Milking the system? $400,000 in student debt and not a single repayment.

[patientrenter]

[quote=Eugene]I have to disagree with you all, at least with regard to loans for professional schools (law, business, med).

The way things are, all capable students can attend these schools without regard to their ability to pay, poorer and stronger students are offered scholarships financed by money from richer and weaker students, graduates get well-paid jobs and the ability to pay off their loans within years after graduation.

Remove student loans, tuition comes down, scholarship pool shrinks. Richest students benefit because they get to pay less. Poor students lose, because there’s less money available for need-based scholarships. The whole system becomes less equitable and produces less qualified professionals.[/quote]

Eugene, if loans to pay for education expenses were more restricted, then it would have to become more focused on the students who were the poorest and most likely to succeed (as measured by earning enough later on to pay it all back with interest).

I don’t see any problem with requiring middle class people to postpone buying a new car in order to pay more for their childrens’ college expenses. And I don’t have a problem with denying financial aid to a poor person who may not be determined enough or capable enough to put the education they are looking for to good-paying use. Not everyone is smart enough or ambitious enough to justify giving them $100,000 for more education.

[patb]

He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[patb]

He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[patb]

He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[patb]

He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[patb]

He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[Anonymous]

The article portrays this guy as a bit of a jerk, and perhaps he is. But I think there is another perspective to consider:

It’s not uncommon for people to borrow hundreds of thousands of dollars to start a business. Isn’t this guy trying to do the same thing?

Yes, he did default along the way (The article is not clear about to what extent.) But unless his intent was to commit fraud and never pay at all (which is pretty much impossible with student loans anyway), it may be that his decision to press on with the law degree was actually in the best interest of all parties. Getting the degree would provide a huge boost in cash-flow that could enable him to pay back the loan.

Consider this scenario: A restaurant owner borrowed $200K to open a new location that would his double cash flow. Just before the project was completed, the owner experiences some medical problems that delays the opening. He defaults on the loan and runs up huge penalties. At this point, should he just abandon the project and focus solely on paying back the loan?

It certainly wouldn’t make sense to yank the restaurant’s business license just before it is about to open.

I’m not arguing that the debt should be forgiven. But there is no reason to deny his license, certainly not from a pragmatic point of view. It’s just a lose-lose. And as long as he is obligated to pay it back, there is no moral hazard either.

[Anonymous]

The article portrays this guy as a bit of a jerk, and perhaps he is. But I think there is another perspective to consider:

It’s not uncommon for people to borrow hundreds of thousands of dollars to start a business. Isn’t this guy trying to do the same thing?

Yes, he did default along the way (The article is not clear about to what extent.) But unless his intent was to commit fraud and never pay at all (which is pretty much impossible with student loans anyway), it may be that his decision to press on with the law degree was actually in the best interest of all parties. Getting the degree would provide a huge boost in cash-flow that could enable him to pay back the loan.

Consider this scenario: A restaurant owner borrowed $200K to open a new location that would his double cash flow. Just before the project was completed, the owner experiences some medical problems that delays the opening. He defaults on the loan and runs up huge penalties. At this point, should he just abandon the project and focus solely on paying back the loan?

It certainly wouldn’t make sense to yank the restaurant’s business license just before it is about to open.

I’m not arguing that the debt should be forgiven. But there is no reason to deny his license, certainly not from a pragmatic point of view. It’s just a lose-lose. And as long as he is obligated to pay it back, there is no moral hazard either.

[Anonymous]

The article portrays this guy as a bit of a jerk, and perhaps he is. But I think there is another perspective to consider:

It’s not uncommon for people to borrow hundreds of thousands of dollars to start a business. Isn’t this guy trying to do the same thing?

Yes, he did default along the way (The article is not clear about to what extent.) But unless his intent was to commit fraud and never pay at all (which is pretty much impossible with student loans anyway), it may be that his decision to press on with the law degree was actually in the best interest of all parties. Getting the degree would provide a huge boost in cash-flow that could enable him to pay back the loan.

Consider this scenario: A restaurant owner borrowed $200K to open a new location that would his double cash flow. Just before the project was completed, the owner experiences some medical problems that delays the opening. He defaults on the loan and runs up huge penalties. At this point, should he just abandon the project and focus solely on paying back the loan?

It certainly wouldn’t make sense to yank the restaurant’s business license just before it is about to open.

I’m not arguing that the debt should be forgiven. But there is no reason to deny his license, certainly not from a pragmatic point of view. It’s just a lose-lose. And as long as he is obligated to pay it back, there is no moral hazard either.

[Anonymous]

The article portrays this guy as a bit of a jerk, and perhaps he is. But I think there is another perspective to consider:

It’s not uncommon for people to borrow hundreds of thousands of dollars to start a business. Isn’t this guy trying to do the same thing?

Yes, he did default along the way (The article is not clear about to what extent.) But unless his intent was to commit fraud and never pay at all (which is pretty much impossible with student loans anyway), it may be that his decision to press on with the law degree was actually in the best interest of all parties. Getting the degree would provide a huge boost in cash-flow that could enable him to pay back the loan.

