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My CS degree from UC cost me ~120k in the end -> $90k of borrowing which accumulated $30k of interest by the time I graduated. The fact that they used to charg

My CS degree from UC cost me ~120k in the end -> $90k of borrowing which accumulated $30k of interest by the time I graduated. The fact that they used to charge 8% interest on those loans is just plain evil. It's not like it's unsecured, it's the only kind of loan you can't get rid of during bankruptcy.

throwaway98797 6y ago
What rate would be not evil?
- lotsofpulp 6y ago
  The one where the government is simply not involved in lending students money. Situation A: Government offers unlimited amounts of loan money for students. Colleges increase prices since their customers have infinite money. Children and their parents go into further and further debt as colleges keep raising prices and there is no limit to the amount of debt the government will underwrite. Situation B: Government does not lend any money. Colleges have to keep tuition at affordable levels, and/or obtain funding from government. Children pay an appropriate amount of money for education and don't waste money on fancy gyms and stadiums and catering halls and ceremonies and extraneous administrators.
  - Teknoman117 6y ago
    As I understand it, the government used to lend money for student loans, but it doesn't do so any longer. "Federal student loans" are nothing more than a public front for private loan companies. Sounds familiar to another intensely politicized system... My parents told me federal student loans (actually from the government) had a fraction of a percent interest when they went to college in the late 80's, although neither of their families had any money to speak of. I'm different in that my parents worked their way (along with a fair amount of luck) to teetering on the edge of entering the upper middle class. They didn't have enough money to send all of their kids to college, but were able to pay for the non-tuition expenses we couldn't cover ourselves on school jobs. I don't know what student loans would have looked like for a family in an equivalent position in the late 80's. My main hope is that barring some form of socialized education system happening in the next 20+ years that I'm able to pay for the educations of any future kids of mine without severely hurting myself financially, and succeed in raising them in such a way where they understand and appreciate the gravity of such a thing.
- Teknoman117 6y ago
  In my mind it's not so much a specific rate being evil, rather that their justification for its rate being unfounded. The only way to escape a federal student loan is dying. Loan forgiveness is the government paying the creditor. It's not your average unsecured loan you can shirk through bankruptcy.
rhino369 6y ago
It's still unsecured because there is nothing they can repossess. My guess that--without discriminating on a person by person basis--8% is pretty fair. I certainly wouldn't loan 20 year olds 90k dollars for only 8% return. The real scam artists are the schools, which have bloated the cost of an education beyond all reason.
troupe 6y ago
You borrowed $22.5k per year ($90k/4) and ended up with $30k in interest by the time you graduated with a 4 year degree? Federal loans don't charge you interest until you graduate. The numbers you are using would need to be a loan at 20% interest with interest charged from the very beginning. Were you using credit cards to borrow money for school?
- Teknoman117 6y ago
  I probably have the principle off a bit. It's troublesome to keep track of when each year is two separate loans (one in my name, one in my parents'). All I recall for certain is when I refinanced a year after graduation I had to borrow 118k to cover the whole thing. I finish paying it off this year (total of 5.5 years, 4.5 on the refi loan + 1 year of paying before that). At least at the time I went (2011 to 2016), federal loans had two modes - subsidized and unsubsidized. Subsidized loans don't begin to accrue interest until graduation, the unsubsidized ones start accruing on day 1. They only accrue interest on the principle though, it's not compounded. If you don't pay off the accumulated interest within 6 months following graduation, it's capitalized (added to the principle). My parents always told me that their gross income determines whether or not you can get the subsidized loans, even for the fraction of the loans in the student's name. They always complained how it didn't take cost of living, home ownership, or how many children you had into consideration. Sure, they were well enough off that they could have probably afforded to pay for me, but my 2 younger siblings and I were all college bound. I would have never assumed or expected them to pay for my schooling anyways. I wasn't raised that entitled. The first year I attended UC, the Parent Plus loans represented something like 80% of my borrowing. The first year was at 7.8% on my parent plus loan, 5 and something on the ones in my name. I get that I'm in an enviable position to have been able to easily handle that due to tech industry income, but I work with a ton of European expats, all of whom take jabs at me for coming from a country that doesn't cover higher education for their citizens. Always stings a bit.
jaybrendansmith 6y ago
Agree with this. It should be considered to be a 'secured' loan, backed by the government. The rate would be determined by the market based on the above. I believe this is how it used to work, way back when. Not sure why it was changed.

