Still hoping Tyler Durden will perform his miracle for us.
Non Sequitur
Oct 7, 18 12:28 pm
How’s that 50k/year “investment” looking like now?
archinine
Oct 7, 18 1:55 pm
NS do you need to rub it in every single time? Not everyone was a prescient well-advised teenager such as yourself with free healthcare for life. You were LUCKY. Get over yourself.
curtkram
Oct 7, 18 2:32 pm
pfft. better to pay student loans until your 60 and go bankrupt because of a broken health insurance system than switch to the metric system.
Non Sequitur
Oct 7, 18 3:20 pm
Metric for the win.
Miles Jaffe
Oct 7, 18 4:42 pm
Don't worry. Society will collapse soon and you won't have to pay off the loans any more. Or you could just stop paying now and say fuck 'em.
Imagine what would happen if everyone did.
archinine
Oct 7, 18 5:50 pm
Miles that day can’t come soon enough.
BulgarBlogger
Oct 7, 18 5:56 pm
I support college heing free as long as institutions are reeally difficult to get into... on the flip side, higher education is optional, so it would make sense that students have some incentive for doing well and taking a seat away from someone else, by establishing education as an investment.; in other words- you don't go through the motions for four/five/six years for nothing...
archinine
Oct 7, 18 6:47 pm
It’s less about the loans themselves and more about the fact that the interest rates are nearly as high as credit cards making it impossible to pay off within a reasonable time even with a consistent reasonable salary. Assuming one stays in architecture, though plenty of other industries are in the same position. If the fed dropped loan interest rates to match the federal reserve a lot more people would be able to responsibly pay off loans and dare I say invest in their own retirement, buy homes, and even gasp open businesses. Instead all that money is wasted on interest going back into the vortex/black hole coffers of the federal government rather than being productively spent out in the greater economy. Add to it that there’s no cap on borrowing so schools have no reason to limit tuition or other costs. It’s very obvious that it’s a political maneuver to keep people in a perpetual state of debt service/slavery rather than being able to become financially successful/independent.
readbetweenthetrees
Oct 7, 18 8:37 pm
$150,000 in loans is still $150,000 in loans. Even if you lower interest to say a generous 2 or 3%, there's still $150,000 principal to pay off.
The problem is ridiculous tuition hikes.
Gloominati
Oct 7, 18 11:49 pm
It's not the student loans that are bad for your credit score, in and of themselves. I've had a perfect credit score for decades, and had some pretty hefty loan balances in the early years. Student loans indirectly affect your credit score if they make the ratio of your debt to your income too high - and of course any late payments will directly ding your score. In your case Rick, basically any type of debt is going to hurt your credit score because you have very little if any reported income. But for most people with a reasonable salary at a full time job their loans won't be enough to drag down their credit score, even on top of a mortgage, and paying their student loans on time helps raise their credit score both because they're developing a history of utilizing credit, and because they're adding to their record of on-time payments.
Flatfish
Oct 8, 18 3:13 pm
My credit score didn't drop when I took out student loans. I've been in the low to mid 800s since before I started college (because I'd worked full time for a few years first, so had time to build up a few years of credit history.) I spent 7 years in college and grad school and my score didn't drop then either. Once I reached 800 the only time I ever dropped below it was once when I accidentally missed a payment to the gas company for over 60 days. It took about a year to rebound from that. But student loans, car loans, mortgage - all no problem, no dent in my score. It's partly a balance of having and utilizing credit. You can't get a really good score unless you've had debt, had several credit cards with relatively high limits, actually utilized at least some of those cards on a revolving basis, etc. People with scores in the "exceptional" range usually have at least 35 accounts on their record. If you want a high score you have to use credit. It doesn't mean you need to keep a revolving balance on your credit cards - but you have to use them. I pay my balances in full every month and haven't paid a penny in credit card interest in over 20 years - but my score wouldn't be high, hence my borrowing power wouldn't be high so I'd be paying higher rates on my mortgage and car, if I didn't have the long-standing high-limit credit card accounts and a good history on all my loans.
