This person made mistakes. Yeah, we all do that, and some people's have worse consequences than others, but we're all pretty much stuck with them. In this case, someone went to law school, made some very contradictory life decisions (having kids -- and failing to prevent having more -- kind of takes away whatever victim angle might have been there), realized they were doing very poorly but kept going anyway, and then... for years and years... did not pursue a career that could possibly have any chance of addressing the debt before the rates ballooned.
So we end up with someone who screwed up, screwed up some more, and then decided she'd screwed up so much that she's going to screw up again, by just not even trying to address the negative results of the previous screwups.
Not very responsible, in my opinion, and certainly not a good lesson to pass on to your kids (along with your debt, because guess where that's going when you die, since you've decided not to pay it off?).
I guess I'm still just not sure what the article is going for.
What? Loans don't pass to kids at death, that's absurd. They stay with the estate. If the estate doesn't have enough funds to cover the debt, tough shit for the lender. Though there are lenders who try to con kids into taking over their parents debt obligations. There is a special place in hell for them.
I think the most important theme to this article, aside from the individual story of debt and irresponsibility, is that this looks an awful lot like the way the housing bubble came about. Cheap debt that the borrowers are unable to afford long term. The difference here is that student debt cannot be discharged in bankruptcy, so it seems there would be more people defaulting.
As a side note, the price tag of a degree should not be so high that a career with that degree cannot pay back the debt. This story is unique in that the debt is much older and ballooned due to interest accrual, but there have been a lot of recent graduates with high debt right out the gate with degrees that are much less employable than they used to be.
Really? Who takes responsibility for the deceased person's loan?
3 kids while earning < $50k and trying to pay off > $100k in debt? If that's not the embodiment of America's dire lack of financial and family planning skills, then I don't know what is.
> "I’ve stressed to my daughter the importance of not borrowing any money."
Maybe she should just teach them to make responsible decisions instead? Borrowing money can be the right thing to do, but you need to carefully measure the costs and benefits.
Also, it would help not to have 3 kids when you're up to your ears in debt and only earning enough money to support yourself.
By extension, having children is a privilege only for either those who were lucky enough to be born into wealth (i.e. no or minimal debt) or those who were lucky enough to make the correct decisions early in life.
if she fails to pay it off in her lifetime, do her children pick up the debt?
Unimportant things like "giving your life meaning" are unimportant.
However, moral duty is relevant when it comes to how society should think about debt. Everyone has things they would like to do if they had more money. Society should not be arranged to give people a free pass just because they want to do something that requires money.
Not everybody is comfortable with using abortions to deal with unplanned pregnancies even if it is the financially expedient thing to do.
Apparently she couldn't work and focus on school at the same time, so she started taking out loans to cover living expenses. She took out $26k in federal loans each year (starting in 1994) to cover these expenses. Factoring in inflation, that would be like taking out a loan for nearly $41k/year in 2013 dollars. I think it's a hard argument to say that was even close to reasonable.
The article doesn't say how long she was in school, but if I'm doing the math right, it took her at least three years (isn't that a long time for a full time law student with no other job?).
Then, after school while she's studying for the BAR, she takes out another $20k in private loans to cover living expenses ($31k in 2013 dollars).
She screwed herself, plain and simple.
Nope, that's the standard.
Law degrees take 3 years to complete.
Her father, a doctor, paid for a year of her undergraduate studies, leaving her free to dodge student loans for a while.
Not full, just one year.
"My intention was to go back to work after my first year of law school," she said. "[But] I did so poorly that I didn't think I could [keep a job at the same time]. So that’s when I started borrowing money."
I seriously doubt she had a 3 year scholarship to law school, especially after doing poorly the first year.
Also, she graduated in 1994, so either that year, or 1993 was the last year she took out student loans.
She HAS a degree. She HAD a 6 figure job that she quit because it was "too hard" She still HAS debt.
Me? That's right. Injured, under Voc rehab. I'm going to a 2 bit state school (drafting, cad). Right now, I can't afford the GAS to get to and from school. Voc rehab (state agency) will pay for it, only after a 6 week wait. And I don't have the money.
What I'd need is a few hundred to get to and fro school. Food would he nice, but soup kitchens provide that. I can sleep in my car to reduce trips.
Where's the help for people like me?
Can anyone here who opted to take a student loan for a technical degree speak to whether it is daunting to them or they are comfortable with the trade?
I'd say it worked out well for me, but my situation is very different from that of the woman in the article. First of all, I graduated in 2005. Interest rates were much lower, and dollars worth a little less, than in 1994. I also didn't have children, or any intention of having them in the near future -- children are very expensive. Finally, I did have to live frugally for that period. For example, I carried groceries about 3/4 mile so that I wouldn't need a car. It wasn't poverty by any means, but I skipped many things my peers considered "essential".
For that reason I'd say, while it worked out for me, it is certainly not for everyone.
I'm a doctor who had about $160,000 in student loan debt by the time I finished residency (during which I paid $1,000/month on a $45,000/year salary and lived like a student). After residency, my wife and I started throwing about $4-5k/month at it. Yes, that means I didn't go out and buy a brand new S55 AMG fresh out of residency, but I didn't care. I know plenty of people who will lose more on mortgages when their house doesn't appreciate like they thought it would. Or when (not if) the market crashes again.
