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The current fashion of calling people "judgmental" amuses me. Of course we all make judgements, and about others. I think it is empty criticism, it's just knee-jerk.
In general, broadening our thinking is a good thing, I'll leave it at that although I am often amused at how the righteous are broad minded enough only to allow their own point of view.
The problem that I see is that Redfox gave us her information and asked for advice. Instead of offering advice Yarrow started judging her for ever buying a house, etc. I do not see that as help & she was asking for help.
Agreed, past actions are water over the damn.Quote:
Originally Posted by Teacher Terry
But guess what--I see the same behaviors repeated in people when the consequences of the first behaviors were clearly a problem. It happens, we are all human, we sure as h*ll are far from perfect. But in order to step out of our path leading to consequences we don't like, we need to recognize the path in order to stop going down same.
I have had problems in my life with debt, so I tend to give advice that tries to steer people away from debt. It has caused me much pain to live in the future that way, on future expectations.
I think I have a hard time not sounding preachy when I talk about this. If I have offended, Redfox, I apologize.
But I am intrigued by the question you asked in your op, because I am so close to your age and facing the same questions about retirement and housing, etc. I think we need a new paradigm, since the old paradigm is not really attainable by many at this stage of the game.
What that paradigm looks like, I am not sure. That's why I like hearing about creative ideas like Catherine's about the Tumbleweed house, or your husband's idea about the studio and renting out the house. Those are creative! I keep looking for solutions to my own problems, lol.
The Student Loan Scam:
Congress passed legislation in the mid-1990’s that skewed student lending to benefit lenders/educational institutions at the expense of students.
•student debt can’t be discharged in bankruptcy
•loan companies/guarantors own collection agencies and can write their own ticket for fees/penalty rates on defaulters—giving them an incentive to allow borrowers to default—lenders will not work with struggling borrowers
•lenders can garnish wages, tax returns, social security, disability
•defaulted loans do NOT qualify for the rare student loan forgiveness programs
•upon consolidation, student loan interest rates may not be renegotiated by borrowers—EVER!
•average national interest rate on outstanding student loans—currently 12%
•student loans are exempt from statutes of limitations for collection, usury laws, Truth in Lending, and Fair Debt and Collections
•lenders are also allowed to take up to 25% as collection fees on defaulted loans
•universities often have "preferred-lender" arrangements with the universities and receive kickbacks
•borrowers wanting to consolidate their loans must use the original lender
None of which happened before student loans were privatized. Yet again, another failed experiment with privatization, this time on a HUGE scale.Quote:
Originally Posted by onlinemoniker
What that paradigm looks like, I am not sure. That's why I like hearing about creative ideas like Catherine's about the Tumbleweed house, or your husband's idea about the studio and renting out the house. Those are creative! I keep looking for solutions to my own problems, (Rodeosweetheart)
I think housing is one of the biggest challenges facing many of us as we age/retire. So have you thought about downsizing, maybe a condo, etc. Not sure what your exact situation is. my hubby & I downsized to a much smaller house when we semi-retired. All expenses went down which was great.
I don't understand where the "scam" comes into play. A person borrows money, for whatever purpose, and there is an expectation that what is borrowed will be repaid, with interest. I could see where it might be considered a scam if the borrower were led to believe that the borrowed money did not require repayment, but that's not the case, is it?Quote:
Originally Posted by onlinemoniker
The scam comes from the insertion of the private sector into the student loan business in the first place, and also the predatory nature of these loans - hence, the numerous lawsuits against for-profit schools with recruiters paid based on how many people they can sign up to attend.
And if bankruptcy laws can discharge debt from clothes, shoes and vacations put on credit cards, then student loans should not be singled out as non-dischargable.
If the government didn't meddle with the guarantees no one would loan 18 year old's thousands of dollars with no collateral or credit. I do agree that it is to easy to get loans for college.Quote:
Originally Posted by Lainey
Who in their right mind would loan some kid over $100k that could just come out and default just out of school?
In the liberal mindset these people are just victims. Its just bad luck that they can't pay back their loans. Or they just were to stupid to understand at the time what they were doing.Quote:
Originally Posted by Alan
It has to be someone else's fault.