Chemex
Oct 7, 18 7:06 pm
what would help most of all is for the architecture “industry” to deregulate and unwind the education-practice industrial complex that forces people to take 5-7 years of arch education. Education devalues itself by forcing everyone through it when only a few need it. FLW didn’t need more than a year, and yet everyone is required so many years to design the same glass box McBuilding
shellarchitect
Oct 7, 18 8:59 pm
Buildings are way more complicated today then 100 years ago. Your idea is fine for people who want to do houses and strip malls, but real architects need a lot of knowledge, not that schools really teach anything of use....
bowling_ball
Oct 7, 18 9:08 pm
Let's split the difference. There's no reason for an architecture education to be more than 4 years.
shellarchitect
Oct 7, 18 9:19 pm
I'm good with that
thatsthat
Oct 8, 18 1:34 pm
I agree with the 4 years. Although, I'd be happier if every state allowed an alternative path that valued experience. My state still has this. I'm not sure how many people use it but that fact that its available is pretty cool.
sameolddoctor
Oct 8, 18 6:03 pm
There is a reason for architecture to be 5 years. It is so that idiot academics can make their moolah milking students.
Architectural education should be no more than 3 years - like any vocational course.
shellarchitect
Oct 7, 18 9:16 pm
I have to check a spreadsheet at work for exact numbers, but ive put about 20k a year for the past 5 years into my student loans. The total balance has gone from 115k to a little under 30k. The remaining loans are all around 3% interest, so I plan on making the min payment going forward.
I hope this is a good example, though it may seem overwhelming, the loans can be paid off.
readbetweenthetrees
Oct 7, 18 10:02 pm
If you divide that monthly, that's close to $1700. Depending on cost of living and other bills and what is most likely lower initial salaries, it does become a struggle. Alternatively, loans can now be income-based (smaller monthly hit but compounds longer) and can be written off in 25 or whenever years at the cost of one big tax hit at the end on whatever was left.
Even the public service forgiveness band-wagoners aren't so sure they will get anything back.
archinine
Oct 7, 18 11:12 pm
Shell how long did you have to work and where do you live to be able to afford 20k a year after tax dollars just on loans!? Also are the loans coming at the expense of less/no retirement contributions?
But seriously congrats that’s a tremendous effort and thank you for sharing your story.
shellarchitect
Oct 7, 18 11:27 pm
Thanks, forgot to answer the first comment.... Been working for about 10 years, with a long break
for m.arch and unemployment.
bowling_ball
Oct 8, 18 1:31 pm
In other words, completely unrealistic for 98% of students just graduating. Thanks for the tip.
shellarchitect
Oct 8, 18 2:52 pm
I disagree, I spent about
5 years paying the absolute minimum before deciding to make it a priority.
bowling_ball
Oct 8, 18 9:19 pm
My point is that yes, it's easier to pay off much more than the minimum, once you're out of school for 5 or 10 years. But when you've just graduated, it's not reasonable to be paying back $1700/ month with an entry level paycheck.
shellarchitect
Oct 9, 18 11:07 am
I was making about 55k when we
started making big payments, my wife made about the same. My pay has gone up pretty quickly since getting licensed, but my wife keeps cutting back so our combined income has been pretty steady.
shellarchitect
Oct 9, 18 11:10 am
i agree, best to keep living like a poor college student and get them out of the way fast. Once people start letting expenses pile up it'll get real hard to make the big payments. Hardest part is to start to process
shellarchitect
Oct 7, 18 11:25 pm
Live in metro Detroit, wife and I make about 120k before taxes, we each put 4% into our 401k's, enough for the employer match, have 2 kids, house, etc....
Now that the big loans are gone I'm looking forward to really building our retirement, custom home, and nice vacations.
Peter Normand
Oct 8, 18 9:27 am
The existing burden of student loans is a problem, but most folks did not go to schools with tuition in excess of 20K per year. this is mostly a problem for folks who did one of two things, they went to a private school with very high tuition or they made changes in heir academic/career path taking longer to finish their degrees by switching majors or taking on a minor. The marketing departments at private schools, or any school, don't accurately depict the realistic salary and job placement prospects of their graduates and the time it would take to repay those loans.
There are a few ways to save some money by consolidating if your interest rates are too high. The best strategy for my situation and possibly yours is to pay off the smallest loans first as quickly as possible to free up more of your take home pay for when you need it. If, for example, you have 4k credit card with a $100 monthly, a Subsidized student loan of 24K at $400 monthly and private loans of 120K at $800 monthly you should focus all of your extra money on the smallest balance not the highest interest rate. Clearing out the smaller loans frees up more money so that if a major expense comes along you can cover it without having to put it on a credit card. The other thing I recommend is to take the regular monthly amount and round up as much as you can afford, even if it is just a few dollars and make that your regular payment, eventually you get ahead on the loans and this gives you a little flexibility when an unexpected expense comes along. The goal is to do your best to not create new debt. Otherwise you need to live within your means and look for ways to cut your expenses wherever practical. The first 10 years of your career, if you have huge loans, should be not too dissimilar from the stereotypical starving artist lifestyle.
