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That makes some sense, although I would be really interested to see their numbers. A 14% for 10 years deal would have been horrible for me. I'd have wound up
by Goladus 15y ago
That makes some sense, although I would be really interested to see their numbers. A 14% for 10 years deal would have been horrible for me. I'd have wound up paying back well over 3 times the amount I originally borrowed, and I was paid very poorly for several years after graduation.
In the US the average debt per borrower was $22,700 in 2008 [1]. That works out to about $255/month for 118 months, for a total of $30090 [2].
That means you have to make less than $214,928 in the 118 months after graduation, which is about $21k per year.
It's basically only a good deal if you have no other option or if you're not going to be able to beat $21k per year for 10 years.
[1] http://www.asa.org/policy/resources/stats/default.aspx http://www.asa.org/policy/resources/stats/default.aspx
[2] http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx http://www.bankrate.com/calculators/mortgages/loan-calculato...
- Kaedon 15y agoI think the difference here is that Sneider is in Colombia, where the article states that the average annual salary is only $8500. It does not mention what the expected salary for a nurse would be, so it is not clear how good or bad of a deal he is getting. Either way, if he graduates, he will be in much better shape still than if he were not able to go at all, which seems to be the alternative in this case. As the article mentions, this kind of aid is aimed towards people who have no other options, particularly in countries such as Colombia where federal aid and grants are more scarce.
- Goladus 15y ago> As the article mentions, this kind of aid is aimed towards people who have no other options. Right, and that's what makes me uneasy. A student needs to make about 7x the amount of the loan (plus overhead) within the 118 months for the lender to break even. That means borrowers will have to make, on average, about 73% of their original loan amount per year. If average salaries are about the same as the average loan size, it seems like it should be profitable. If average salaries grow and inflate substantially, it will be massively profitable.