Lainey: I agree. Student loans in their current form are totally predatory lending.
That’s why I am just so grateful that President Bush signed the Public Service Loan Forgiveness Act of 2007. With this program, a public school teacher like me can pay an income-based payment on her student loan for 10 years and if she is still in public service at the end of ten years of payments, the balance of the loan is forgiven!
Without this program I was looking at a totally unfair payment of nearly 60% of my net salary going to repay my student loans each month. As that would have been an impossible payment if I also wanted shelter and to eat regularly, I knew I was going to be taking this debt to my grave. But now, my payment is a very reasonable and fair 9% of my gross salary or just a little less than 20% of what I would have paid on the standard 10-year repayment plan.
I can eat, buy a house, pay my bills and plan for my future retirement! And the best part is, I can spend my entire career doing what I dreamed of doing; giving back to my community as a public servant.
I encourage every public servant I meet who has crippling school debt and is concerned they may have to leave public service for a more lucrative career in the private sector to look at this program. I am so happy that President Bush and the 110th Congress realized the critical importance of public servants to the welfare of the nation and made this act a reality for struggling government and non-profit workers.
Redfox: I don’t know if you’re a public servant but if you are, please look at this program! It may be your answer. If not, keep your fingers crossed. Congress is working on another loan forgiveness program for private sector workers.
As I recall, the private sector was always the lending agent in the process, albeit with government guarantees.Quote:
Originally Posted by Lainey
Are you saying that recruiters were responsible for the loans that students received? Is a car salesman responsible for someone buying too much car, or a credit card company responsible for the $60K of credit card debt many run up? When does an individual become responsible for their actions?Quote:
...and also the predatory nature of these loans - hence, the numerous lawsuits against for-profit schools with recruiters paid based on how many people they can sign up to attend.
That's just it. The default rate on student loans is very high, something like 20% at two years into re-payment and higher at each additional year in the re-payment schedule. Who in their right mind would assume that risk without adequate protection?Quote:
Originally Posted by dmc
That sounds like quite a deal. I went to school without loans, although as a Vietnam era veteran I did receive approximately $350 per month in Veterans benefits, as long as I kept my grades up and attended class regularly. I also worked full time while attending evening college. Those two factors ensured that I graduated without a penny of debt. If I had been smart, I'd have taken out enough school loans to purchase a house and then let the government forgive the loan after 10 years.Quote:
Originally Posted by onlinemoniker
Maybe the scam is they create the money out of thin air (and they really do loan it into existence) and then charge interest on it. I think state schools are a way better way to go about it (just hard if you can't get classes). But then I have little in the way of formal degrees (and the 2 year degree from city college - relatives paid) and I have even less debt (as in not a penny of debt to my name - well ok I haven't fully paid off this years auto insurance - so may pay a small amount of interest there).
Student loans are really, really costly. But I don't necessarily see the difficulty in getting out of paying them (not bankruptable, etc.) as a bad thing. I think Alan's right--the rate of default is probably very high. If it were easier to default, no doubt they'd have to raise interest rates or something like that to cover their losses.
However, I also think that people (kids and their parents) go into borrowing blindly, and I think it's been so ingrained into our consciousness that student loan is "good debt." Well, it's not good debt if you are a slave to it. How ironic is the situation that onlinemoniker mentioned--to go to school for your dream job and then you have to defer your dream job because of the high cost of the education that got you there. Also, people also have the very erroneous belief that an expensive school has inherent good return on investment down the road. In fact, Malcolm Gladwell's new book says the opposite--that it's better to be a big fish in a small pond than a small fish in a big pond. Those small ponds have smaller price tags typically.
These are all things I learned with my experience with my kids. Two of my sons went to community college and then to the State university. No debt--totally cash-flowed. One is now a lawyer and the other got his dream job up in Vermont. My daughter wanted to go to an expensive private, liberal arts college. Because my grandfather funded my education carte blanche, I wanted to do the same for her. I cash-flowed two years, and took out student loans for the other two years.