Paying for your debts early by not deferring and living on the tightest possible budget will pay off in the long run.
Over and OUT
Peter N
thatsthat
Oct 8, 18 2:05 pm
The existing burden of student loans is a problem, but most folks did not go to schools with tuition in excess of 20K per year.
thatsthat
Oct 8, 18 2:16 pm
^^ I tried to edit this but I guess it didn't go through.
Was trying to say that I'd up that 20k estimate to 30k. The state school I graduated from was 14k with in-state tuition - no books/housing included - and the 4-year program required a summer abroad which is not included in that 14k.
sameolddoctor
Oct 8, 18 12:51 pm
Its not about the loans per se, fellas. Its about taking out a loan for this crap profession.
flatroof
Oct 8, 18 1:10 pm
What, you didn't have parents that paid full freight plus extra like 80% of your top arch school class?
Flatfish
Oct 8, 18 3:05 pm
Where are you finding $200 per credit in an NAAB architecture program? Even when I started (80s, I guess I'm one of "ye old farts") the per credit hour cost at my state university was around $300. Today it's close to $700 per credit hour at that same public university.
SpontaneousCombustion
Oct 8, 18 3:22 pm
My state university's in-state tuition is $664 per credit, and $1674 for out of staters. There's a huge range across the US. Most of us aren't in Oregon.
SpontaneousCombustion
Oct 8, 18 3:37 pm
Yes, as I said, there's a huge range. So what's with "bullshit unless there's something else included..."? Your experience is too limited for you to call bullshit on anything.
Flatfish
Oct 8, 18 3:43 pm
Balkins my point was not that NAAB accreditation directly affects tuition. But many of the lowest-priced degree-granting public colleges in the US have no NAAB programs. In most states throughout the middle of the US if you want to go to an in-state NAAB program the only one available is at the highest-priced in-state university - not at a lower-tuition state college. There are also many states that have no NAAB-accredited option at all in their state's public colleges or universities. Only a few of those states have reciprocity agreements with other states, allowing their students who want to study majors that aren't available in that state to go to the other state's institutions at in-state tuition. If you're not in a state with one of those deals, and your state doesn't have an NAAB program, then you're looking at out of state tuition unless you go live somewhere first and jump through the rest of the hoops to qualify as in-state.
Flatfish
Oct 8, 18 3:51 pm
And you're generalizing again. There are HUGE differences in many states between tuition for state colleges vs. the same state's state university - in some cases the university is almost twice the lowest price state college.
Here: lowest priced in-state public college tuition + fees = approx 11k. Highest priced state public university tuition + fees = approx 18k. This does not include room and board. So almost 40% higher.
shellarchitect
Oct 8, 18 3:54 pm
for example the only NAAB public school in Michigan is University of Michigan. The other 3 schools are private. I believe at least one public school is working on accreditation tho.
Flatfish
Oct 8, 18 4:18 pm
The median architect's salary has increased by over 600% since 1972. The average year of college tuition nationwide increased by about 250% during that same time frame.
You're looking at just one school, and extrapolating that as if it were the case for all. That's what I've been saying all along: stop generalizing.
Flatfish
Oct 8, 18 4:49 pm
I'm basing the 600% increase on US DOL figures. Median architect's salary in 1972: approx. $13,700. Median architect's salary in 2017: approx. $89,000. Increase: 650%.
Flatfish
Oct 8, 18 4:59 pm
My state university's in-state tuition was already about 5 times Oregon's in 1972. Was the situation that Oregon was supporting their university system with massive tax appropriations, and has cut back on that drastically over these decades? I don't see how else they could have run a university on $500 per kid. Even in the 70s the cost to operate a university was estimated at over 5k per student - and your out of state tuitions weren't anywhere near enough to support that either. If the state was paying for it through taxes and isn't anymore now then that could account for much larger rates of increase than some other states have seen.
shellarchitect
Oct 8, 18 2:57 pm
Above is a graph of my total loan balance. What really motivated me was creating a spreadsheet of each loan, balance, and interest rate. I tracked the balances and interest as is accrued as well. When I saw that I had paid 1k in interest after a just a few months I realized that I had to pay these things off
shellarchitect
Oct 8, 18 3:02 pm
I hope that seeing how much of a payment is going towards interest, not even touching the principle is good motivation to make loans a priority. Of coarse being able to make the big payments will likely require structural changes to the way the a person lives.
