it.

 

But perspective being what it is, a house cost 18k, gas was 25 cents a gallon, and cigarettes from PX were 8-11 cents.

OSU quarter fees were 150-200 when I was there. GI Bill covered that, low rent, and a little food. Worked for everything else.

[Bubba]

May cash out an IRA or 401k to do it. I have a pension now, but it doesn't make sense to be earning 5% interest on savings and paying 6.625% on loans with a higher balance than said savings.

 

WRONG!!!  I would strongly urge you to re-think this decision thru many times before embarking on this course.  It's almost NEVER a good idea to cash in your 401-K or IRA early to pay a current debt.  S'matter of fact, read enough financial advice columns and they'll give you quite a few reasons why this is universally a terrible idea….if you look 25 or 30 years down the road.  My advice--and its free, so judge its value on its own merit--is that its always more sensible IN THE LONG RUN to do anything else, including starving yourself and eating mac&cheese, canceling your cable, your cell service, your personal trainer, your night with boys/girls, than cashing in your tax-deferred retirement accounts early.  Do EVERYTHING you can to reduce your monthly cash expenditures and aggressively pay your loans off using your free cash flow.  Anything else and you're jeopardizing your future security.

[zx3vfr]

They still think I'm in school. Just have it auto debited every month for $110. Covers both types of the loan. I've never called them or changed anything. Hopefully can stay under the radar. Only have 3 more years at this rate.

[granda080]

At least you have the potential to make a decent wage. I have and undergrad and masters in education...I worked all through school and my parents didn't have any way to help me financially, so I had to take out loans. I literally will never, in my life, make enough money to pay them off.

The system is beyond broken. Good on you for paying them off, as annoying as it may be. I had to differ the shit out of mine and then tell them I couldn't afford $800+ a month. Laughable. Oh well went into it to help the kids. Hopefully you went into law to help people as well.

[DAC]

The government loan machine and government-fed academe putting an entire generation into poverty.

[4DAIVI PAI2K5]

mine is 3%

 

Last payment put at owing under a grand!

[Bad324]

I am really not looking forward to the day my wife gets a letter like this. I know it's coming soon if I don't convince her ass to continue with her masters program which is free because she works at the college now

[Jester_]

Has anyone done any consolidation before? Who was it through?

[bloodninja420]

College is one of my favorite social science issues to pontificate on. There seems to be a lot of popular backlash against college these days, but the wage premium of a BA over high school degree is huge, and larger than it's ever been.  From:

 

http://www.census.gov/hhes/socdemo/education/data/cps/historical/tabA-3.xls

 

In 2011 the mean Bachelor's degree holder earned $59,000.  The mean high school grad earned $32,000. 

 

How much would you be willing to pay today for a 40-year annuity that paid out the $27,000 difference in earnings every year?  At a 5% discount rage thats worth like $450,000.  Subtract out maybe $100,000 in forgone wages from spending 4 years at college and college is still worth about $350,000.

 

If you can really achieve that wage premium from college (which will be somewhat dependant on your chosen major, and actually finishing) taking on even a large chunk of debt is a smart play. 

[CBBaron]

Just got an ass-fuck from Sally Mae.

 

I'm looking at paying close to 10% of my (pre-tax) income toward student loans from August until eternity.  Is this par for the course?  The last time I had loans (undergrad) I don't recall what my payment was, but I know I didn't qualify for income-based, because my balance was pretty low.  I all but killed those loans in a few years, and have a few thousand outstanding that were added to my law school loans.

 

The killer about law school is that no one has a job when they graduate - you have to study for the bar, which for 80% or more of bar applicants, is a full-time job of its own.  So you exhaust your grace period before ever even having a whiff of a paycheck.

 

I did some temp work for a few months, then landed my current gig in September of 2013.  Based on my $0 income at the time my loan payments were scheduled to start, I haven't had to pay until now. 

 

I only have an estimated figure at this point, but it's not an insignificant amount.  More than a car payment (which we don't have right now).  My concern isn't so much about how we'll afford this, but rather how we'll afford things like a car payment the next time a vehicle needs to be replaced.

