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bjbj Hello everyone and welcome to another episode of ErickonTV. Curtis here with Lauren.
In our last episode we talked about the overall size and massive amount of student loan debt.
We also talked about how a lot of people aren t even finishing school on time or are taking
a job that didn t even require a college degree. Since 2/3 of people are ending up with student
loan debt, let s talk about the ramifications. ve been reading a lot about this lately and
in talking with other people I ve learned that there are some pretty big misconceptions
about student loan debt. Here are a few of the big ones I ve run into. People think there
is some sort of statute of limitations on student loan debt. There is not. As of 2005,
the government can collect your student loan debt until the day you die. Bankruptcy does
not discharge student loan debt. You can default on your loans, but that doesn t really help
you. You mostly just end up with a lot of fines and penalties. And when I say the government
will collect until the day you die this is what I mean: some people s social security
checks have started to get garnished to pay for student loan debt. They can garnish up
to 15%. And if your parents or grandparents co-sign on your loan, their social security
checks can be garnished to pay for the debt, especially if you default. If you default
they can confiscate your tax return. They have a wide variety of methods to collect
your student loan debt that are not available to people who are trying to collect other
kinds of debt. It s a weird little business. Here s one thing that at first seems good
but really is not is: they expected over the very, very long term, even for those who default,
that 80% of those student loans would be recovered. But there s a problem with that. If you know
that even the people that are going to default on your loans will have to pay it back eventually,
it doesn t give you much incentive to try to make sure you re going to give loans to
people who won t default. This is one more example of why I tell people you really have
to be careful in this world of student loans. In some ways it looks like a good deal but
a lot of the good deal student loans mostly cause college prices to go up. In other words,
sure you get paid a low interest rate but it s the colleges that now get to raise their
fees because more people can easily get loans that they wouldn t be able to afford otherwise.
It s not a simple business. It s not a business where you can think to yourself that there
s going to be a bankruptcy or statute of limitations that somehow will allow you to escape this
student loan debt. If you take on a lot of debt, you will have to pay it some way or
another. What you are saying has some eerie similarities to the housing bubble where the
ease of housing loans spurred higher prices and something had to burst. I think there
s some concern out there that the investment value of a college education, because the
prices have gone so high up, is going to be hard to recover based on the job markets.
One lesson I think we should learn from the housing bubble is that not all markets are
efficient. The stock and bond markets are pretty efficient. But real estate markets
are not necessarily efficient. Loans get strange incentives attached to them; the way the housing
market had them, the way our education market has them. In our next episode, the final of
this series, we ll talk about real life strategies to maybe improve your investment return from
college. We ll see you next time on EricksonTV. Bye now. nbVbVC hLok ]J>2>2 hcy{ hcy{ hwTR
hcy{ hwTR hcy{ hwTR hcy{ Hello everyone and welcome to another episode of ErickonTV Curtis
Erickson Normal Curtis Erickson Microsoft Word 10.0 Erickson Wealth & Tax Management
Hello everyone and welcome to another episode of ErickonTV Title Microsoft Word Document
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