I'd go after the big ticket items, housing and transportation.
shellarchitect
Oct 8, 18 3:22 pm
couple points, sold a house shortly after starting this spreadsheet, that gave a pretty good chunk to put into the loans, made fairly steady big payments until mid 2015, when I got a layoff (surprise) and second kid (not a surprise) made min. payments for about a year until we felt comfortable making big payments again. Usually saved up and paid 4-5k at a time.
Paid off the 5% loan fairly early to give us an extra $100 a month, otherwise it all went to the 6.5% group of loans.
thatsthat
Oct 8, 18 4:08 pm
Are you saying you pay extra AND save up to pay off a big chunk too? Just trying to understand. I've paid off 15k in the last 5 years; just started ramping up my payments about two years ago when I finally was able to move around some things in my life and afford to make larger payments. I pay about 600 extra to my smallest loan. I don't think I could do that AND save up a chunk to pay off at the same time.
shellarchitect
Oct 8, 18 4:23 pm
I paid the absolute minimum for each loan and then made pretty big payments periodically. I felt a little better having money in case something bad happened vs keeping my savings account empty.
shellarchitect
Oct 8, 18 4:24 pm
paying off the smallest loan is nice to free up cashflow, most important thing is to make progress. I liked to do simulations to show myself how much I was saving too.
I'm sensing some cognitive dissonance here as we generally complain about not making enough but then are quick to shoot down using a tax break because we make too much. If recent graduates (those just starting out paying back their loans and thereby paying more toward interest in their monthly payment) are making more than 80K MAGI ... good for them. The deduction probably isn't going to matter as much to them anyway because they are raking it in.
FYI, the AIA salary calculator is showing that you have to get to around Architect 3 before you might be making enough to worry about breaking the 80k threshold. That's a licensed architect with 10 or more years of experience. Most repayment plans try to put the borrower on a 10-year path to paying it back. Even if you get above the 80k threshold and you're still paying back your loans, you should be close to finishing at that point and you'd be paying less in interest so the deduction may not have been that much anyway.
shellarchitect
Oct 9, 18 12:12 pm
I assume that most of those complaining are on the 30 year repayment plan? there are no pre-payment penalties so its a good idea to maximize flexibility. I agree,
only a fool would turn down the interest deduction.
Gloominati
Oct 9, 18 1:21 pm
Everyday, I wasn't shooting down the tax credit - it's good for those who qualify. I was just adding that there's an income limit (and it phases out starting well before that anyway). The income limit has been raised slowly over the years. I didn't qualify for it for the last 5 of the 10 years that I was paying loans. I just wanted people to be aware of the fine print.
Everyday Architect
Oct 9, 18 1:42 pm
Formerlyunknown, sorry about my misunderstanding then. There should be plenty of fine print to spell it all out for people at the original link I shared if anyone is looking for more.
Everyday Architect
Oct 9, 18 12:59 pm
I've seen plenty of information out there saying you are probably able to get a higher return by investing your money than you would just repaying the loans. In other words, the interest made on your investments will outpace the interest you owe on your loans so it would be better to make the minimum payments and to take any extra money and invest it rather than paying extra on the student loans. With compounding interest working for you to earn more money in the investment, you'll end up better off in the long run. It probably isn't feasible for everyone though, and will depend on your personal financial situation so if your thinking about this, I'd recommend talking to a financial planner or adviser (I forget the actual title, but make sure it is the one with a fiduciary duty to put your interests above their own).
I'm essentially doing this without really trying to, but have considered being a little more aggressive with it. I'm making a pretty healthy contribution to retirement accounts, more than I would if I was trying to aggressively pay down the student loans, but could probably afford to do more ... or invest it outside of the 401k in some way or another.
The year I graduated, I had a little under the national average in student loan debt. At this point I've paid off about 2/3 of the debt. I'm not worried about my situation and I feel I'm much better off than many of my peers. But I also went to an "affordable" state university, sought out scholarships and grant opportunities, and worked multiple part-time jobs through school so I wouldn't have to take on a lot of debt ... you know, I tried to be smart about getting my education.
Flatfish
Oct 9, 18 1:14 pm
Assuming you're talking about fairly recent loans with low interest rates, you may come out ahead by paying the minimum while investing other available cash. Maybe. But by "the minimum" you'd need to mean the minimum on the original plan, not the minimum on a longer income-adjusted plan. Lots of people these days pay very little in their early working years because they put their loans in income-sensitive plans - but if you let there still be a sizable balance when you hit the forgiveness year of those plans then that amount that's forgiven is taxed as income in that year. So it isn't just that you've been paying "the minimum" all this time and racking up interest, now you get taxed on whatever the balance is that paying "the minimum" didn't take care of. For someone who never manages to make a lot of money in their career and keeps their payments low all along, the chunk forgiven at the end can be huge - in the hundreds of thousands of dollars for some - and the tax hit on that forgiven balance is all due at once.