If I had it to do over again, or even if someone had explained to me how repayment is different for student loans than it is for other types of loans (three years of interest only, for instance) I would have discouraged my daughter from going to the expensive school, I'm sorry to say. The other frightening thing was how easy it was to get those loans! I got one student loan approved in a lunch hour--from the initial call to the acceptance. I was shocked at how fast they were willing to give me money.
My son, who now works at the school that he graduated from, tells me there are bills in the New Jersey legislature that would mandate full disclosure of the downside of student loans by the lender/school at the time of application of the school loan, very similar the the new credit card laws that tell you on your bill how much interest you pay if you only pay the minimum each month.
These student loans are one more thing now coming between me and a financially healthy retirement... arghh...
I went to school as an adult & saved the $ first so no student loans. However, unlike Alan I don't begrudge the people that need to take them.
Begrudge? Why would you say that?Quote:
Originally Posted by Teacher Terry
I'll admit to being skeptical of the concept of "student loan scams", but I'm a free market kinda guy. If someone wants to borrow huge amounts of money for their education, more power to them. And, I'll also admit to being intrigued by the nature of some of the programs designed to forgive that debt. It seems that an enterprising person could benefit in many ways, outside of simply receiving a discounted education.
I re-mortgaged my house 5 years ago in order to pay off my daughter's student loans, as it became apparent that she would not be able to afford the life we wished for her as a result of the debt. We'll take it off of her inheritance. ;)
I believe that the current problem with student loans involves those who default on the loans, making it harder for the next group requiring assistance, as lenders try to protect themselves. Adjusting for risk is a natural component of lending.
I made that comment Alan because you said you should have borrowed enough student loan $ to buy a house & then get it forgiven in 10 years.
Are you aware of any safeguards to prevent it from happening? Also, if a person borrows $100K through the student loan program, what are the odds that the entire $100K went to education expenses? Just curious.Quote:
Originally Posted by Teacher Terry
When I was in college I knew alot of adults that borrowed way more then they needed & lived a great life. Bought stuff that them & their kids did not need-I guess they were sick of being poor. I remember thinking at the time this is a really bad idea. We had 3 kids and lived frugally then to pay for my college & later to help the kids.
That was never the case for me, Redfox. When I was in school and getting my loans nothing was dispersed to me for living expenses until all my tuition, fees and room and board were paid in full. All I got was money for books. I never took all the money that was offered to me with my FAN. I had a job the entire time and didn't need all that money and I kind of knew it was going to be a big burden paying it back. When I was in grad school and no longer living in the dorm, the money for living expenses went to my rent. I didn't want to live in my car so it never occurred to me to buy a car with it. Anyway, I didn't get and entire academic career's worth of aid in on check. They stretched it out over the years and semesters.Quote:
Originally Posted by redfox
Please go back and re-read what onlinemoniker posted originally:Quote:
Originally Posted by dmc
The Student Loan Scam:
"Congress passed legislation in the mid-1990’s that skewed student lending to benefit lenders/educational institutions at the expense of students. •student debt can’t be discharged in bankruptcy
•loan companies/guarantors own collection agencies and can write their own ticket for fees/penalty rates on defaulters—giving them an incentive to allow borrowers to default—lenders will not work with struggling borrowers
•lenders can garnish wages, tax returns, social security, disability
•defaulted loans do NOT qualify for the rare student loan forgiveness programs
•upon consolidation, student loan interest rates may not be renegotiated by borrowers—EVER!
•average national interest rate on outstanding student loans—currently 12%
•student loans are exempt from statutes of limitations for collection, usury laws, Truth in Lending, and Fair Debt and Collections •lenders are also allowed to take up to 25% as collection fees on defaulted loans
•universities often have "preferred-lender" arrangements with the universities and receive kickbacks
•borrowers wanting to consolidate their loans must use the original lender"
It's not students being unable to repay their loans, it's getting into a contract that is far more punitive than any other similar contractual agreement.
One more: Banks' Student Loan Gravy Train:
http://www.dailyfinance.com/2010/03/...ly-got-halted/
Were they forced to take the loan? Did they not think that they would be required to pay the loan back? Loans are made for the lender to make a profit, or at least keep up with inflation. Most of the rules you seem to be complaining about only effect those who are trying to default on the loans.Quote:
Originally Posted by Lainey
I agree that the money was to easy to come by. Without the government agreeing to the above rules many of the loans would not have been made. What do you think the interest rates would be for unsecured loans?
