Comment by Teknoman117 | Hacker News Reader

Comment by Teknoman117 | Hacker News Reader

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I went to one of the UC schools and left with $121k in debt ($100k borrowed plus the interest I couldn't pay off while working during school). Basically didn't qualify for any sort of scholarships or grants due to my parents making "enough money." Don't know where they get that figure from, as its not like my parents' could afford to write a check for $25k/yr just for my education (especially not with my sister entering college in my senior year). I had to take out loans for the whole bill. Not that I'd ever expect my parents to pay for my education.

The one that kills me is that my sister, who graduated high school with a 4.5 gpa (second only to her class's valedictorian) wasn't able to get any scholarships or grants. If your parents' credit is good enough to take out the loans very few seem to be willing to give you even a merit scholarship.

So I worked my ass off while attending school (academics and side projects) and got myself a nice tech-industry job (not like I'm pulling a Google level of pay though). Still, with the interest rates the government loans are (~7.5%), I'm paying a $2,350 a month bill to shed my student loans in 5 years. Kind of unnerving to think I'll be paying on them for the rest of my 20's. I won't lie, I find myself envious of people I met in school who got free rides in many cases for nothing more than being a member of some special interest group. A bunch of them are talking about starting companies or going to work for very risky (early stage) startups as they don't owe anything to anyone. With the student loan payment though, doing anything that doesn't have good stability seems like a bad choice.

Cautionary tale here for anyone entering college - take out student loans for 2x the cost of tuition (UC tuition is about 12,300) and you'll be paying for a looooong time.

If you can, you're much better off limiting your student loans and working to pay for food/beer/rent etc. students who work through college generally manage to pull the same or higher GPAs anyway, so you're not going to hurt your career.

I would also add that for some of the campuses (I went to Merced), check out local housing and skip the "dorm life." The UC housing expenses in Merced were about 4 - 5 times what it cost to split a rental house in town. And these were large, new properties.

As far as taking out twice the tuition, it doesn't particularly help when the loan system "recommends" borrowing 2x the tuition and gives you a bunch of warnings if you try to borrow less. I ended up working the last two years I was there (also moved off campus).

Thanks for sharing your story. A couple of thoughts, from a 90s-era student:

- $121k in loans is a lot in absolute terms. But compared to the other big purchase people often make, it's not expensive at all (and has a shorter period to expected ROI). The expected ROI on a degree is still massively positive.

- The opportunity to be able to earn -- in one's 20s -- a spare $2,350/mo from a job (versus starting a business) is remarkable. That's close to 70% of the median personal income in the US, which after 5 years will become disposable income for you. At 30, you will be able to basically throw away most of the salary of the median American worker (who is more senior than you). That's remarkable. A 5-year ROI is tremendous for most investments.

- The comparison with alternative career paths makes it entirely rational to borrow six figures for college, at least in the US. The existence of a few well-paid jobs that do not require a degree aside, several studies have consistently shown that college degrees increase lifetime earnings. Basically it boils down to borrowing a lot of money for college is a better bet than the alternative ("either you're slinging crack rock or you got a wicked jump shot.")

- Folks are comfortable financing houses and cars. It's interesting that they get squeamish when financing the one major purchase that's most likely to earn them money.

- Presumably stretching repayment out to 10 years or more would make the burden much more bearable. We finance houses over 30 years; it does make some sense to finance education over one's entire career.

- Obviously I get that the math is different for different career paths/majors/schools. But I'm kind of surprised that the math works out as well as it does.

The OP is just super-concerned with paying back and getting out of student loan debt. As you outline, it's somehow more important to pay it off than something else (Maybe it's all they pay for?).

My student loans are over a much longer timeframe than they give. Closer to 30-years on all of them. Paying mine off are important to me, for obvious reasons, but the interest rates I pay on mine are only second to my home in affordability.

Is that 7.5% interest rate standard? Is it high because of the risk inherent in young adults being unable to service the loan?

There is basically no risk, they are government guaranteed and can't be defaulted on.

That's the standard rate for the "federal non subsidized stafford loan"

For a specific bracket (time attended, and level of education). Most undergrads are facings rates half of that.

Can you refinance?

https://www.edvisors.com/college-loans/federal/stafford/inte...

I've been looking into it. Wanted to wait until I held my current job for a year so that I could get a better interest rate.

No I think it depends on when you went to college. IIRC, it was 7.5% for 2006-2008 and was around 3.8-5.0% in 2010 - 2015

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