
There Are 101 Americans with Over $1M in Student Loans - DoreenMichele
https://www.vetr.com/posts/6498190136-There-Are-101-Americans-With-Over-1-Million-In-Student-Loans
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cbanek
> Any balance remaining after 25 years is forgiven, effectively covered by
> taxpayers. The forgiven amount is then taxed as ordinary income. -WSJ

It's going to be a pretty penny still to pay the federal taxes on a $2m+ loan
(like, $400k, and that's not a loan, that's IRS money at that point).

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ggg9990
Why is Mark Meru allowed to pay back only 10% of his discretionary income? He
has a $225,000 income and can pay back more than $1,590 a month for the
education that got him to this salary level. Then he could make a dent in the
principal.

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gok
Because... those were the terms the lender agreed to?

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mirimir
And because he realized how things were going, and refinanced at the right
time, in a smart way.

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vidarh
And according to the article it is not that simple: the forgiven debt amount
will be taxed as ordinary income. Which means he'll also need to plan for å
substantial tax charge at the point when his debt is discharged.

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Simulacra
This was discussed in depth in another post a few days ago. This guy also
lives in a 5000 square-foot home, and based on a little digging by others, it
appears he has more of a spending problem then a debt problem.

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mirimir
> Bottom line: with so many borrowers set to default on their student loans,
> those who can't make ends meet will be able to pay roughly 10% of their
> income for 25 years. The remainder, such as Mark Meru's $2 million balance,
> will be an obligation of the United States taxpayer.

Is this generally true now? I mean, "10% of income for 25 years"? That's not
so bad, really. Only half of 20% income tax bracket.

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onion2k
_That 's not so bad, really._

That 10% is what middle-income people would typically use to save for things
like a 401k, a house deposit or a car. If people can't afford those they'll be
much poorer in retirement, stuck renting for much longer which will keep them
poor, and for many it'll mean they choose not to have children because they're
financially unstable. On an individual level these things are unfortunate; on
a societal level they're catastrophic. An aging population can ruin an
economy. Tax receipts don't cover basic services. It's happening in many
places already (Japan, UK, etc).

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pitaa
How does anyone think it's a good idea to take out $1M in loans for an
education? Yes, tuition costs are ridicules and in general students have no
control over them. In general, I feel like students are taken advantage of.
HOWEVER, students certainly can choose not to attend a certain school. If you
choose to rack up $1M in debt, I feel like that's solely on you and your
(obviously) poor decision making skills.

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dnsco
This article focuses on a man who took out ~600k in loans to become an
orthodontist. That interest has since compounded to 1mm. I would imagine he
took the loans out because becoming an orthodontist was his highest-paying
career option. Had he known that the variable-rate loans would be impossible
for him to pay off he probably would not have taken them out. We should not be
putting aspiring medical professionals in this position.

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yellow_postit
While we are at it let’s stop artificially limiting the number of medical
professionals.

~~~
candiodari
So the state will be increasing the budgets for university medical
departments, then ? In contradiction to what has been done for decades now ?

So, what I mean to say is that we will be increasing taxes some amount (not
much, but let's say 0.5%) to allow for this and other subjects to train more
people ?

(medicine is actually one of the most expensive things to train, requiring
lots of tools, infrastructure (literally entire hospital complexes), ...)

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jurassic
Costs are out of control and university interests are not aligned with student
interests in this matter. It seems like federal educational lending should be
capped at some lifetime maximum ($200-300k per student?). The higher ed
industry will figure out the cost side of the equation in a hurry when
students no longer have unlimited access to credit.

~~~
joe_the_user
The state should get out of the business of guaranteeing student loans
entirely and instead only give grants. The loan guarantee system is exactly
what misaligns university and student interests in loans. Universities have no
disincentive to give students loans they can't pay back.

I don't think a cap would change university behavior - it would only affect a
few students, who would be tossed out by the university to make way for the
next students.

~~~
candiodari
But the rub is in congressional abuse of accounting practices.

A loan guarantee "costs":

1) in reality: the future default rate, times the average loan that gets
defaulted on

2) in theory: the past default rate times the average loan amount

What's wrong with this:

a) default rate : the default rate under very different circumstances: the
default rate for guaranteed-by-the-state loans vs the default rate for large-
personal-consequences loans

b) amount of the loan: average loan amount vs average amount that gets
defaulted on. Everyone who's ever had a late credit card bill knows the vast
difference here.

So congress got to vastly overspend, giving the money to banks (>72% of the
dollars spent will be at the banks in the end, according to one study), while
pretending to give it to their constituency (students, overwhelmingly
democrat), in a way that will drive a wedge between them and republicans for
decades ...

So of course they did this ! I mean, sure, it will throw a decent number of
those people into destitution constantly for decades, but it's not like that's
going to make those guys change their vote. Oh, mor... ? M-what ? Oh, morality
? I donate extensively to my self-owned charities !

I mean, let's give credit where credit is due here. Democrat party : I bow to
your absolute genius.

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himom
I worked at a university that frittered away $150 million on a software
rollout that was eaten by consultants and ultimately failed in every regard.
Also, the same university is on a building binge, replacing donated buildings
barely 10 years old with shiny new ones. Given the cost of CIP projects,
that’s why tuition is so expensive... the universities playing “Keeping Up
With the Yales” by pouring money into construction. If it weren’t for building
binging, tuition would be much saner and in the realm of affordable for the
taxpayer to prevent stalling the economic futures of students to be chained in
debt with a degree that doesn’t help them enough to escape white-collar
poverty.

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dnsco
It's absurd that becoming a medical professional requires saddling yourself
with an exorbitant amount of debt. My doctor friends advise people
contemplating med school not to go for this reason. It's incredibly sad that
the economic situation is incentivizing intelligent people to stay out of
medicine.

