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07-09-2007, 01:41 AM
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#1 |
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Registered User
Join Date: Jul 2007
Posts: 3
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How bad is my situation?
Hello all, I am currently an undergraduate student and have a hefty amount of loans. The situation is my parents both make a good amount of money but simply refuse to give me a cent so my FAFSA did not help me with much. I have taken out a 28K private loan at a ridiculous 8% interest rate so far and assuming I don't get more help later on (I have 2 and a half years left counting the current 28,000 loan for this upcoming year) I am wondering how deep am I digging myself.
By my calculation (approximate obviously) I will have roughly 50,000 in private loans (8%) and another 10,000 in federal stafford (6.8% subsidized) taken out when I am done with my bachelor's. How bad is this situation? I really have no idea what the average is so I am not sure as to how bad of a hole I am in right now? To further complicate things I am planning on Law School and that will obviously cost even more but by then I will be independent with a lot more federal help and a degree job that pays a decent amount. So, how is my situation looking? |
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07-09-2007, 07:38 AM
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#2 |
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No Disclaimer Necessary
Join Date: Feb 2005
Posts: 1,772
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Kevin,
Your situation is excellent. Even with these financial difficulties, you are continuing on your path to further your education. Transfer those loans to a loan with a lower APR, if possible. Keep your grades up and shoot for scholarships and grants. You will enter the job market with good debt (built on education, not junk). Your job then will be to make that advanced education pay off and land you a great job, which in turn will help you knock that debt down faster and then be able to live life your way. Good luck!
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"A nickel ain't worth a dime anymore." - Yogi Berra |
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07-09-2007, 08:44 AM
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#3 |
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Registered User
Join Date: Jan 2007
Posts: 1,084
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So long as you keep going until you reach your goal, you're okay.
Someone I know and love took out about that much in loans during their undergrad years, but had to drop out before completing -- imagine having $500/mo in loans to repay on a secretary's salary! And if at all possible, can you reduce the amount you're borrowing? It's one thing if your tuition is that much (private school?), but it's another if you're using loans to live on, just because you don't want to get a part time job.
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"Wealth is the slave of a wise man. The master of a fool." -- Seneca |
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07-09-2007, 08:58 AM
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#4 |
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No Disclaimer Necessary
Join Date: Feb 2005
Posts: 1,772
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Right. You don't want to get $150k in debt and then go work in a record store nd pay it off just in time for retirement. If you successfully apply that degree, you can have that load repaid within 5 years of landing a cush job and then sit back and relax (best case scenario).
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"A nickel ain't worth a dime anymore." - Yogi Berra |
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07-09-2007, 09:53 AM
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#5 |
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Registered User
Join Date: Jan 2007
Posts: 1,084
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Right.
But I should clarify. Friend, that's a lot of money, if I'm reading you right -- that you've already borrowed $50k before your junior year. At this rate, you'll owe $100k before you even start law school -- and then law school should be another $50k minimum. You COULD leave law school with nearly $200,000 in debt. THAT IS A LOT OF MONEY! It's a lot of money especially if you fail, drop out, or decide that you want to work in some touchy-feely part of the legal profession (like public defender, or civil rights law, or environmental law). Dingo is right that you can repay that loan in a heartbeat -- IF AND ONLY IF you enter a high pressure, big dollar field like MedMal, personal injury, defending rich criminals, etc. In short, please be realistic about what it is you want to do with your life. If you want to "change the world" by laying your lawyerly skills at the feet of the downtrodden, you'll never pay off that kind of money. Those legal fields don't pay. This is why I strongly recommend cutting expenses (even if it means transferring to a cheaper school -- as a side note, I JUST NOW registered my husband for his Grad School classes -- total bill for tuition, $810). Spending $28,000 a year is all well and good, so long as you absolutely go into a lucrative field after graduation. But what if you don't? -- what if you take a shine to the downtrodden and want to help them, not the rich fat cats who can afford to pay you what you need to pay off that kind of monster debt. What if you decide law isn't for you, and you'd rather be a chef? What if you become ill and have to drop out of school and get a job to pay your medical expenses? Good luck, friend. And think about it. EDITED TO ADD -- you asked what's the average. Let's put it this way. The Federal Government, which subsidizes most loans for students, allows undergraduates to borrow no more than about $36,000 during one's undergraduate years -- TOTAL!!! In two years, you have blown that amount out of the water. What you're borrowing can probably be considered excessive -- but as Dingo and I have both pointed out, such excess can be forgiven, if you choose a high paying field.