Consider this scenario: A restaurant owner borrowed $200K to open a new location that would his double cash flow. Just before the project was completed, the owner experiences some medical problems that delays the opening. He defaults on the loan and runs up huge penalties. At this point, should he just abandon the project and focus solely on paying back the loan?

It certainly wouldn’t make sense to yank the restaurant’s business license just before it is about to open.

I’m not arguing that the debt should be forgiven. But there is no reason to deny his license, certainly not from a pragmatic point of view. It’s just a lose-lose. And as long as he is obligated to pay it back, there is no moral hazard either.

[Anonymous]

The article portrays this guy as a bit of a jerk, and perhaps he is. But I think there is another perspective to consider:

It’s not uncommon for people to borrow hundreds of thousands of dollars to start a business. Isn’t this guy trying to do the same thing?

Yes, he did default along the way (The article is not clear about to what extent.) But unless his intent was to commit fraud and never pay at all (which is pretty much impossible with student loans anyway), it may be that his decision to press on with the law degree was actually in the best interest of all parties. Getting the degree would provide a huge boost in cash-flow that could enable him to pay back the loan.

Consider this scenario: A restaurant owner borrowed $200K to open a new location that would his double cash flow. Just before the project was completed, the owner experiences some medical problems that delays the opening. He defaults on the loan and runs up huge penalties. At this point, should he just abandon the project and focus solely on paying back the loan?

It certainly wouldn’t make sense to yank the restaurant’s business license just before it is about to open.

I’m not arguing that the debt should be forgiven. But there is no reason to deny his license, certainly not from a pragmatic point of view. It’s just a lose-lose. And as long as he is obligated to pay it back, there is no moral hazard either.

[Eugene]

[quote=patb]He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[/quote]

but he does not have to buy a 2 BR in Manhattan. NYC is nice in that it has an awesome public transportation system that allows you to commute to Manhattan from anywhere in the five boroughs and from some parts of NJ under 45 minutes. Raise the limit to 1 hour one way, and he can commute from inner Connecticut (Greenwich, Stamford). An hour commute on a high speed train from Stamford to Manhattan is far more pleasant than an hour commute from Temecula to Sorrento Mesa.

A 2-br aparment in a remote (but still good) part of NYC could cost him 500k or even less.

Now, of course, there’s a certain amount of unavoidable miserableness (miserability? what’s the right word?) associated with living in NYC when you’re 47.

[Eugene]

[quote=patb]He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[/quote]

but he does not have to buy a 2 BR in Manhattan. NYC is nice in that it has an awesome public transportation system that allows you to commute to Manhattan from anywhere in the five boroughs and from some parts of NJ under 45 minutes. Raise the limit to 1 hour one way, and he can commute from inner Connecticut (Greenwich, Stamford). An hour commute on a high speed train from Stamford to Manhattan is far more pleasant than an hour commute from Temecula to Sorrento Mesa.

A 2-br aparment in a remote (but still good) part of NYC could cost him 500k or even less.

Now, of course, there’s a certain amount of unavoidable miserableness (miserability? what’s the right word?) associated with living in NYC when you’re 47.

[Eugene]

[quote=patb]He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[/quote]

but he does not have to buy a 2 BR in Manhattan. NYC is nice in that it has an awesome public transportation system that allows you to commute to Manhattan from anywhere in the five boroughs and from some parts of NJ under 45 minutes. Raise the limit to 1 hour one way, and he can commute from inner Connecticut (Greenwich, Stamford). An hour commute on a high speed train from Stamford to Manhattan is far more pleasant than an hour commute from Temecula to Sorrento Mesa.

A 2-br aparment in a remote (but still good) part of NYC could cost him 500k or even less.

Now, of course, there’s a certain amount of unavoidable miserableness (miserability? what’s the right word?) associated with living in NYC when you’re 47.

[Eugene]

[quote=patb]He’s got between 3-400K in debt and it appears he’s been living with girlfriends, etc his whole life.

If he chooses to buy a house the median 2 BR apt in Manhattan is 1.27M
So Figure he’s looking at 1.7M in debt service.

That’s almost 100K/year in Debt Service.

Median First Year Associate salary was running 170K plus 30K bonus.

with pay down, figure it’s 170K now.

add 33% Income tax figure he’s looking at making 100K Net.

So i fhe wants an apartment, he’s looking at living on 10K.

Even if he rents a place it’s still going to be miserable.

[/quote]

but he does not have to buy a 2 BR in Manhattan. NYC is nice in that it has an awesome public transportation system that allows you to commute to Manhattan from anywhere in the five boroughs and from some parts of NJ under 45 minutes. Raise the limit to 1 hour one way, and he can commute from inner Connecticut (Greenwich, Stamford). An hour commute on a high speed train from Stamford to Manhattan is far more pleasant than an hour commute from Temecula to Sorrento Mesa.

A 2-br aparment in a remote (but still good) part of NYC could cost him 500k or even less.

Now, of course, there’s a certain amount of unavoidable miserableness (miserability? what’s the right word?) associated with living in NYC when you’re 47.

[Author]

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