US study- breakeven point for U grad

alt=""id="BLOGGER_PHOTO_ID_5471504150462074386" />

University DOES work for many people.

http://www.onlinedegrees.org/research/value-of-a-degree/

private post-secondary schools have high loan default

http://www.theglobeandmail.com/news/national/career-college-students-crushing-debt-costs-taxpayers-millions/article1555629/

D: twice as high, in fact.

Figures compiled by The Globe revealed that those students made up just 17 per cent of the recipients of federal student aid, yet accounted for more than 30 per cent of the value of delinquent loans."

D: hmm. Whaddyathink? Doubling tuition in the 90s, would it have a similar effect?

http://www.hrsdc.gc.ca/eng/hip/cslp/statistics/08_st_DefaultRatesCanadaProvinces.shtml

Yup. See pic.

I started U in 1991. They got rid of grants. Good for 1% on default rates.
I finished in um 1997. But in the following years, the rate DROPPED. So... times got better, right?
Nope. That was when the minimum years-to-default rules came out.
It artificially suppressed rates.
Time were tough. The U tuition had DOUBLED by then from 1990, at an increase of 10% per year it only takes c. 7 years.
So really, the getting screwed up the A** had the addition of no more Vaseline at that point.

By 2001, any ex-student who could obviously bellied up ASAP. It had not been true before. Not to 'screw the system'.
Cuz they knew the system would screw them MORE given half a chance.

I recall the papers talking about the accumulated total of bankrupted student loan to shock the public.
Of course, most of that had been Baby Boomers.
Baby Boomer sins being used to justify punishing Gen X. Rich...
Baby boomers were all but encouraged to default. The student loan could not even appear on their credit report.

The sins of the father are passed on to the son, apparently, and 7 generations.
But it is the FATHER administering the punishment for his own behavior!
Do you feel indignant?
Why the hell not?

Do I feel bad about not paying my loan back (caveat). Well I tried to pay it without the necessary income for years. So at the time, obviously I did. But no. Not at ALL.
Why? How could I be so ungrateful?
1) I DID pay it back, counting interest. And I quite possibly would have paid it back 4x by retirement. All the while living at a poverty-to-LICO level. I just never made serious inroads into the principle.
Here's a lil' factoid. Take away all the booze I ever drank. All the toys. And I STILL would have owed a big debt!
It would have changed nothing at all.
2) I was dealing with Dark Vader. Really. Let me explain.
I signed a contract. Which I agreed to. There was a trailer that said 'we can do anything we want to you'.
I didn't know they'd use it!
The debt I agreed to could be defaulted on. If things were bad enough. It was why I was trying to pay it in good faith.
At first.
Recall the line from Empire Strikes Back.
In Cloud City.
Lando Calrissian: That wasn't the deal!
Darth Vader: I am altering the deal. Pray I don't alter it further.
And there it was. I realized I was Lando and Darth was a dick.
So Lando screwed him back. Good for him.
Good for me.

Here's a couple hypothetical financial scenarios.
1) I tried to work off my debt
2) I tried to ignore it and go back to school.

1) That wasn't working anyway. Oddly, at Mcwage at Mcjob, I can only pay rent.
Take a debt of c. 25,000 bux. At 4% interest that is $1000 interest per year. So my token payments of 100/month... paid interest. In perpetuity.
I realize now that the c. 10% interest when I got out of school meant the 4-5000 I couldn't afford to pay had no impact whatsoever. Family got tired of bailing me out when I couldn't pay rent. Strangely paying about 4000 before balking.
I should never have tried.
We can extrapolate to c. age 65- in theory, retirement age - that I may very well STILL be treading water on paying interest in this scenario. Assuming age 25 to 65 - 40 years - and an interest rate that meant say 1-2000 per year (call it 1500)...
40x1500 = 60,000 in interest payments. 2-3x the actual principal amount.
But NEVER paying down the principal.
No house, no retirement savings.
Right.
2) Ignore it. Take school to PhD.
I'll be 40 starting grad school. A PhD, optimistically, at age 45.
Age FIFTY TWO before I could even consider bankrupting.
While hoping for some sort of prof gig to take off.
Which would, in turn, mean bad credit until age FIFTY NICE. About 60. Almost retirement.
Again, no house, no retirement nest egg.

If I could have seen the future there are 3 things, sequentially, I would have done:
1) used the $10,000 I saved at the end of high school for something else
2) not used student loans
3) bankrupted IMMEDIATELY after leaving school!!!
At age 40, I could have owned a home by now in scenario 1).

To summarize this entry, default rates are closely tied to tuition rates and ensuing loan levels.

The present student loan program is best considered a poison pill for the needy, but really just a subsidy for the comfortable middle class. Tax the middle class to pay the middle class. Not progressive.
Just like the present tax breaks on school costs and loan repayment.

I recommend to any student who has been out of school 7 years, and has an untenable debt, to default - barring other considerations - RIGHT NOW. Before Darth's rules change again.
It's self-preservation.
Darth, Lando was not being an asshole. You were.

I'll talk you through it next time.