|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
|
 Posted: Wed Feb 17, 2010 9:58 am Post subject: The $555,000 Student-Loan Burden |
 |
|
Government debt and government loan programs lead stupid people into making stupid decisions that destroy their lives.
Government must be prohibited from borrowing and lending.
Remember the wise words of the bard: Neither borrower nor lender be.
| Quote: |
The $555,000 Student-Loan Burden
by Mary Pilon
Tuesday, February 16, 2010
The Wall Street Journal
When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.
It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.
.....
After completing her fellowship in 2007, Dr. Bisutti juggled other debts, including her credit-card balance, and was having trouble making her $1,000-a-month student-loan payments. That year, she defaulted on both her federal and private loans. That is when the "collection cost" fee of $53,870 was added on to her private loan.
Meanwhile, the variable interest rates continue to compound on her balance and fees. She recently applied for income-based repayment, but she still isn't sure if she will qualify. She makes $550-a-month payments to Wells Fargo for the two loans she hasn't defaulted on. By the time she is done, she will have paid the bank $128,000 -- over three times the $36,000 she received.
She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans -- now $209,399 -- for $990 a month, with only $100 of it going toward her original balance.
The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.
The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.
Dr. Bisutti told her 17-year-old niece the story of her debt as a cautionary tale "so the next generation of kids who want to get a higher education knows what they're getting into," she says. "I will likely have to deal with this debt for the rest of my life." |
http://finance.yahoo.com/college-education/article/108846/the-555000-student-loan-burden?mod=edu-continuing_education |
|
| Back to top |
|
 |
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Wed Feb 17, 2010 10:11 am Post subject: |
|
|
I wrote this on another thread:
| komerican wrote: |
| There's no incentive for universities to reduce tuition since the higher they charge the more they get from the government. |
Exactly exactly. This is the fundamental reason that tuition has increased so much. The state and banks (there is really no separation between the two) direct capital at specific markets. The price of something depends on the capital available for it (the subjective determination of future revenues compensated for losses as calculated by banksters). This is why housing was a bubble and is also by tuition is so high. With housing you can walk away from the house. You can't walk away from the degree. It is debt slavery. They'll direct more and more capital to education because it is a tight trap for the debtor.
The women in question (with the 550k debt) should go into exile. Her American medical degree will get her work outside of the US. Just walk away and forget about it all. |
|
| Back to top |
|
|
ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
|
| Posted: Wed Feb 17, 2010 10:24 am Post subject: |
|
|
| mises wrote: |
I wrote this on another thread:
| komerican wrote: |
| There's no incentive for universities to reduce tuition since the higher they charge the more they get from the government. |
Exactly exactly. This is the fundamental reason that tuition has increased so much. The state and banks (there is really no separation between the two) direct capital at specific markets. The price of something depends on the capital available for it (the subjective determination of future revenues compensated for losses as calculated by banksters). This is why housing was a bubble and is also by tuition is so high. With housing you can walk away from the house. You can't walk away from the degree. It is debt slavery. They'll direct more and more capital to education because it is a tight trap for the debtor.
|
100% correct.
The government has caused a massive increase in the funding available for higher education without regard to its actual value. This has caused a major shift in the demand curve for higher education through this artificial increase in demand which caused a massive increase in the price. This in turn has allowed incredible increases in prices charged for the factors of producing a university education including ridiculous increases in the price of textbooks, and in the salaries of university professors and instructors.
When it comes to the education bubble, however, it seems to pop one victim at a time. |
|
| Back to top |
|
|
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Wed Feb 17, 2010 10:30 am Post subject: |
|
|
| Removing the legal ability to liquidate debt is a modern form of bonded labor. It is astonishingly immoral and mean. |
|
| Back to top |
|
|
ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
|
| Posted: Wed Feb 17, 2010 10:38 am Post subject: |
|
|
| mises wrote: |
| Removing the legal ability to liquidate debt is bonded labor. It is astonishingly immoral and mean. |
I agree, but each person chooses to take on this debt. Unlike government debt imposed upon the citizens by the state, this was personal debt entered into perhaps ignorantly, but voluntarily.