 

My wife (thankfully) has no college debt.  I'm an educated guy who doesn't live extravagantly, and has never paid interest on a credit card - if I'm struggling, how the fuck are everyday morons surviving in the world?!

 

/rant (for now)

My brother-in-law and sister-in-law both went to law school with significant loans. Even after consolidation and extension on the loans they figure they have 2 house payments, one for the house and one for the student loans. Luckily they both had high paying jobs lined up even before passing the bar so it hasn't been an issue but I could see that being a serious burden on some that didn't land the big bucks.

 

Seems student debt is getting worse and worse. Even public school grads are significantly burdened.

 

Craig

[bloodninja420]

The messed up thing about college, though, is that probably very little of the wage premium is due to any skills people acquire/hone in college. 

 

Completing a BA is a signal that a person has some minimum level of intelligence, persistence, and conformity. Those are the traits employers want, and employers f'ing love that this country has devised a system to screen workers on those traits at zero cost to themselves. 

 

The millions of people employed by colleges also obviously love the system.

 

And we've already establish that college is a good deal for graduates.

 

Individually almost everyone wins under the college system, but as a society it's a pretty wasteful way of doing things.  Arent' there ways to signal intelligency/persistance/conformity without largely wasting 4 years of life and $100,000+? 

[blue03636]

This is my whole though on college. I will also say that I have been lucky in that my work has covered mine 100%

 

[DAC]

College is one of my favorite social science issues to pontificate on. There seems to be a lot of popular backlash against college these days, but the wage premium of a BA over high school degree is huge, and larger than it's ever been.  From:

 

http://www.census.gov/hhes/socdemo/education/data/cps/historical/tabA-3.xls

 

In 2011 the mean Bachelor's degree holder earned $59,000.  The mean high school grad earned $32,000. 

 

How much would you be willing to pay today for a 40-year annuity that paid out the $27,000 difference in earnings every year?  At a 5% discount rage thats worth like $450,000.  Subtract out maybe $100,000 in forgone wages from spending 4 years at college and college is still worth about $350,000.

 

If you can really achieve that wage premium from college (which will be somewhat dependant on your chosen major, and actually finishing) taking on even a large chunk of debt is a smart play. 

 

False choice.  Other options include working and deferring until money is saved, community college to major college transfers (saving tuition), living at home while attending school.

 

Public policy options include a government exit with bankruptcy relief which would give true loan underwriting and market pricing. 

 

Overall, demand is artificially inflated by unfettered access to borrowed funds.  Constricting this would drive tuition lower.

[bloodninja420]

^Completely agree regarding the distorting effects of government-subsidized loans.  The delinquency rate of student loans is apparently higher than credit cards, and we know what kind of interest rate credit cards are charging... A private market for student loans would look more like payday lending than a mortgage.  That would put some pressure on the tuition bubble for sure.

[Josh1234]

Here's how it works in another country, just in case anyone is interested in just plain old "another way of doing things."

 

In Germany, each student, while in high school, chooses 1 of three lengths: I think they're 8, 10, or 12 years.

 

If you wanna be a garbage man or laborer or something, you only have to complete 8th grade.

If you want to have a semi-professional job, or work in an office, you have to go through tenth grade.

If you want to go to college/university to get a degree & a technical or highly-trained position, you go through 12th grade.

THEN you go to college for your Doctor or lawyer training, or whatever.  

 

Keep in mind that it's all paid for and nothing comes out of pocket from the student.

 

Without getting into my thoughts on the German government & society, it seems like a good idea to let each student decide for themselves how much schooling they really want, and what kind of job requires it.  Here it seems like parents decide, and going to a 4-year college is the defacto expected decision.

Edited July 16, 2014 by Josh1234

[DAC]

^^ You get what you pay for.  Also, when someone gives you something, you value it less than if you earned it.

 

My brother taught college level classes in Germany for years.  He said they were some of the laziest students he ever saw.

[Bubba]

There are many social policies across much of central Europe that seem to be more 'progressive' than those in the US.  One thing often overlooked by people who espouse such a system is that those supposedly 'free' benefits, like education, health insurance, 6 weeks paid vacation, 1 year paid maternity leave for both spouses, are paid for by taxation at rates of 50% to 70% of wages.  Be careful what you ask for--you just may get it!!!

