Comment by sarchertech
20 days ago
>So a 10% hit to your income for at least 20 years isn't significant?
It's not a 10% hit to your income. It's 10% of your income over 1.5x the poverty limit. And it's capped at whatever the payments would be under a 10 year repayment plan.
And it's not at least 20 years, it's at most 20 years. If you make more $80k or so you'll pay less under the standard 10 year plan, so you'll pay that. Which for $40k in deb is something like $450 a month (about 6.75% of your income).
>So... your suggestion is to live just above poverty so you won't have to pay student loans?
That's clearly what I said...of course it's not. The point is that worst case scenario you make under 1.5x the poverty limit you make nothing. If you make a little more than that you pay a 10% tax on the money over that (up to about $60k then it goes down).
>Sure, there exists ways to go about getting a degree which doesn't _have_ to have a massive financial burden for decades, but what percentage of degree holders (Or, those who have student loans) took this path? Is this a pragmatically fair expectation for 17/18 year olds to make?
In 2020 around 6% of students took out private student loans. And private student loans represent only around 7% of all student loan debt, so most of them don't have a massive financial burden because they qualify for income based repayment.
>How do you resolve the "while the total average balance (including private loan debt) may be as high as $41,618"[0]
The vast majority of that is federal, which qualifies for IBR, so isn't a massive burden. Don't take out private loans unless you're going to an Ivy League school, or med school.
I simply don't agree that an IBR loan is a good enough deal to not justify one needing useful and employable skills coming out of higher education.
The utility of a degree, from what I've seen, _does_ end up being better than the accrued debt on average, but the distribution of these cases (I simply imagine) leaves enough people on the margin to be harmful.
If you don’t have family money, you probably need to have a plan for what you’re going to do as a career even if college is free.
My point is that whether they need a marketable skill or not has very little to do with student loans. Provided they go to a state school.
If you borrow $40k to go to a state school, the most you’re going to pay is something like $450 a month for 10 years. Any degree no matter how vocationally useless will allow you to make more than $450 a month extra than you otherwise would have.
There are of course cases where this doesn’t hold, but you’d almost have to try for it not to be worth it. The program is good enough that I think we’ve mostly reached the point of diminishing returns, and there are other things we could spend additional money on with higher ROIs.