~~~
vostok
I'm willing to bet that the AMA caps are keeping more smart people out of
medicine than the costs are.

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TomK32
Sounds like the US finally have a government-financed higher education - of
some sorts...

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sschueller
Next congress will pass a law forcing these debts to be transfered onto your
children.

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anovikov
Herd mentality: if everyone is getting a degree, i must too. If getting a
degree is an investment, why don't put as much money in there as possible, if
ROI is constant?

Both wrong. Most people who are getting college degrees nowadays simply can't
make enough use of them to even break even. People have to stop! They are the
only ones to blame; capitalism has no checks in place to prevent people from
harming themselves, maybe that's bad, but ultimately, it is their decision to
get a diploma they don't need and can't hope to put to good use, is to blame.

~~~
eksemplar
I come from a country with free education and the latter part is just plain
wrong.

Autodidact people are nearly always terrible programmers because they haven’t
learned how to think. The few of them that actually understand CS principles
are typically unable to work in teams because they’ve never been taught the
fundamentals of working together. If they do have the right sort of
personality (extremely rare in CS) they wont have the business side of things,
making them unable to work with the people they are making systems for.

Of course I lead teams in digitization where, self management, team work,
business and customer interaction is part of what my programmers need to do.

I’ve hired a lot of people by now, back between 1995 and 2005 a lot of them
didn’t have much of an education behind them, and we’ve frankly spent 5 years
cleaning up their mess since.

Today we simply require a degree.

It’s a little different in the IT department, they prefer certificates over
degrees, but a lot of university engineering programs know this and give their
students the essentials.

We do have a mix of technical degrees. There is the candidate or
bachelor(people typically never stop here) at the universities for the full
education, but we also have various academy degrees that are “almost bachelor”
programs, which focus less on the theoretical and science things and more on
practical application. Both roads are perfectly fine, but you really need that
piece of paper if you want a job that requires any sort of thinking.

~~~
s_m_t
What does learning to think mean? People who haven't gone to college can't
think?

~~~
eksemplar
Part of an education is learning theory of science, analytical methods, best
practices and scientific reasoning. At least that’s part of a higher education
in Denmark.

I’m sure people without degrees can learn in this on their own, but they are
much less likely to have done so. So why would I bother taking the risk?

It’s about probability. People with no degrees are a bigger risk than people
with degrees. That doesn’t mean there aren’t people without degrees who aren’t
better, but it does mean I won’t allocate the resources it takes to find them.

I’m not looking for the _best_ candidate, I’m looking for a _good_ candidate.

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awat
If you owe the bank $10,000 the bank owns you.

If you owe the bank $1,000,000 you own the bank.

Probably not entirely accurate for this situation but I would still love to
see the risk calculations for allowing a ~mil in student loans.

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Johnny555
The numbers are a little outdated -- multiply by 10 or 100, then it's more
relevant.

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awat
No argument on that I should probably just write it with variables.

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microcolonel
My ingenious solution: don't buy so much education, if the loans are too much.

You know you shouldn't buy a house, a car, or a business asset which you know
you can not afford or leverage to pay for itself, why do you take on debts
(and make other decisions around payments) that you know you can not repay? I
have to hope that people aren't counting on bailouts, but given the political
rhetoric that gets tossed around, it's hard to imagine that doesn't factor in
to people's poor decisions.

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benrbray
I think this is too black and white of a perspective.

First off, plenty of people buy cars they can't afford out of necessity. Or,
rather, they NEED a car for work and buy a cheap used car that inevitably
needs repairs and sucks up money they need for food, rent, etc.

I think attending college is a similar type of decision. We're told over and
over that college is the only path to decent life, and in many ways it is.
There's very little hope of someone without a degree making more than minimum
wage and even less hope of doing meaningful work. If they're already poor,
getting a job right out of high school won't pay enough to help improve their
quality of life.

So they go to college hoping things will be better.

~~~
microcolonel
> _I think attending college is a similar type of decision. We 're told over
> and over that college is the only path to decent life, and in many ways it
> is._

You're also told that Harvey's makes your hamburger a beautiful thing, that
smoking Marlboros will make you a man's man, that Tesla will deliver the Model
3 at the promised rate, and that you can keep your doctor. If your contention
is that people should not be judged for believing what they are told, then I
guess you could make that case. I certainly don't agree.

> _There 's very little hope of someone without a degree making more than
> minimum wage and even less hope of doing meaningful work._

I think there is something wrong with this, I have had 10th+ percentile income
since I was 17, and I never attended high school. I get the impression that a
number of people who have gone to college may have spent money and time better
on books and begging for an internship. The people who benefit from college
don't need assistance paying it off.

I'm aware I lost something by not going to college, but I figure it can't be
too bad, if I can't really tell what that something is.