Everyday Architect
Oct 9, 18 1:28 pm
Good point. If I'm not mistaken, even the loan forgiveness options can end up putting the balance that is forgiven in your taxable income. It's a big chunk of taxes if you aren't prepared for it or otherwise able to reduce the burden. All the more reason you should talk to a professional with a fiduciary duty rather than some anonymous people on the internet. Also a reason you shouldn't take on more debt than you can reasonably repay.
shellarchitect
Oct 9, 18 1:46 pm
I believe you're correct. I don't know what most people's loan interest rates are, the one's that I focused on were 6.5%. I really struggled with the question of weather it was better to pay the debt or invest that money. Coming out of the great recession it was reasonable to assume that returns would be very good vs. the guaranteed "return" on debt. In hindsight, investing in the s&p 500 would have been the smarter option in strictly dollar figures. However, I like the freedom that paying off the loans offers. When I started my spreadsheet in 2012, the required payments were almost $900! Over time the req. has gone down and is now $260. I had many long discussions with my dad (a financial advisor) and the advisor that I actually use on this very
topic.
tuna
Oct 17, 18 4:47 pm
20 more years until i'm off the instant ramen noodle diet
Damn you to hell!
Still hoping Tyler Durden will perform his miracle for us.
How’s that 50k/year “investment” looking like now?
NS do you need to rub it in every single time? Not everyone was a prescient well-advised teenager such as yourself with free healthcare for life. You were LUCKY. Get over yourself.
pfft. better to pay student loans until your 60 and go bankrupt because of a broken health insurance system than switch to the metric system.
Metric for the win.
Don't worry. Society will collapse soon and you won't have to pay off the loans any more. Or you could just stop paying now and say fuck 'em.
Imagine what would happen if everyone did.
Miles that day can’t come soon enough.
I support college heing free as long as institutions are reeally difficult to get into... on the flip side, higher education is optional, so it would make sense that students have some incentive for doing well and taking a seat away from someone else, by establishing education as an investment.; in other words- you don't go through the motions for four/five/six years for nothing...
It’s less about the loans themselves and more about the fact that the interest rates are nearly as high as credit cards making it impossible to pay off within a reasonable time even with a consistent reasonable salary. Assuming one stays in architecture, though plenty of other industries are in the same position. If the fed dropped loan interest rates to match the federal reserve a lot more people would be able to responsibly pay off loans and dare I say invest in their own retirement, buy homes, and even gasp open businesses. Instead all that money is wasted on interest going back into the vortex/black hole coffers of the federal government rather than being productively spent out in the greater economy. Add to it that there’s no cap on borrowing so schools have no reason to limit tuition or other costs. It’s very obvious that it’s a political maneuver to keep people in a perpetual state of debt service/slavery rather than being able to become financially successful/independent.
$150,000 in loans is still $150,000 in loans. Even if you lower interest to say a generous 2 or 3%, there's still $150,000 principal to pay off.
The problem is ridiculous tuition hikes.
It's not the student loans that are bad for your credit score, in and of themselves. I've had a perfect credit score for decades, and had some pretty hefty loan balances in the early years. Student loans indirectly affect your credit score if they make the ratio of your debt to your income too high - and of course any late payments will directly ding your score. In your case Rick, basically any type of debt is going to hurt your credit score because you have very little if any reported income. But for most people with a reasonable salary at a full time job their loans won't be enough to drag down their credit score, even on top of a mortgage, and paying their student loans on time helps raise their credit score both because they're developing a history of utilizing credit, and because they're adding to their record of on-time payments.
My credit score didn't drop when I took out student loans. I've been in the low to mid 800s since before I started college (because I'd worked full time for a few years first, so had time to build up a few years of credit history.) I spent 7 years in college and grad school and my score didn't drop then either. Once I reached 800 the only time I ever dropped below it was once when I accidentally missed a payment to the gas company for over 60 days. It took about a year to rebound from that. But student loans, car loans, mortgage - all no problem, no dent in my score. It's partly a balance of having and utilizing credit. You can't get a really good score unless you've had debt, had several credit cards with relatively high limits, actually utilized at least some of those cards on a revolving basis, etc. People with scores in the "exceptional" range usually have at least 35 accounts on their record. If you want a high score you have to use credit. It doesn't mean you need to keep a revolving balance on your credit cards - but you have to use them. I pay my balances in full every month and haven't paid a penny in credit card interest in over 20 years - but my score wouldn't be high, hence my borrowing power wouldn't be high so I'd be paying higher rates on my mortgage and car, if I didn't have the long-standing high-limit credit card accounts and a good history on all my loans.