throwaway98797 6y ago

What rate would be not evil?

lotsofpulp 6y ago
The one where the government is simply not involved in lending students money. Situation A: Government offers unlimited amounts of loan money for students. Colleges increase prices since their customers have infinite money. Children and their parents go into further and further debt as colleges keep raising prices and there is no limit to the amount of debt the government will underwrite. Situation B: Government does not lend any money. Colleges have to keep tuition at affordable levels, and/or obtain funding from government. Children pay an appropriate amount of money for education and don't waste money on fancy gyms and stadiums and catering halls and ceremonies and extraneous administrators.
- Teknoman117 6y ago
  As I understand it, the government used to lend money for student loans, but it doesn't do so any longer. "Federal student loans" are nothing more than a public front for private loan companies. Sounds familiar to another intensely politicized system... My parents told me federal student loans (actually from the government) had a fraction of a percent interest when they went to college in the late 80's, although neither of their families had any money to speak of. I'm different in that my parents worked their way (along with a fair amount of luck) to teetering on the edge of entering the upper middle class. They didn't have enough money to send all of their kids to college, but were able to pay for the non-tuition expenses we couldn't cover ourselves on school jobs. I don't know what student loans would have looked like for a family in an equivalent position in the late 80's. My main hope is that barring some form of socialized education system happening in the next 20+ years that I'm able to pay for the educations of any future kids of mine without severely hurting myself financially, and succeed in raising them in such a way where they understand and appreciate the gravity of such a thing.
Teknoman117 6y ago
In my mind it's not so much a specific rate being evil, rather that their justification for its rate being unfounded. The only way to escape a federal student loan is dying. Loan forgiveness is the government paying the creditor. It's not your average unsecured loan you can shirk through bankruptcy.

rhino369 6y ago

It's still unsecured because there is nothing they can repossess. My guess that--without discriminating on a person by person basis--8% is pretty fair. I certainly wouldn't loan 20 year olds 90k dollars for only 8% return. The real scam artists are the schools, which have bloated the cost of an education beyond all reason.

troupe 6y ago

You borrowed $22.5k per year ($90k/4) and ended up with $30k in interest by the time you graduated with a 4 year degree? Federal loans don't charge you interest until you graduate. The numbers you are using would need to be a loan at 20% interest with interest charged from the very beginning. Were you using credit cards to borrow money for school?

Teknoman117 6y ago
I probably have the principle off a bit. It's troublesome to keep track of when each year is two separate loans (one in my name, one in my parents'). All I recall for certain is when I refinanced a year after graduation I had to borrow 118k to cover the whole thing. I finish paying it off this year (total of 5.5 years, 4.5 on the refi loan + 1 year of paying before that). At least at the time I went (2011 to 2016), federal loans had two modes - subsidized and unsubsidized. Subsidized loans don't begin to accrue interest until graduation, the unsubsidized ones start accruing on day 1. They only accrue interest on the principle though, it's not compounded. If you don't pay off the accumulated interest within 6 months following graduation, it's capitalized (added to the principle). My parents always told me that their gross income determines whether or not you can get the subsidized loans, even for the fraction of the loans in the student's name. They always complained how it didn't take cost of living, home ownership, or how many children you had into consideration. Sure, they were well enough off that they could have probably afforded to pay for me, but my 2 younger siblings and I were all college bound. I would have never assumed or expected them to pay for my schooling anyways. I wasn't raised that entitled. The first year I attended UC, the Parent Plus loans represented something like 80% of my borrowing. The first year was at 7.8% on my parent plus loan, 5 and something on the ones in my name. I get that I'm in an enviable position to have been able to easily handle that due to tech industry income, but I work with a ton of European expats, all of whom take jabs at me for coming from a country that doesn't cover higher education for their citizens. Always stings a bit.

jaybrendansmith 6y ago

Agree with this. It should be considered to be a 'secured' loan, backed by the government. The rate would be determined by the market based on the above. I believe this is how it used to work, way back when. Not sure why it was changed.