It doesn't bother me one bit that many people on here get to ride the tech money train that I don't have a ticket for. Enjoy it, homies! But never forget (but don't stress about) the fact that the party music can stop at any time.
Everyone should enjoy what they've got and be reasonable about expenses. There's already enough to be worried about.
The reason your federal loans don't have an ungodly interest rate right now is that as part of the economic stimulus student loan interest rates were lowered. The temporary extensions have kept it down since then, but they could jump back up at almost any moment.
That said, you shouldn't need to take those kinds of loans anymore. We went to a top-10 school for CS back when you still had to get loans for them. These days, there are nominal costs, but all of the top-tier schools I know of cover any difference between you/your family's ability to pay and the tuition. I would personally be somewhat skeptical of the lifetime earning potential you are getting from any institution whose alumni have not given so much money that they can easily afford to cover any gap you have in your tuition payments.
This is good advice, but don't forget that "your ability to pay" is just code for "perfect price discrimination."
I finished my program with $60,000 in debt. $40k for undegrad, and and another $20k for graduate. As bad as that sounds, I had a pretty good financial aid package; the estimated cost of attendance was $60k per year, and most of it was paid for through a mix of work study, scholarships, and a very generous need-based grant from the university [1].
I've made enough since I've graduated to repay my debts a few times over, have a great job, learned valuable leadership skills, participated in a couple research projects, and learned things I never would have known how to even approach had I not gone.
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[1]: Good schools will give need-based grants if your financial aid package doesn't cover the estimated cost of attendance (minus your EFC, as calculated by the FAFSA). They'll ask you to take out Stafford loans, but those are capped at about $12k/year for undergraduate study.
That said, my advice is to stay far away from any school that asks you take out private (non-federal) loans. Those are uncapped, and will easily bury you more debt than you can handle.
The way I see it: every option available to me coming out of high school had risk. Taking on debt to go to college is a risk. Not going to college is a risk. For some, these risks are low, due to a fortunate upbringing with financially stable parents. That wasn't the case for me — but I can appreciate having the choice at all, which many people don't.
I achieved the goals that were important to me given the risk I took: to get a job doing something that challenges me, makes me happy, and allows me to live comfortably. The debt is the cost I chose to pay in order to achieve this goal — one of many I could have taken, but there was always going to be a cost.
The article meanders a bit but I think the story is a pretty common one for those of us in a lot of debt: it's a long term partnership. The "amount of debt you're in" is abstract and barely fathomable. It manifests monthly as a force that pushes against you and your bank account, and how you choose to respond to that reflects your priorities at that moment.
I transfered 25 credits in when I went to college, so it was an easy way to get rid of classes that would lecture bowl type stuff in a much smaller / interactive setting.
All things considered, I am happy with my decisions. My loan payments aren't that bad. Rent and car-related expenses are worse. I do live check-to-check, but I could probably get a much higher paying job if I looked.
I have to say I have no regrets. The job opportunities that were available to me with my BS were depressing and (relatively) low paying. Even with my aggressive loan payments I'm still taking home more than I would have without the investment and the lower salary.
Hard to judge anything just based on this article, but I'd have to say that if you have a full tuition scholarship and still need to take on 100k in debt you might want to rethink it. Also she had 3 children within 3 years of graduating, which would make it impossible to pay off anything unless you get a much higher paid job.
A friend of mine and his wife took out something in the neighborhood of 100k/each, so they have(or had, been paying a bit now) 200k of student loan debt recently. I think it was a bit of a bad investment, since I think they could have gone to cheaper schools, however they stayed in NYC and make enough for this.
Short story: If you want to take on a big student debt, paying it off is going to require you to go where the high paying jobs are. If you want to raise a family and work for the state, don't take on the debt, your life will be easier.
If you have Federal Loans and hold a public service job for ten years (and make your payments of I believe 10% of your gross income), your remaining debt is forgiven. The same is true after 25 years if you aren't in public service I believe and I think Obama just railroaded a change to make that 15 years using Executive Order. This is the reason why if you are struggling with Federal Loans DO NOT consolidate them through a private lender. Their terms will suck for you if you think you will struggle to pay them off.
She could have stayed at the lucrative Manhattan law firm where she was making enough to cover her loan obligations. I get that it's rough on the kids, but that was a decision she made, and tons of other people make that situation work.
So, although unlikely, she may have based her decision on the possibility that, worse case scenario, she could have declared bankruptcy.
Now the $20,000 personal loan for living expenses, I assume would still be dischargeable in bankruptcy.
Which made sense at the time, since it was being subsidized.
Not entirely true.
I'm not sure what her options are to never pay off the debt.
She can always just stop paying, and try to call the lender's bluff and force them to go through court to garnish her wages.
Genuine request: Can you please elaborate.
Either way, best of luck. If you do want to strike out on your own, please don't wait until you're "comfortable" because it will be too late.
The article sounds like bad career planning given the missing or unwanted partner.
Student loans have a high standard, but not an impossible one.