However, if it were possible to liquidate such debt through bankruptcy, lenders might not push individuals into carrying such an outrageous debt load to fund an education. Especially when the cost obviously exceeds the increase in earning potential.
If she can stand a life in exile, the woman might be better off to give up on paying and leave the country. There are other costs to such a tactic, however, and for most people, such personal losses obviate the benefit of fleeing their debt payments. |
|
| Back to top |
|
|
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Wed Feb 17, 2010 10:42 am Post subject: |
|
|
| ontheway wrote: |
| mises wrote: |
| Removing the legal ability to liquidate debt is bonded labor. It is astonishingly immoral and mean. |
I agree, but each person chooses to take on this debt. Unlike government debt imposed upon the citizens by the state, this was personal debt entered into perhaps ignorantly, but voluntarily.
|
Which takes us into a the most common drunken argument between libertarians: Can we sell ourselves into slavery?
There is a great book about this called The Student Loan Scam. Really sad stories in there. Some have created new identities to avoid the debt and remain in the country. The lady in the OP at least has a MD. What if it was a tier 4 sociology phd? No hope for employment outside the local hippie cafe. Imagine 200k debt in that situation. Life is ruined unless you start over. |
|
| Back to top |
|
|
bucheon bum
Joined: 16 Jan 2003
|
| Posted: Wed Feb 17, 2010 10:42 am Post subject: |
|
|
It amazes me how many people thoughtlessly go to grad school without calculating the costs. This woman's case isn't that exceptional, and her (lack of) thinking is more the norm.
A friend of mine from grad school makes a little over $30K/year at a prestigous think tank here in DC. Her debt is manageable because we went to an affordable public university. Two of her colleagues, however, went to SAIS. While it is the top-rated IR program in the country, it will also put you $100K into debt. $100k for a degree where only a handful of grads will get 6-figure salaries (in a good economy)?? Yeah, sounds like a great decision to me. But enough people do it so that the market is flooded with IR grads that the think tank can hire a few of the best for a paltry $30K (although a job there can help one get a significantly better position elsewhere after a year or two).
And the market ain't going to be shrinking any time because universities are seeing what a cash cow it can be. 30 years ago, there was only a handful of IR programs, nearly all of which were in DC. Now? Crap, they're everywhere. |
|
| Back to top |
|
|
pkang0202
Joined: 09 Mar 2007
|
| Posted: Wed Feb 17, 2010 7:08 pm Post subject: |
|
|
Average starting salary with a Bachelor's in the US is like $35,000.
With an MBA or Master's it bumps it up to $45,000.
With a PhD, it goes up to $70,000.
These are all starting salaries.
If you go to grad school, you might as well go all the way and get your PhD. |
|
| Back to top |
|
|
bucheon bum
Joined: 16 Jan 2003
|
| Posted: Thu Feb 18, 2010 5:46 am Post subject: |
|
|
| pkang0202 wrote: |
Average starting salary with a Bachelor's in the US is like $35,000.
With an MBA or Master's it bumps it up to $45,000.
With a PhD, it goes up to $70,000.
These are all starting salaries.
If you go to grad school, you might as well go all the way and get your PhD. |
Depends on where you get the degree, and what the degree is in. A MBA from a top b-school trumps that $45K. A master's in engineering does too. A PhD in a non-science subject from a podunk university won't get $70K. Hell, a person who gets a PhD in philosophy from Harvard will have a difficult time getting that $70K gig too. |
|
| Back to top |
|
|
pkang0202
Joined: 09 Mar 2007
|
| Posted: Thu Feb 18, 2010 6:57 am Post subject: |
|
|
| bucheon bum wrote: |
| A MBA from a top b-school trumps that $45K. A master's in engineering does too. A PhD in a non-science subject from a podunk university won't get $70K. Hell, a person who gets a PhD in philosophy from Harvard will have a difficult time getting that $70K gig too. |
That's true. The figures were an average. Most people who attend a top 25 MBA program are not entry level, but people who are already executives in companies. Also, top 25 programs are highly selective. Not everyone can rock 700+ score on the GMATs. I don't know exactly, but I think only the top 10% of all GMAT test takers get above a 700. That leaves the other 90% to go to a school not in the top 25.