what would help most of all is for the architecture “industry” to deregulate and unwind the education-practice industrial complex that forces people to take 5-7 years of arch education. Education devalues itself by forcing everyone through it when only a few need it. FLW didn’t need more than a year, and yet everyone is required so many years to design the same glass box McBuilding
Buildings are way more complicated today then 100 years ago. Your idea is fine for people who want to do houses and strip malls, but real architects need a lot of knowledge, not that schools really teach anything of use....
Let's split the difference. There's no reason for an architecture education to be more than 4 years.
I'm good with that
I agree with the 4 years. Although, I'd be happier if every state allowed an alternative path that valued experience. My state still has this. I'm not sure how many people use it but that fact that its available is pretty cool.
There is a reason for architecture to be 5 years. It is so that idiot academics can make their moolah milking students.
Architectural education should be no more than 3 years - like any vocational course.
I have to check a spreadsheet at work for exact numbers, but ive put about 20k a year for the past 5 years into my student loans. The total balance has gone from 115k to a little under 30k. The remaining loans are all around 3% interest, so I plan on making the min payment going forward.
I hope this is a good example, though it may seem overwhelming, the loans can be paid off.
If you divide that monthly, that's close to $1700. Depending on cost of living and other bills and what is most likely lower initial salaries, it does become a struggle. Alternatively, loans can now be income-based (smaller monthly hit but compounds longer) and can be written off in 25 or whenever years at the cost of one big tax hit at the end on whatever was left.
Even the public service forgiveness band-wagoners aren't so sure they will get anything back.
Shell how long did you have to work and where do you live to be able to afford 20k a year after tax dollars just on loans!? Also are the loans coming at the expense of less/no retirement contributions?
But seriously congrats that’s a tremendous effort and thank you for sharing your story.
Thanks, forgot to answer the first comment.... Been working for about 10 years, with a long break
for m.arch and unemployment.
In other words, completely unrealistic for 98% of students just graduating. Thanks for the tip.
I disagree, I spent about 5 years paying the absolute minimum before deciding to make it a priority.
My point is that yes, it's easier to pay off much more than the minimum, once you're out of school for 5 or 10 years. But when you've just graduated, it's not reasonable to be paying back $1700/ month with an entry level paycheck.
I was making about 55k when we started making big payments, my wife made about the same. My pay has gone up pretty quickly since getting licensed, but my wife keeps cutting back so our combined income has been pretty steady.
i agree, best to keep living like a poor college student and get them out of the way fast. Once people start letting expenses pile up it'll get real hard to make the big payments. Hardest part is to start to process
Live in metro Detroit, wife and I make about 120k before taxes, we each put 4% into our 401k's, enough for the employer match, have 2 kids, house, etc....
Now that the big loans are gone I'm looking forward to really building our retirement, custom home, and nice vacations.
The existing burden of student loans is a problem, but most folks did not go to schools with tuition in excess of 20K per year. this is mostly a problem for folks who did one of two things, they went to a private school with very high tuition or they made changes in heir academic/career path taking longer to finish their degrees by switching majors or taking on a minor. The marketing departments at private schools, or any school, don't accurately depict the realistic salary and job placement prospects of their graduates and the time it would take to repay those loans.
There are a few ways to save some money by consolidating if your interest rates are too high. The best strategy for my situation and possibly yours is to pay off the smallest loans first as quickly as possible to free up more of your take home pay for when you need it. If, for example, you have 4k credit card with a $100 monthly, a Subsidized student loan of 24K at $400 monthly and private loans of 120K at $800 monthly you should focus all of your extra money on the smallest balance not the highest interest rate. Clearing out the smaller loans frees up more money so that if a major expense comes along you can cover it without having to put it on a credit card. The other thing I recommend is to take the regular monthly amount and round up as much as you can afford, even if it is just a few dollars and make that your regular payment, eventually you get ahead on the loans and this gives you a little flexibility when an unexpected expense comes along. The goal is to do your best to not create new debt. Otherwise you need to live within your means and look for ways to cut your expenses wherever practical. The first 10 years of your career, if you have huge loans, should be not too dissimilar from the stereotypical starving artist lifestyle.
Paying for your debts early by not deferring and living on the tightest possible budget will pay off in the long run.