Edited July 16, 2014 by Bubba

[Tpoppa]

I wouldn't choose Germany as a model.   They have their own problems.

[redkow97]

I don't have a lot of sympathy for the OP. Smart enough to pass law school should be smart enough to see how much you borrowed and estimate the payments expected.

 

I wasn't asking for sympathy so much as I was venting and asking if the percentage i'm looking at paying is typical.  My estimated loan debt was actually higher than my current balance, and my payment amount is in line with what I had anticipated.  What's vastly skewed is what I had projected my income to be.

 

I started law school in 2009 when the legal profession was still pretty solid.  During the 3.5 years I was in school, the bottom dropped out of the big law machine.  There are still places that hire starting at $120k/year for first-year associates, but there are a LOT fewer of those jobs than there used to be.  Like 10% of what was available when I applied to law school.  Competition for the sub-$100k jobs is proportionately more fierce.

 

During the time I was in law school, the average starting salary for attorneys in Ohio dropped by close to $25,000...  a 30% drop in projected income hurts a lot when average salary was part of your considerations for debt repayment.  

 

Now i'm looking at leaving a job that I like quite a bit :-/

[CBBaron]

I wasn't asking for sympathy so much as I was venting and asking if the percentage i'm looking at paying is typical.  My estimated loan debt was actually higher than my current balance, and my payment amount is in line with what I had anticipated.  What's vastly skewed is what I had projected my income to be.

 

I started law school in 2009 when the legal profession was still pretty solid.  During the 3.5 years I was in school, the bottom dropped out of the big law machine.  There are still places that hire starting at $120k/year for first-year associates, but there are a LOT fewer of those jobs than there used to be.  Like 10% of what was available when I applied to law school.  Competition for the sub-$100k jobs is proportionately more fierce.

 

During the time I was in law school, the average starting salary for attorneys in Ohio dropped by close to $25,000...  a 30% drop in projected income hurts a lot when average salary was part of your considerations for debt repayment.  

 

Now i'm looking at leaving a job that I like quite a bit :-/

Thats the part that sucks about deciding on college. You go in anticipating finding a well paying job once you are able to complete your degree. But if the economy falters the first thing that happens is companies stop hiring, especially new graduates. But you can't predict that when you start. And once you start if you decide to exit before the degree then you just have the debt with little to no return.

Thats why grad schools see increases in applications when the economy sours. Undergraduates can defer the loan expenses and job hunting for 2-6 more years by pursuing an advanced degree.

 

Good luck and it sounds like you will come out OK even if things hurt right now.

 

Craig

[turnone]

I now better understand the gripe. What did you expect to earn? How far off do you think you will be?

People are sold one thing and many times end up with much mess income than expected and more debt than expected.

I'm a college for some people. My oldest son will be a senior this year at OSU for computer science and engineering degree. Excellent chance of good pay recession or not.

Legal field to me means long hours for years before the lay gets really good, if ever.

[OsuMj]

This thread makes me sad, and grateful for my luck.
 

[redkow97]

I went into law school assuming $60k was the basement for a practicing attorney working for a small firm. That assumption was likely optimistic even in a good economy.

I shouldn't be so dramatic about the economy though - I could probably make double what I do now, but I would literally be putting in twice as many hours. It would cost me all my free time. I'd never ride, my wife would hate me, and my kid wouldn't know me.

I'd rather struggle a little and actually have a life. I know more than one young attorney who has quit the profession completely after 2.5 years at a job pulling damn near $100k. Now that she quit, we actually get to hang out with Julie again.

[shittygsxr]

from what you are saying and how you are planning on allocating your finances, you would greatly benefit from learning a bit more about finance. I am not trying to jab you but It doesn't matter how much you make if you don't put it in the right places

[redkow97]

Where are you averaging 7% return on your investments?

I have a pension, and a Roth IRA where all my 401k money was rolled. I will have to check, but I think my return is 5-7%, and it's not compounding the way my interest is.