Korean Job Discussion Forums

Real Reality · Joined: 10 Jan 2003 Location: Seoul

The Rise of the New Poor
Prof. Bae Jun-ho of Hanshin University attributes the rise in the new poor to the increase of temporary, daily and irregular workers.... If you become ill, it becomes a shortcut to poverty because it leads to long-term unemployment.... Bad debt among graduates unable to repay their student loans is also a major factor.
Chosun Ilbo (December 22, 2005)
http://english.chosun.com/w21data/html/news/200512/200512220016.html

noguri · Joined: 28 Nov 2005 Location: korea

Hey, I thought this article would be about the U.S.

I am drowning in student debt. My loans are from the 1990s when interest rates were at an all-time high, and I unfortunately took a loan consolidation with the U.S. Dept of Education in 2000.

That means that I am locked into a fixed rate of interest that is outlandishly high. It is an inappropriate interest rate because it is from a decade when economic conditions were totally different than they currently are.

Every payment I make simply goes toward interest, I never make any headway into the principal. SO this means that the U.S. Dept of Education is just milking me and milking me for $ and I never make any headway toward paying off the debt. So basically, Uncle Sam owns me and every cent I ever earn in my life.

The US DOE has a program of "debt forgiveness" that applies funds yearly toward the student debt of anyone who teaches in a public school that is labeled "disadvantadged" [socially, economically] by the DOE. However, this program only admits those whose first loan was disbursed AFTER 1998, so I'm not eligible. SO I say, screw 'em, I won't teach in a U.S. school.

Is anyone else in a similar situation? I have been trying to find an online community of debtors who are also trying to find answers, but no luck. Isn't there anyone else like me, on the verge of loan default after paying $25,000 in an honest effort to make good on my obligation? What are people like me supposed to DO?

Kimchieluver · Joined: 02 Mar 2005

Next time you are Stateside, go to a bank and tell them your problems. As long as your credit is okay, they will buy out your existing debt and then give you a rate that reflects the current. interest rates.

noguri · Joined: 28 Nov 2005 Location: korea

Thanks for the tip, Kimchieluver, but what type of loan should I ask for? Mortgage, auto, consumer loan? Banks won't offer a line of credit without the borrower's collateral such as a home, a yacht, or some other large-value item. Unless, of course it's a student loan. In fact, isn't that what a student IS, a loan given without collateral because the US gov't is the guarantor.

IF my student loan is bought out without collateral, it is bought out as another [new] student loan--this is called a loan consolidation.

This consolidation does not take place at market rates of interest, because loan consolidations are governed by laws added during the 1980s into the Higher Education Act of 1965. During the buy-out of the loan by a new lender [e.g., "consolidation"] the new interest rate is calculated as a WEIGHTED AVERAGE of the existing loans' interest rates. THe new interest rate is set as a FIXED rate for the life of the loan and no buy-out by a new lender can knock down the interest rate. Once the loan is consolidated, it is protected from market forces.

This is advantageous to people who consolidated their variable-rate loans soon after Sept. 11, 2001 when interest rates began to plummet. THose people were able to lock into an all-time low interest rate and have it become a fixed rate. But I was not able to forsee the terrorist attack and the drastic changes in interest rates & the economy so I consolidated my loans in 2000.

So, for my stupidity I'm condemned to have Uncle Sam own every penny I make for the rest of my life. I feel like North Koreans have a lot more freedom than I do! Economically speaking, anyway.

joe_doufu · Joined: 09 May 2005 Location: Elsewhere

Ask JeJuJitsu... he stole over $120,000 from the US government and he can teach you all you need to know to commit your own grand theft!

JeJuJitsu · Joined: 11 Sep 2005 Location: McDonald's

joe_doufu · Joined: 09 May 2005 Location: Elsewhere

joe_doufu · Joined: 09 May 2005 Location: Elsewhere

For those who are new, I'm referring to this thread:
http://www.eslcafe.com/forums/korea/viewtopic.php?t=48777

fiveeagles · Joined: 19 May 2005 Location: Vancouver

noguri · Joined: 28 Nov 2005 Location: korea

Eeek, I just read the rather messy thread that Joe Doufu posted the link to. I must say that I could relate to the situation faced by Moldy Rutabaga. However, it does sound like Canada is much more aggressive than the U.S. about collecting these loans and I feel for Rutabaga.