Over and OUT
Peter N
The existing burden of student loans is a problem, but most folks did not go to schools with tuition in excess of 20K per year.
^^ I tried to edit this but I guess it didn't go through.
Was trying to say that I'd up that 20k estimate to 30k. The state school I graduated from was 14k with in-state tuition - no books/housing included - and the 4-year program required a summer abroad which is not included in that 14k.
Its not about the loans per se, fellas. Its about taking out a loan for this crap profession.
What, you didn't have parents that paid full freight plus extra like 80% of your top arch school class?
Where are you finding $200 per credit in an NAAB architecture program? Even when I started (80s, I guess I'm one of "ye old farts") the per credit hour cost at my state university was around $300. Today it's close to $700 per credit hour at that same public university.
My state university's in-state tuition is $664 per credit, and $1674 for out of staters. There's a huge range across the US. Most of us aren't in Oregon.
Yes, as I said, there's a huge range. So what's with "bullshit unless there's something else included..."? Your experience is too limited for you to call bullshit on anything.
Balkins my point was not that NAAB accreditation directly affects tuition. But many of the lowest-priced degree-granting public colleges in the US have no NAAB programs. In most states throughout the middle of the US if you want to go to an in-state NAAB program the only one available is at the highest-priced in-state university - not at a lower-tuition state college. There are also many states that have no NAAB-accredited option at all in their state's public colleges or universities. Only a few of those states have reciprocity agreements with other states, allowing their students who want to study majors that aren't available in that state to go to the other state's institutions at in-state tuition. If you're not in a state with one of those deals, and your state doesn't have an NAAB program, then you're looking at out of state tuition unless you go live somewhere first and jump through the rest of the hoops to qualify as in-state.
And you're generalizing again. There are HUGE differences in many states between tuition for state colleges vs. the same state's state university - in some cases the university is almost twice the lowest price state college.
Here: lowest priced in-state public college tuition + fees = approx 11k. Highest priced state public university tuition + fees = approx 18k. This does not include room and board. So almost 40% higher.
for example the only NAAB public school in Michigan is University of Michigan. The other 3 schools are private. I believe at least one public school is working on accreditation tho.
The median architect's salary has increased by over 600% since 1972. The average year of college tuition nationwide increased by about 250% during that same time frame.
You're looking at just one school, and extrapolating that as if it were the case for all. That's what I've been saying all along: stop generalizing.
I'm basing the 600% increase on US DOL figures. Median architect's salary in 1972: approx. $13,700. Median architect's salary in 2017: approx. $89,000. Increase: 650%.
My state university's in-state tuition was already about 5 times Oregon's in 1972. Was the situation that Oregon was supporting their university system with massive tax appropriations, and has cut back on that drastically over these decades? I don't see how else they could have run a university on $500 per kid. Even in the 70s the cost to operate a university was estimated at over 5k per student - and your out of state tuitions weren't anywhere near enough to support that either. If the state was paying for it through taxes and isn't anymore now then that could account for much larger rates of increase than some other states have seen.
Above is a graph of my total loan balance. What really motivated me was creating a spreadsheet of each loan, balance, and interest rate. I tracked the balances and interest as is accrued as well. When I saw that I had paid 1k in interest after a just a few months I realized that I had to pay these things off
I hope that seeing how much of a payment is going towards interest, not even touching the principle is good motivation to make loans a priority. Of coarse being able to make the big payments will likely require structural changes to the way the a person lives.
I'd go after the big ticket items, housing and transportation.
couple points, sold a house shortly after starting this spreadsheet, that gave a pretty good chunk to put into the loans, made fairly steady big payments until mid 2015, when I got a layoff (surprise) and second kid (not a surprise) made min. payments for about a year until we felt comfortable making big payments again. Usually saved up and paid 4-5k at a time.
Paid off the 5% loan fairly early to give us an extra $100 a month, otherwise it all went to the 6.5% group of loans.
Are you saying you pay extra AND save up to pay off a big chunk too? Just trying to understand. I've paid off 15k in the last 5 years; just started ramping up my payments about two years ago when I finally was able to move around some things in my life and afford to make larger payments. I pay about 600 extra to my smallest loan. I don't think I could do that AND save up a chunk to pay off at the same time.
I paid the absolute minimum for each loan and then made pretty big payments periodically. I felt a little better having money in case something bad happened vs keeping my savings account empty.
paying off the smallest loan is nice to free up cashflow, most important thing is to make progress. I liked to do simulations to show myself how much I was saving too.
I'm just going to leave this here.
https://www.irs.gov/taxtopics/...