I don't understand why the banks are so worried about making a profit. When they make bad loans en mass they just start screaming for a bailout and then the government and federal reserve happily comply with trillions of dollars.
I don't agree with that either.Quote:
Originally Posted by jp1
I do get tired of the idea that anything is OK since someone else does it.
I don't think it's about ok, I think it's about if the only one "following the rules", either because they have so much of a conscience - and good, but it seems far from the best use of it, or far more likely because the system as such is setup so the rules only apply to them, then that leads to certain structural consequences, a society that is a certain way. I mean the banks can't actually get bailed out and then "move on nothing to see here". Joe Schmoe following all the rules because "anything is not OK just because someone else does it" and because rules are actually enforced on him, banks getting all the money in the world in bailouts forever and ever, will lead to Joe Schmoe bankrupt and on the streets and the banks charging him interest for the sidewalk he sleeps on. That's really not that much of an exaggeration. And in that case who do you think most people would rather be? Joe Schmoe whose rewards are not in this lifetime, or a bankster? You don't even have a cultural structure that values HOW people got their money over merely having it (not this culture!) and the economy certainly doesn't (even if it was literal blood money noone will ask - money itself is a laundering operation, it launders social conscience so it all comes out smelling green, uh I mean clean, in the end).Quote:
Originally Posted by dmc
DD did not take on college loans until she was in grad school. Even with merit-based scholarships, she still amassed quite a bit of loan debt to get through the two years. This was seven years ago and my recollection was that the media pumped out the message non-stop that college loans were "good" loans and that one couldn't make it in the world without an advanced degree. Now, seven years later, she like so many others moans about her indentured servitude to obtain the education needed to achieve her career goals. Seems to me like a society that really valued educated citizens would make low cost education a top priority. There was a time when education at a state university was ridiculously cheap. I don't know about other state universities but ours is rich beyond belief due to oil, gas and real estate interests yet tuition goes up every year...along with student loan debt.
The government stepped in to make it easy to get school loans. Then due to easy money the colleges did what they could to attract new students, then upped their prices. Not much different than housing.
I paid for both my kids college, they also went about 7 years ago. It was a lot of money, but I don't think two years qualifies for indentured servitude. Still no one forced the students to take out a loan, and I would think that the terms were in the loan documents.
If people quit going to state college's and said the cost were to high, what do you think would happen? I would think they would cut cost and reduce the price of tuition. But student's like the fancy building and continue to pay for them.
+1 See Germany.Quote:
Originally Posted by pinkytoe
Back then as now, I resist "media messages" about consumption. If others do not that, it's on them. I wish that state universities would not build the giant rec complexes and etc. Ridiculous. I would value a University education with well known and respected profs without the silly bells and whistles. It's time that the public stands up and says "no f**king more."Quote:
Originally Posted by pinkytoe
Wash Univ OTOH can charge whatever they like as a private Univ with cache'. My frenemy The Garden Diva has a MSW degree from there and is very well known as a sex therapist. She worked with Masters and Johnson and is a consultant on the teevee show. I know 2+ people who have followed her lead but they are not employable (one is just nuts) although they are in the trendy field of sex trafficking, traffickers, and trafficked.