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"Wealth is the slave of a wise man. The master of a fool." -- Seneca Last edited by Puck : 07-09-2007 at 10:02 AM. |
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07-09-2007, 11:58 AM
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#6 |
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Join Date: Jun 2007
Posts: 134
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To each his own. Most of the successful (wealthy) people I know had little to no college. Of those with a college education, they haven't even used it to build there net worths. I attended the school of "hard knocks" (although I had some community college as well). At the age of 25 when many were getting out of their 4-year schools, I owned my home and had two rentals going. "Rich Dad, Poor dad" covers this in detail. Many college grads get a late start and graduate with a feeling that they are 'due' to enjoy the good life. They get a whopping mortgage, a new car payment and huge credit card debt. It takes a long time to recoup that college debt and make up for the late start. While some college grads are peaking in their careers, there are others that are managing a well established nest egg. If I sound bitter, it must be that I've got issues with missing those rockin' dorm parties.
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07-09-2007, 01:04 PM
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#7 | |
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Join Date: Jul 2007
Posts: 3
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Quote:
Thank you for all the replies. Puck, I actually stated that I will have that 50K in private loans borrowed for my ENTIRE undergrad, not before junior year (I am estimating for what it will look like after the 4 years are complete), today I only have 28K taken out. I will likely try to reduce the amount I am borrowing for next year by finding outside scholarships or seeing if I can move money around to reflect better on my FAFSA. It is a private school and costs a hell of a lot, I am borrowing simply for tuition, room, and board so all that money is going to school. |
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07-09-2007, 01:06 PM
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#8 |
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Join Date: Jan 2007
Posts: 1,084
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Kevin -- whew! glad I misunderstood.
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"Wealth is the slave of a wise man. The master of a fool." -- Seneca |
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07-10-2007, 01:12 AM
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#9 |
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Join Date: Jul 2007
Posts: 3
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So is my situation looking better than what you first thought then Puck?
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07-10-2007, 08:29 AM
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#10 |
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Join Date: Jan 2007
Posts: 1,084
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Well, no. You're still borrowing more than the "average", if you call the maximum amount the government allows an "average". And actually I read in this month's Kiplinger's (an article on boomerang kids) that the average student completes the Bachelor's program with an average $20k in student loan debt. So, your borrowing will indeed be beyond the average.
The main problem is if you don't choose a high paying job in a lucrative profession. And I say that as a person who completed the Bachelor's with ZERO in debt, but the GRADUATE degrees with nearly $60k in debt. It took several years before I got a job in my profession (I teach at a university), but it's not a well-paying job, as compared to my debt. I was lucky to have a windfall allow me to pay off all but about $12k of it. So I know what it means to have only a "decent" salary and massive student loan debt to pay. And since the minimum repayment period for SL debt is ten years, you're looking at a long, long vista of time where you are suffering under these kinds of payments. I can give you other examples. A colleague of mine (professor) and her husband (lawyer, public defender) with a combined $200k in debt know they will never be able to buy a house. My secretarial friend with $500/mo in student loan payments. A good friend of mine who is doing environmental law in DC -- if it weren't for his wife, who specializes in spin control for politicians and celebrities and makes oodles of money, he would be a nearly-40 year old idealistic lawyer, living in a rotten apartment in the bad part of the city. My neighbor -- I don't even know what he borrowed, or what kind of degree he has. All I DO know is that a student loan company is calling ME to "deliver a message". This means that his self-employment as a construction contractor isn't paying enough to repay his loans. None of these people are losers. Many of them discovered an aptitude for something other than what they originally got their degrees in, or discovered that, within the law, they had an interest that didn't pay well. In many cases -- like my friend marrying a woman who makes six figures a year -- luck plays a huge part in how things turn out. But luck is a sorry thing to depend on.
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"Wealth is the slave of a wise man. The master of a fool." -- Seneca |
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08-05-2007, 07:49 PM
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#11 |
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Join Date: Aug 2007
Location: colorado
Posts: 20
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I had the same 8% rate on a couple of my loans. It was because it was a private one and I didn't have a co-signer.
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Colorado Homes For Sale - Boulder Colorado - Niwot Homes - Westminster Colorado - Thornton Colorado |
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08-05-2007, 08:35 PM
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#12 |
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Registered User
Join Date: Oct 2006
Posts: 201
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I think the average is 20K. I read that some where.
Youask if you are getting to many loans. well it depends on what your major is. If your studying something that the market does not reward financially then it may be a problem. You will be paying 300-400 per month to the student loans. But you have to do what you have to do. Get that education. Im glad I did. I dont agree with the whole richdad philosophy that education is a hindrance and that is one of my biggest issues with kiyoski. I think I was in a worse situation than you. In my final year I couldnt get any more student loans for some reason so I had to put the semester on my credit cards. So 10K of my student loan debt was on credit cards at 12%. Now Im glad I got it over with. financially, life is good. Education is worth it. If it makes you feel any better when I graduated I owed over 60K. Now its down to 45. About half of that 45K is at 8%. Im not rushing topay it off though. Im trying to do some other things with my money first. Last edited by articledon : 08-05-2007 at 08:41 PM. |
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