I hope everyone is taking advantage of the tax deduction you can get for student loan interest. Itemizing deductions is not required.
You can only take that if your income is less than about 80k (if filing singly).
i think that's taxable income.
Better than nothing
b3ta, It's your MAGI (modified adjusted gross income).
I'm sensing some cognitive dissonance here as we generally complain about not making enough but then are quick to shoot down using a tax break because we make too much. If recent graduates (those just starting out paying back their loans and thereby paying more toward interest in their monthly payment) are making more than 80K MAGI ... good for them. The deduction probably isn't going to matter as much to them anyway because they are raking it in.
FYI, the AIA salary calculator is showing that you have to get to around Architect 3 before you might be making enough to worry about breaking the 80k threshold. That's a licensed architect with 10 or more years of experience. Most repayment plans try to put the borrower on a 10-year path to paying it back. Even if you get above the 80k threshold and you're still paying back your loans, you should be close to finishing at that point and you'd be paying less in interest so the deduction may not have been that much anyway.
I assume that most of those complaining are on the 30 year repayment plan? there are no pre-payment penalties so its a good idea to maximize flexibility. I agree, only a fool would turn down the interest deduction.
Everyday, I wasn't shooting down the tax credit - it's good for those who qualify. I was just adding that there's an income limit (and it phases out starting well before that anyway). The income limit has been raised slowly over the years. I didn't qualify for it for the last 5 of the 10 years that I was paying loans. I just wanted people to be aware of the fine print.
Formerlyunknown, sorry about my misunderstanding then. There should be plenty of fine print to spell it all out for people at the original link I shared if anyone is looking for more.
I've seen plenty of information out there saying you are probably able to get a higher return by investing your money than you would just repaying the loans. In other words, the interest made on your investments will outpace the interest you owe on your loans so it would be better to make the minimum payments and to take any extra money and invest it rather than paying extra on the student loans. With compounding interest working for you to earn more money in the investment, you'll end up better off in the long run. It probably isn't feasible for everyone though, and will depend on your personal financial situation so if your thinking about this, I'd recommend talking to a financial planner or adviser (I forget the actual title, but make sure it is the one with a fiduciary duty to put your interests above their own).
I'm essentially doing this without really trying to, but have considered being a little more aggressive with it. I'm making a pretty healthy contribution to retirement accounts, more than I would if I was trying to aggressively pay down the student loans, but could probably afford to do more ... or invest it outside of the 401k in some way or another.
The year I graduated, I had a little under the national average in student loan debt. At this point I've paid off about 2/3 of the debt. I'm not worried about my situation and I feel I'm much better off than many of my peers. But I also went to an "affordable" state university, sought out scholarships and grant opportunities, and worked multiple part-time jobs through school so I wouldn't have to take on a lot of debt ... you know, I tried to be smart about getting my education.
Assuming you're talking about fairly recent loans with low interest rates, you may come out ahead by paying the minimum while investing other available cash. Maybe. But by "the minimum" you'd need to mean the minimum on the original plan, not the minimum on a longer income-adjusted plan. Lots of people these days pay very little in their early working years because they put their loans in income-sensitive plans - but if you let there still be a sizable balance when you hit the forgiveness year of those plans then that amount that's forgiven is taxed as income in that year. So it isn't just that you've been paying "the minimum" all this time and racking up interest, now you get taxed on whatever the balance is that paying "the minimum" didn't take care of. For someone who never manages to make a lot of money in their career and keeps their payments low all along, the chunk forgiven at the end can be huge - in the hundreds of thousands of dollars for some - and the tax hit on that forgiven balance is all due at once.
Good point. If I'm not mistaken, even the loan forgiveness options can end up putting the balance that is forgiven in your taxable income. It's a big chunk of taxes if you aren't prepared for it or otherwise able to reduce the burden. All the more reason you should talk to a professional with a fiduciary duty rather than some anonymous people on the internet. Also a reason you shouldn't take on more debt than you can reasonably repay.
I believe you're correct. I don't know what most people's loan interest rates are, the one's that I focused on were 6.5%. I really struggled with the question of weather it was better to pay the debt or invest that money. Coming out of the great recession it was reasonable to assume that returns would be very good vs. the guaranteed "return" on debt. In hindsight, investing in the s&p 500 would have been the smarter option in strictly dollar figures. However, I like the freedom that paying off the loans offers. When I started my spreadsheet in 2012, the required payments were almost $900! Over time the req. has gone down and is now $260. I had many long discussions with my dad (a financial advisor) and the advisor that I actually use on this very topic.
20 more years until i'm off the instant ramen noodle diet