There are many PhD's that won't get 70k, but then again, there are many PhD's that will get you 90k starting. You average all of it together and you get the ~70k starting salary.
The main point was that there is quite a bump in salary going from a master's to a PhD. |
|
| Back to top |
|
|
asylum seeker
Joined: 22 Jul 2007
Location: On your computer screen.
|
| Posted: Fri Feb 19, 2010 12:41 am Post subject: Re: The $555,000 Student-Loan Burden |
|
|
| ontheway wrote: |
Government debt and government loan programs lead stupid people into making stupid decisions that destroy their lives.
Government must be prohibited from borrowing and lending.
Remember the wise words of the bard: Neither borrower nor lender be.
|
Private banks and credit cards with exorbitant interest rates also "lead stupid people into making stupid decisions that destroy their lives".
Should they also be prohibited from borrowing and lending? |
|
| Back to top |
|
|
visitorq
Joined: 11 Jan 2008
|
| Posted: Fri Feb 19, 2010 1:19 am Post subject: Re: The $555,000 Student-Loan Burden |
|
|
| asylum seeker wrote: |
| ontheway wrote: |
Government debt and government loan programs lead stupid people into making stupid decisions that destroy their lives.
Government must be prohibited from borrowing and lending.
Remember the wise words of the bard: Neither borrower nor lender be.
|
Private banks and credit cards with exorbitant interest rates also "lead stupid people into making stupid decisions that destroy their lives".
Should they also be prohibited from borrowing and lending? |
Not if they're using their own money (which the government never does). The government collects taxes. It is not a bank. |
|
| Back to top |
|
|
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Fri Feb 19, 2010 6:20 am Post subject: Re: The $555,000 Student-Loan Burden |
|
|
| asylum seeker wrote: |
| ontheway wrote: |
Government debt and government loan programs lead stupid people into making stupid decisions that destroy their lives.
Government must be prohibited from borrowing and lending.
Remember the wise words of the bard: Neither borrower nor lender be.
|
Private banks and credit cards with exorbitant interest rates also "lead stupid people into making stupid decisions that destroy their lives".
Should they also be prohibited from borrowing and lending? |
Yes. They probably should. |
|
| Back to top |
|
|
pkang0202
Joined: 09 Mar 2007
|
| Posted: Fri Feb 19, 2010 6:52 am Post subject: |
|
|
| The worst are those cash advance/ check cashing stores. Legitamized loan sharks. |
|
| Back to top |
|
|
ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
|
| Posted: Fri Feb 19, 2010 8:12 am Post subject: Re: The $555,000 Student-Loan Burden |
|
|
| asylum seeker wrote: |
| ontheway wrote: |
Government debt and government loan programs lead stupid people into making stupid decisions that destroy their lives.
Government must be prohibited from borrowing and lending.
Remember the wise words of the bard: Neither borrower nor lender be.
|
Private banks and credit cards with exorbitant interest rates also "lead stupid people into making stupid decisions that destroy their lives".
Should they also be prohibited from borrowing and lending? |
Individuals have the right to do stupid things: smoking, using drugs, overeating, being obese, dropping out of school, excessive alcohol consumption ... whatever ... and borrowing stupidly. All of this is fine as long as it's a matter of stupid individuals choices.
The government, on the other hand, is a steward of the people's resources, to the extent we allow, and sets an example that many people follow. Borrowing is a bad idea in almost all cases, except when the risk adjusted rate of return from an investment after taxes and finance costs is high enough to warrent the investment. In such an instance, borrowing to finance the investment is reasonable.
Borrowing to finance consumption, automobile purchases, most educational expenses, and often even home ownership, is generally a bad decision.
The government should be prohibited from borrowing. The government NEVER has a good ROI and never has any legitimate reason to borrow.
Government should also set an example. They can discourage unwise practices without prohibition, or at the very least, abstain and remain neutral.
Government can discourage smoking, drug use and borrowing. Government can encourage wearing helmets for motorcyclists, bicyclists, skiiers etc. or the purchase of health insurance.
But, government should make no law requiring or prohibiting either beneficial or harmful personal behavior.
Government should also be prohibited from subsidizing or penalizing behavior that it encourages or discourages.
When it come to personal behavior, the role of government begins and ends with moral suasion. |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