I haven't read the other posts yet so sorry if I'm repeating. But I would try to get rid of the house. Clearing that huge long term debt would give you much greater flexibility now and in the future - and certainly more available moolah to put towards debt and savings each month. I'd look at renting a small apt at half the cost of your current mortgage - and it would probably be much more than half the cost of the house once you figured out your "real costs" associated with owning the house - taxes, insurance, maintenance, repairs, extra utilities, etc.. Then I'd work on paying off everything else and starting to save a nest egg for both emergency funds and retirement funds. You have what to me is a very high gross income and once the albatross of a big house debt and other debts are out of the way, you should be able to save like the dickens.Quote:
Originally Posted by redfox
However, if you want to hang onto the house, then I'd first add up ALL the costs associated with owning the place to get the true annual costs involved. Then decide if keeping the house is of enough value to you that you'd want to keep it even though it might mean you and the hubs would have to work many years longer, and sacrifice many more things and perhaps go without any savings in your old age, in order to keep the house now. If you still want to keep the house then I would try to maximize my and DH's income by getting second jobs, and really reduce all my expenses to the bare bones and pay off all non-house debt first then start saving. I probably wouldn't pay extra towards wither the house or the student loan until my other debts were paid off, then I'd make sure I'd have an emergency fund and a bit going to a retirement fund. Then, if I had extra money left over, I'd start to pay extra towards the house and student loans. I'd only pay extra on the student loan debt and mortgage if they were constantly being adjusted upwards. If that was the case I'd probably pay them first - unless, as you said, the student loans may be discharged at some future point or I planned to sell the house at some future point. I'd also look into getting a roommate or 2. Both my Mom, and then myself, did that when we each got divorced in order to have extra money to cover our housing costs. I got 2 roommates and the income I got from them allowed me to pasy extra towards my mortage each month until I paid it off. Then I used that roommate money to put towards savings until I had built up a sizable fund. Then I booted them out as I didn't need their income anymore :-)! I'd do that if you want to keep the digs and also pay extra towards your debt or savings..
Me too. But that generation (milennials?) are all about media and doing what their peers do. She had attended a specialty magnet high school and all of her friends were lock step about getting advanced degrees. And Wash U was VERY expensive after attending state u for undergrad. But it was important to her to attend a highly rated school in her program.Quote:
I resist "media messages" about consumption. If others do not that, it's on them.
Redfox-
What could you sell your house for?
Rents in Seattle are high and going up. There is no rent control. I can't imagine having roommates; I could hardly imagine it when I was 18. The very last thing I'd do is give up my house, personally, unless there was a cheaper, nicer one waiting in the wings.
I don't mean this to sound snarky. But. If selling your "home*" is not an option, you aren't serious about getting out of debt. Just sayin'Quote:
Originally Posted by redfox
So perhaps you are entirely right that selling the dwelling in which you reside will not net savings. But I would look to what super frugal girl Spartana says and she is suggesting that a realistic review of your housing costs will show that you can in fact rent cheaper. She has always lived in an expensive part of the country, as do you.
I would also suggest that when you retire on SS income, living in Seattle will not be an option. Too expensive.
* home is a realtortm consumer driven emo word to evoke feelings that drive humans into non-rational decisions. I live in in a house. You live in a house. It's a damn dwelling made of sticks and brick. If you wish to ascribe warm fuzzy descriptions to it, that's fine, but never forget what that costs you in real money.
It's so easy to make assumptions about others' choices. Your values about your "house" are yours, not mine. Your judgements about my intentions getting out of debt reflect the way you choose to live, and that's it.
There have been some interesting suggests made here, and then there has some disrespectful nastiness. I'm done sharing my financial details with this group.
IL, I just had that conversation with DIL. A house is just a house, as Burt Bacharach said, or something along the lines of a house is a house and a home is the people inside (grossly paraphrased)Quote:
Originally Posted by iris lily
Emotion is chaining me (or I should say DH) to our house. I know unequivocally that I should sell both my house and BIL's house in which we have 50% interest. I would sell both, rent for a couple of years and save up money for a smaller house in a less expensive area. I mean, it just makes sense.
I do prize the memories I have of raising my children there, and those memories are handcuffing DH's emotions to the house (my handcuffs are more the chinese handcuff type--I'm still attached, but feel I can escape my cuffs much more easily), and he refuses to entertain even a discussion of moving. I'm in Burlington VT right now, and would love to take him on a home tour just to get him thinking that JUST MAYBE there are other places he could be happy living in.
redfox, I'm sorry you felt attacked by nastiness.. we all do have strong opinions on these boards, that's for sure. I personally totally understand your predicament. The right answer is yours alone and only you will be able to discern the right direction when the time comes.
Catherine, check this one out:Quote:
Originally Posted by catherine
http://www.realestateinvt.com/proper...-Road/18411365
I like the fireplace. The taxes are 4200 a year, though. Don't know how that compares with your current place. On the other hand, it is glorious Vermont (got my masters in VT).