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I was lucky enough to not have to take out loans, but we did finance my wife's law school education predominantly with loans. The thing I never understood was
by ssharp 11y ago
I was lucky enough to not have to take out loans, but we did finance my wife's law school education predominantly with loans.
The thing I never understood was the interest rate. It seemed like we were locked into a 6.5% rate no matter what, but others were getting loans at nearly half that rate. I'm not sure if this was based on need (seems like a dumb way to set interest rates), when we first started taking the loans, or what.
Once you graduate, you're able to refinance into a private loan, which will get you a lower rate, but you seem pretty stuck while in school and unsubsidized loans accrue interest while you're in school. Our loans will be paid off in a few short months, but we have been scrimping by the past two years in order to put as much money as possible towards the loans. I'd guess most people don't graduate as undergrads to this type of scenario. With law school, you're hopefully graduating into a nice paying position and are in a better financial place to pay off the loans. I do find it a bit ridiculous that during a period when you could finance a house at 3%, a car at 2%, and could only get 0.5% or 1% on a savings account that the government was collected 6.5% of student loans. Yet, they did, and lots of students are going to be stuck paying multiples of their actual education cost as they pay interest on those loans for 30 years.
There is a government program where if you work in the public sector for 10 years, they will forgive your law school loans. I did the math on this and it ended up costing less money to just pay off the loans as quickly as possible rather than pay 10 years worth of interest on them, while being indentured to a single public-service job that likely pays less than the private sector anyway.
- ASinclair 11y ago> I do find it a bit ridiculous that during a period when you could finance a house at 3%, a car at 2%, and could only get 0.5% or 1% on a savings account that the government was collected 6.5% of student loans. You can't repossess an education... yet.
- kefka 11y agoThat's not entirely true either. They can attack your licensure if you aren't current on your student loans. And for certain high-scholastic-debt careers, also makes you lose your job, and therefore further ability to pay said loans. The scary part is the revocation doesn't have to be for the degree the loan was for. For example, if you tried being a lawyer, and couldn't find a job, you look elsewhere. You decide to join the pipefitters and steamfitters union for plumbing, which requires a license. Later on, the state can remove your license to practice plumbing. List of states with such laws on the books: http://www.jwj.org/wp-content/uploads/2015/02/State-Laws-and-Statutes-That-Suspend-Professional-Licenses-and-Certificates.pdf http://www.jwj.org/wp-content/uploads/2015/02/State-Laws-and... Bloomberg discussing the particulars of license revocation due to default: http://www.bloomberg.com/news/articles/2015-03-25/these-states-will-take-your-license-for-not-paying-student-loans http://www.bloomberg.com/news/articles/2015-03-25/these-stat... Findlaw discussion: http://blogs.findlaw.com/greedy_associates/2015/04/defaulting-on-a-student-loan-can-cost-you-your-law-license.html http://blogs.findlaw.com/greedy_associates/2015/04/defaultin... ... But you still owe the loans, because even the private educational loans were also federally backed.
- ssharp 11y agoYou can't erase student loan debt with bankruptcy either, so its not something you can really walk away from like a car or house.
- dragonwriter 11y ago> You can't erase student loan debt with bankruptcy You can, though its harder than many other categories of debt. That you can't is a popular myth which makes the problem worse, since it discourages people from looking into the possibility of doing so.