Doufu is a good "tough toenails" kinda guy and of course he is right that one should not sign for a loan and then dodge the responsibility.

However, Dysupes made an important point at the end of that thread about when banks "pile interest on top of interest on top of interest" which is what is happening. Every time one cuts a deal with the loan holders, they compound the interest into the principal loan. So I am paying interest on interest on interest. I wanted to pay this loan and as I said, I sunk an inheritance of 25 grand into it, even though it hurt to do so because it barely made a dent in my debt.

By the way Doufou, I'm so happy for you that your loans are only at 3% interest but mine are at least five percentage points above that so why can't I have YOUR interest rate? I would be smug like you if I could have that interest rate.

People like Rutabaga and I really WANT to pay up but the interest game ruins us.

Furthermore, although nobody OWES me a job, I don't understand the arbitrariness of the bureaucratic system that rewards some but punishes others. For example, why does working in an underprivileged school in the U.S. allow one to have partial loan forgiveness, but only for those who received their first loan AFTER 1998? Because the rest of us don't deserve a chance to pay the loan back? Or, why CAN'T the interest rate be renegotiated at a later date after a loan consolidation? It is all regulated by Congress and responds to political whims, not market forces.

Finally, I would add that it there are very corrupt people in the U.S. Congress--have you ever heard of Tom DeLay, that happy-go-lucky fellow from my hometown of Houston?
THese corrupt people are making laws to oppress me financially [the entire 1965 Higher Education Act has just been revamped] while they bend the laws to their own financial gain. So, when these people wreck the economy with their anti-market crony "capitalism" which is not capitalism at all, it DOES negatively affect MY ability to earn enough to pay back the loans.

So why don't you resent people like those politicians, Doufu? Because you have an ideology of "if you're poor it is your fault because you're lazy or corrupt or immoral..." You have the same ideology of those who said the Hurricane Katrina victims were to blame for their predicament because they didn't own automobiles [e.g., they were too lazy to earn enough to own a car].

PolyChronic Time Girl · Joined: 15 Dec 2004 Location: Korea Exited

I'm also paying back so much debt from college, and my brothers, who never bothered with college, are living quite nicely.,and making twice as much as I am. Now, I think I made the mistake of going back for my M.A...I doubt it will help me out at all.

Sometime, I think going to school for so long is more detrimental than it is beneficial. It seems that the better-off people I know here are the ones who DIDN'T go to school. Colleges seems to hold you back more than it helps you.....sad state of affairs.

Moldy Rutabaga · Joined: 01 Jul 2003 Location: Ansan, Korea

Noguri, without opening the can of worms again, although I have issues with the way Canadian student loans operate, I have indeed almost paid them in full after a few years here-- what sort of crazy loan or crummy job do you have that you cannot send back significant payments to reduce the principal?

There might be the possibility of a Korean credit card or line of credit-- having a Korean spouse sure helps get one!-- the interest might be high but robbing Peter to pay Paul might work here if the American rates you describe are so prohibitive. If you have PhD-sized loans, maybe a year in Saudi Arabia would be an (unpleasant) option. Just some ideas. Would your American loan permit you paying a lump sum in full?

Ken:>

Pyongshin Sangja · Joined: 20 Apr 2003 Location: I love baby!

7 years.

7 years.

Tiger Beer · Joined: 07 Feb 2003

joe_doufu · Joined: 09 May 2005 Location: Elsewhere

I agree it's a burden. My Stafford loans are a breeze, but it's the credit cards that are holding me down. Speaking of which, I believe a law has changed regarding minimum payments. My minimum monthly payments shot up this month, from about $300 to just over $500. I believe it's a good law, intended to protect us from ourselves... because now I'll be paying much more of the principal with each payment.

Debt puts a serious damper on life. I have a good enough degree, I could have gotten a high paying job and dealt with it. But now I just want to get rid of the debt so I can be free to take the low-paying but interesting job I want, or to start a business. "Bonfire of the Vanities" is a great book about debt and the phenomenon that as people make more money, they find themselves deeper in debt. It also captures the emotions involved with debt in an extremely good way... it almost brought me to tears.