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Thread: Video on US Student Loan Repayment Options

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    Default Video on US Student Loan Repayment Options

    while this doesn't cover every available repayment plan, or every detail of those plans, it does provide an excellent overview / comparison





    Also noteworthy is the fact that this video highly recommends that recent graduates continue to live in their parents' basements to allow their student loans to be repaid.


    The arguably reason for increased concern over student loan repayments is that the 'default' rates are rising rapidly ...

    Budget Lifetime Default Rates

    Year Loan Enters Repayment 2007 2008 2009 2010 2011

    2-Year Non-Profit/Public 32.1% 31.6% 31.1% 31.4% 33.8%
    2-Year Proprietary 47.3% 48.6% 49.0% 48.4% 49.4%
    4-Year Freshmen & Sophomores 24.7% 24.0% 23.6% 24.2% 25.4%
    4-Year Juniors & Seniors 12.4% 12.3% 12.1% 11.9% 13.0%
    Graduate Students 6.2% 6.2% 6.1% 6.1% 6.4%

    Weighted Average 15.9% 16.5% 17.3% 17.6% 18.4%

    Source: U.S. Department of Education (based on figures published in fiscal year 2013)

    The official stats clearly show that the lion's share of student loan defaults are occurring with students at 2 year schools, or with freshmen and sophomores at 4 year schools. This is I suppose understandable, since leaving school without a degree, or even graduating with a 2 year degree, will generally not lead to a job with a pay rate high enough to allow 'standard' 10 year schedule student loan payments to be made while at the same time paying for 'normal' cost of living items like rent, food, energy etc.

    Thus for dancers and camgirls who are 'wrestling' with student loan repayments, it is arguably far better to shift to one of the alternative repayment plans to avoid having your loan go into default under the 'standard' 10 year plan. Having a US gov't backed student loan in 'default' status poisons credit rating / credit reports, and also makes even 'subprime' credit very difficult to obtain ( because the gov't arguably has 'first claim' rights versus private lenders ).
    Last edited by Melonie; 10-05-2014 at 07:03 AM.

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    Default Re: Video on US Student Loan Repayment Options

    I saw this article from salon.com that argues that student loans aren't really loans. They are more like a tax:
    http://www.salon.com/2013/06/05/let_...s_go_bankrupt/

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    Default Re: Video on US Student Loan Repayment Options

    ^^^ the Salon article references the unique attributes of gov't backed student loans ...

    - it's nearly impossible for them to be discharged in bankruptcy
    - practical 'refinancing' options are limited to whatever alternative repayment programs the gov't offers

    Technically speaking, it's theoretically possible to apply for a non gov't-backed private student loan, and use ( part of ) that money to repay the gov't backed student loan, thus achieving a true mortgage-like re-fi. However, this would require good credit as well as a sufficient level of verifiable earnings ... which are not likely to be the case for anyone whose gov't backed student loan is at risk of default.

    Keep in mind that one of the supposed reasons for the US gov't 'taking over' the vast majority of the US student loan market was to increase the loan approval rate for college students who come from low income families having few assets. However, the gov't had arguably learned from their previous experiences with gov't backed mortgages for low income families having few assets that the default rates ... thus extra costs to taxpayers to make good on defaulted loans ... were likely to be rather high. This is the reason that gov't backed student loans were exempted from normal bankruptcy law - to provide the gov't with an opportunity to make ( partial ) recovery on defaulted loan debt over an extended time period thus reducing extra costs to taxpayers.

    In terms of Salon's claim that this arrangement amounts to a 'tax' - by definition that cannot be true since every dollar of student loan money received by the borrower has actually already been spent on 'something' ... college tuition itself, a new Ipad, college living expenses, etc. Salon's reference in this regard seems to be the newest repayment option ... which allows for capped monthly student loan payments for a period of 20+ years, with the monthly payment cap amounting to 10% of the borrower's actual 'disposable' income.

    But in reality this newest repayment option arguably resembles the following scenario ... A borrower takes out a home mortgage with a normal monthly payment of $800 to buy a home. The defaulted borrower is allowed to make monthly payments of $100 ( actually 10% of borrower's disposable income ) instead of $800 while also allowed to continue living in the home for years and years. At the end of 20+ years, the lender 'forgives' the large unpaid loan principal plus 'forgives' the even larger accumulated interest charges ( with US taxpayers covering the resulting lender's losses ), hands the defaulted borrower the deed to the home, and 'sanitizes' the borrower's credit report.

    Salon's alleged similarity is that the monthly loan payments under this alternative repayment option amount to a percentage of actual income in a manner similar to an income tax. The obvious difference, of course, is that the home is a tangible asset with a readily determinable 'value', while a college degree ( and especially an incomplete degree ) is not. However, large amounts of borrowed money was spent in both cases, actual repayments made by the defaulted borrower are comparatively small in both cases, and additional costs to US taxpayers to cover lender losses are large in both cases.
    Last edited by Melonie; 10-06-2014 at 09:02 AM.

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    Default Re: Video on US Student Loan Repayment Options

    On a related note it is highly advisable to investigate thoroughly and carefully consider attending one of the many "for-profit" colleges and /or trade schools out there. While there are some that range from comparable (to private and public non profit schools ) to better than , most are pure diploma mills with abysmal employment stats for their grads. A LOT of the loan repayment horror stories out there involve loans taken out to pay tuition at various on line colleges and "basement" trade schools. Without student loans at least 90% of these schools would dry up and disappear.

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