My sister took loans during her BS and MS, her grace period elapsed and she still did not get a job, so she had no choice but to go for a phd.
Now she is doing her phd, but she keeps getting calls from creditors about her loans, I think they should stop calling her and freeze the interest, after all a lot of people are in the goverment are responsible as to why someone with a masters in immunology still cant a job
She is doing her Phd in France, and I also was working outside the country (till i got fired, but i am still there).
Communicating with these guys from abroad is tough, different time zones, hard to understand what is going on, so many different people calling and I am not sure who the hek is who.
Does anyone have experience in this domain? Should she be able to stop the interest and not be considered in default, and possibly get financing for her MD, she got accepted for an MD in the UK.
Thanks
Your joking right? I think you would have a case if the loan agreement said that if she can not get a job that they would defer repayment, but I doubt it said that. You don’t get to add new terms to a loan agreement to suit your needs when things change. And who pays for this “frozen interest”? You do realize that the government does not have any of its own money right?
A better question would be why is the government subsidizing student loans in th first place.
What do you suggets students who dont get jobs do with their student loans?
Pay them? Like you agreed to when you signed the promissory note.
~~~~~Live. Laugh. Love.~~~~~
I thought interest was deferred if you went back to school, no? Maybe matriculating overseas makes a difference. Thought you could also get deferment for economic hardship. Pretty much impossible to just walk away from student loans if you ever want to set foot in the US again though. It is my understanding that they are not forgiven in personal bankruptcy and the govt. can garnish wages, use tax refunds as payment, and even sue in civil court.
Which government is responsible for her not being able to get a job? She apparently had no problem getting into a foreign school for her PhD, no foreign jobs available or are those governments responsible too?
You can fondle the cube, but it will not respond.
If she can’t pay her current loans the last thing she should do is take on more. If she’s in the medical field she shouldn’t have a hard time finding a job. She’s better off working in a hospital setting (tech, messenger, etc) and working at night to get something more specialized like nursing, PT, or lab work.
Immunologist is one of those professions that 10 people get qualified for every one position available.
^ Hey! Don’t flame my guy … or at least not before June 2nd. I already put a $50 in our office pool to see if he passes or not.
Fired, remember to do some exercise daily and eat right, ideally five smalls meals every three or so hours.
I agree with fired. how is she going to pay her interest if she literally has no income?
Cities teem with evil and decay, let’s give it a good shake and see what falls out!!
can I bet against myself ?
So you dont think the way the U.S. gov ran the economy for the past twenty years has anything to do with people being unable to find jobs.
Finishing up a Phd, and already accepted into a top MD, we can hardly say hard work is a problem. I quit during first semmester of pre med, first organic chemistry course makes CFA Level III look like childs play.
If you have government loans, there are ways you can defer them if you’re unemployed or in school (I believe the way it works is that for unsubsidized the interest still builds up but maybe not the case for subsidized). However, that’s often not the case with private loans.
I understand your frustration, but the link between the general “the government did things to the economy and I can’t find a job” and the “therefore I shouldn’t have to pay back my very specific student loan obligation” is just too tenuous a causal chain to justify your position. It’s not like the government was actively trying to convince you to take loans you know can’t pay in order to make a profit… that would be a little more sustainable since it would suggest possible fraud… if your loans are for a for-profit private school, then there are a few class action lawsuits that might get those schools to be responsible for some of your debt.
In the US, student loans can be deferred or foreborne due to economic hardship, which freezes the payments but lets the interest capitalize. And if you are still in school, you should be exempt from payments, and depending on the type of loan, possibly even the interest, but you aren’t exempt from eventual repayment, although being in a foreign school might muck up the rules on that.
One of the reasons I am not in academe any more was that I noticed my students graduating with 100s of thousands of dollars of debt (these were masters students), and wondering how the heck most of them were going to pay it back (most were not finance/business types). It was clear that tuition was going up year after year faster than inflation and that students were making up the difference by going into debt, and yet the jobs were not there to repay the debt, particularly at the undergraduate level. This was just a bad sign for academe in general, because most professors feel very comfy, not realizing that universities are still businesses that need to have sources of revenue, and that source looked headed for a crash.
You want a quote? Haven’t I written enough already???
This student loan bubble is going to get really ugly. It does suck for students to graduate with tens or even hundreds of thousands in debt. Even with a good job, that’s a huge hurdle to overcome.
There are plenty of people to blame - Universities and their ever rising costs, the government for being general inept, and students for taking on too much debt in the first place. It’s pretty much the housing crisis just with a different name. And it’ll end about the same way.
In this particular case, even though it sucks for your sister she has to pay. Just like people that bought homes they couldn’t afford, she’s way over her head in student loans. Why the hell would she continue to take on more debt when she’s SOL already? Sorry, but your sister is just as much a part of the problem as the government.
Sweep the big difference that you didn’t mention is that unlike an underwater mortgage, you can’t just walk away from a student loan. In the vast majority of cases, the lender, be it the government or a private entity, will eventually get their money somehow, sometime.
You can fondle the cube, but it will not respond.
http://blogmaverick.com/
Mark Cuban’s relevant points, despite the dismal performance by the defending champs against soon-to-be-slain-by-Kobe OKC
True, which may make it an even bigger problem. The optimistic spin on that is it may be much easier (politically) to forgive student loan debt than reducing principal on mortgage debt. I think people would be willing to let the government take it on the chin for people that went into debt to better themselves (in theory) versus people that bought a home they couldn’t afford. I’m not for bailing anyone out, but I could see it happening.
