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> this guy has the financial acumen of a brick Sounds like he's doing the smart thing at this point, doesn't it? He borrowed over $600,000. By the end of the

> this guy has the financial acumen of a brick Sounds like he's doing the smart thing at this point, doesn't it? He borrowed over $600,000. By the end of the 25 year period he'll likely have paid back less than the original principal.

Hasz 8y ago
From the article "Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948. It will keep growing through the 25-year life of the repayment plan until it reaches $2 million. That sum will be forgiven and, at current tax rates, could cost Mr. Meru more than $700,000 in income tax payments. By then, Mr. Meru will have paid $1.6 million. That would be about the same as repaying his $600,000 in student loans at a rate of 4% over 25 years, said Jason Delisle, a student-loan expert with the American Enterprise Institute, a conservative think tank. The biggest factor in Mr. Meru’s runaway debt, he said, was a high principal combined with long periods when Mr. Meru made no payments."
- Harvey-Specter 8y ago
  I don't have access to the full article, but > lowering the rate to 7.25% > repaying his $600,000 in student loans at a rate of 4% These two things don't jive. Did he have the option of a loan at 4% at some point?
  - nononope 8y ago
    Yeah. The years before the federal student loan interest rates went over 6.49% and private loans went over 7.25% FOR EVERYONE.
  - hellogoodbyeeee 8y ago
    I think the article is saying that had he received a loan at a 4% rate for 25 years he would paid the same amount toward the bill as he is currently doing for loans at a 7.25% rate with loan forgiveness at the end. The 4% is a hypothetical rate, not a real one. Though he did have at least one student loan at a rate of less than 5%. Most student loans are made up of smaller loans. For example, my wife's "student loan" is $100k, but it is made up of 8 loans of 4k to 30k with varying interest rates of 3% to 6.5%. Rates increase every couple of years. To be clear, federal loans are fixed rate loans, but each year you are in school, you may incur new, higher rate loans than the year before.
  - nononope 8y ago
    His first loans were probably 4%. In 2007-8, all loan rates doubled to predatory levels, along side the cost of tuition. He got a doctorate, thats like 8-10 years. Federal loans get cut off at about $27k. So, he likely got private loans with interests rates upward of 8%, loans were purchased by the DOE and he was able to consolidate to a lower rate based on the amount he owed each lender and their respective interest rates. I pay 6.25% because I have autopay and getba discount. Doesn't change the $300/mo interest I accrue monthly
  - nononope 8y ago
    His first loans were probably 4%. In 2007-8, all loan rates doubled to predatory levels, along side the cost of tuition. He got a doctorate, thats like 8-10 years. Federal loans get cut off at about $27k. So, he likely got private loans with interests rates upward of 8%, loans were purchased by the DOE and he was able to consolidate to a lower rate based on the amount he owed each lender and their respective interest rates. I pay 6.25% because I have autopay and getba discount. Doesn't change the $300/mo interest I accrue monthly.
deleted 8y ago
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Hasz 8y ago

From the article "Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948. It will keep growing through the 25-year life of the repayment plan until it reaches $2 million. That sum will be forgiven and, at current tax rates, could cost Mr. Meru more than $700,000 in income tax payments. By then, Mr. Meru will have paid $1.6 million. That would be about the same as repaying his $600,000 in student loans at a rate of 4% over 25 years, said Jason Delisle, a student-loan expert with the American Enterprise Institute, a conservative think tank. The biggest factor in Mr. Meru’s runaway debt, he said, was a high principal combined with long periods when Mr. Meru made no payments."

Harvey-Specter 8y ago
I don't have access to the full article, but > lowering the rate to 7.25% > repaying his $600,000 in student loans at a rate of 4% These two things don't jive. Did he have the option of a loan at 4% at some point?
- nononope 8y ago
  Yeah. The years before the federal student loan interest rates went over 6.49% and private loans went over 7.25% FOR EVERYONE.
- hellogoodbyeeee 8y ago
  I think the article is saying that had he received a loan at a 4% rate for 25 years he would paid the same amount toward the bill as he is currently doing for loans at a 7.25% rate with loan forgiveness at the end. The 4% is a hypothetical rate, not a real one. Though he did have at least one student loan at a rate of less than 5%. Most student loans are made up of smaller loans. For example, my wife's "student loan" is $100k, but it is made up of 8 loans of 4k to 30k with varying interest rates of 3% to 6.5%. Rates increase every couple of years. To be clear, federal loans are fixed rate loans, but each year you are in school, you may incur new, higher rate loans than the year before.
- nononope 8y ago
  His first loans were probably 4%. In 2007-8, all loan rates doubled to predatory levels, along side the cost of tuition. He got a doctorate, thats like 8-10 years. Federal loans get cut off at about $27k. So, he likely got private loans with interests rates upward of 8%, loans were purchased by the DOE and he was able to consolidate to a lower rate based on the amount he owed each lender and their respective interest rates. I pay 6.25% because I have autopay and getba discount. Doesn't change the $300/mo interest I accrue monthly
- nononope 8y ago
  His first loans were probably 4%. In 2007-8, all loan rates doubled to predatory levels, along side the cost of tuition. He got a doctorate, thats like 8-10 years. Federal loans get cut off at about $27k. So, he likely got private loans with interests rates upward of 8%, loans were purchased by the DOE and he was able to consolidate to a lower rate based on the amount he owed each lender and their respective interest rates. I pay 6.25% because I have autopay and getba discount. Doesn't change the $300/mo interest I accrue monthly.

deleted 8y ago

[deleted]