If students were allowed to defualt on student loans they would never get a 200k to be an Immunologist.
Studying With
The other big difference is that a student loan is collateralized by human capital as opposed to a mortgage collateralized by the house/condo physical asset. I never had loans, but I wonder if rates vary according to the quality of the future human capital…i.e. does a computer science major get the same rate as a linguisitics major?
I remember before the 2008 crisis there were pundits out there saying “look, there is definitely a housing bubble, but they are back by assets. These are not going to zero. This is not Worldcom.” It turned out to be substantially bigger that Worldcom, which seems obvious in hindsight. If the number of non-performing student loans rises to crisis levels (whatever that is), what is the chain of events? What happens if someone defaults on a student loan today? The tax-payer just eats it?
“Some people make shoes. Some people make houses. We make money and people are willing pay us a lot to make money for them.”
Well, the size of the mortgage market is also substantially larger than the studen loan market. So when the market collapses by 10 or 20%, the ripples through the economy are WAY larger.
Secondly, when a student defaults on their student loan, it doesn’t make the value of your education any less than it was before. If anything, it makes it more valuable, because it will be harder for the next guy to get a loan and education. With mortgages, if one guy forecloses on your block, your home equity takes a corresponding hit.
You want a quote? Haven’t I written enough already???
Yes, this is all the government’s fault. Americans taking unreasonable levels of debt without thinking through their obligations has nothing to do with it whatsoever.
I used to smoke pot and go to class.
Sneak in ten minutes late with a bullsh*t excuse.
Slink down low at my desk.
Pray to god nobody asked me any questions.
I was the best teacher ever.
Anyone else having trouble posting on this thread? I keep trying to post a longer comment and it will not let me. Its not that long but is there a char limit?
Studying With
Good points, Bchad. I just did some quick googling because I was curious on these points.
1) Mortgage debt is valued at around $6.1T. Student loan debt is at around $1T.
2) If a mortgage defaults then the debtholder can recoup probably around 70%. If a student loan defaults then as far as I know the debtholder recoups 0%. I am not sure on this point so if anyone knows for sure please speak up.
3) Given points 1 and 2, student loan debt, while smaller than total mortgage debt, could represent a very high potential for destruction of capital.
4) On bchad’s assertion that a student loan default does not affect the value of that student’s education, I agree but would add that the student loan itself is supposed to be funded by that education so the fact that there was a default indicates that the value of that education is low. Student loan rates are quite favorable (for now) so an inability to make the payments probably indicates that the education as a low economic value (at least for now).
IMO, there are too many people going to school too long. The people that I know who are doers begin working after a BA/BS. Most of the people I know nowadays that are going into grad school could not find a good job following graduation, looked around for a few years, and then bit the bullet and applied ot grad school (more to have something “productive” to do than anything else). Take a person I know who basically defines lazy and entitled (rich parents) and has not had a job in 5 years. Parents finally cut him off, so he got into a decent grad program for Poli Sci (his undergrad degree focus) and is financing this with loans.
“Some people make shoes. Some people make houses. We make money and people are willing pay us a lot to make money for them.”
Many of the issues posted by others are just descriptions of what happens when the government subidises anything Replace the word wheat with student loans and you get the same problems; overproduction and missallocated resources
Overproduction: In education we have too many people relative to the market demand pursuing higher degrees (that seems to be the case in fired sisters situation. At least on this day)
Misallocation and waste: You have people taking on loads of debt to obtain degrees that do not provide sufficient economic benefit to support the debt (I will not name the degrees but leave it to you to fill in the blank). Many of these people can only hope to find work in their field in taxpayer supported(directly or through subsidies) universities
David Rosenberg, whom I normally don’t agree with, made a very good point a couple months ago. Young adults now owe so much in student loans they can’t afford to buy a home. Since first time home buyers are critical to a healthy housing market, that’s been a key factor in the slow/non-existent housing recovery. Since the student loan situation is going to get worse before it gets better, housing will struggle for several years.
Interesting observation at any rate.
^ I never made that connection before, but I can see it. As such, I think all outstanding student loans should be forgiven on the condition that the borrower uses the money as a down payment on a single family home instead, particularly in the greater Philadelphia area.
You can fondle the cube, but it will not respond.
thanks for the data check, facial.brain.wash. Those were interesting points and good analysis. I quibble with the data, though.
My impression was that the mortgage market was substantially larger than that. IIRC, the mortgage market is larger than the Treasury market; the Federal debt is close to 100% of GDP, and GDP is around 15 Trillion. So my understanding is that the mortgage market should be over 15 T. Not sure where the 6T comes from.
Looking at Wikipedia (which is not really a great source, but it was easy to find) it says that as of 2011 Q2: there were about $13T in mortgage debt outstanding, and 8.5T in mortgage related securities. $7T is securitized or guaranteed by GSEs.
You want a quote? Haven’t I written enough already???
Brain’s point still stands. Hey higgmond, I don’t know when I’ll get back to the PHL area, but when I do later this summer I’ll try to look you up for some peers if you’re down.
I used to smoke pot and go to class.
Sneak in ten minutes late with a bullsh*t excuse.
Slink down low at my desk.
Pray to god nobody asked me any questions.
I was the best teacher ever.
Most certainly Swan.
You can fondle the cube, but it will not respond.