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$555,000 in Student Debt, Payments to Age 70

Written by Gary North on August 1, 2012

This woman is 41 years old. She is single. Anyone who marries her gets $555,000 in debt. No man wants to say “I do.” She is trapped until age 70, unless hyperinflation delivers her.

No one warned her. Her father even co-signed for part of this debt.

The world is full of economically illiterate people. They are fair game for bankers.

She is a physician. She took on $250,000 in student loans: undergraduate and medical school. The interest charges and the collection agency charge ($58,000) took this to $555,000 in nine years.

She made it into the Wall Street Journal as a poster child of student debt run wild.

She admits that she failed to read the fine print. She did, indeed. She says maybe half of the problem is her fault. No, 100% of the problem is her fault. She signed the papers. She made a contract. Now she is paying the price. It is a terrible price — lifetime debt.

She says she knew when she started medical school in 1999 that she would have to borrow heavily. But she reasoned that her future income as a doctor would make paying off the loans easy. While in school, her loans racked up interest with variable rates ranging from 3% to 11%.

She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.

This was self-conscious. At any time she could have stopped. Instead, she plunged forward.

Her father co-signed for some of these loans. Now he is on the hook.

This is self-conscious self-destructive behavior. No one counts the cost.

These stories on student debt reveal an ignorance that goes beyond mere stupidity. They reflect a systematic unwillingness to consider the economics of compound interest. They reveal a near addiction-like refusal to face reality early in life.

What is most appalling is that no parent intervened. No parent said, “Don’t do this. It will destroy your life.” Parents encourage it.

No banker said, “Not a brass farthing” at some point — no more loans to the clearly debt-addicted woman who could never pay back the loans.

Why not? Why wouldn’t anyone intervene?

She deferred loan repayment to complete her residency (low pay). Interest built up.

Every physician must complete residency. She failed to factor this into her repayment schedule.

She now has worked out a deal. She pays $1,000 a month. Only $100 goes for payment of principal. She is 41. She will be out of debt at ago 70.

At 41, she cannot get married. She cannot buy a home — bad credit.

This is becoming universal.

Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can’t make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.

Today, there is $750 billion in student debt, and only 40% is being repaid.

There is going to be a great default on these loans. At some point, the debtors will have such political clout that Congress will repeal its law that made student debt immune from bankruptcy.

Then watch the bankers howl.

Continue Reading on online.wsj.com

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26 thoughts on “$555,000 in Student Debt, Payments to Age 70

  1. She's a physician and can only afford to repay at the rate of $1,000 per month? I don't know any physicians who make less than 6 figures per year. Bump that monthly payment till it hurts … that's what others do to make a loan go away.

  2. I wonder how many excellent students are going to be willing to take on a half million dollars in debt to work for miminum wge providing services under Obamacare.

  3. Economic illiteracy is killing Americans individually and at the ballot box, too. The keys to economic prosperity for America is the same as it has always been: sound money, savings and a healthy business climate. Right now, we are batting 0 for 3. He won't be elected, but Ron Paul is an economic locksmith that was offering these keys.

  4. Let's look forward from today. IF OBAMACARE IS NOT REPEALED HERE IS A FUTURE SCENARIO. Let's be realistic, Obama has a 50% of being re-elected.
    Doctors will make less money than today (forget inflation). We will eventually have a shortage of doctors in both the near and long term as more doctors retire, leave the business or go back to their native country because of Obamacare.
    What do you think this administration would do if they are still in office under this scenario???? Of course… GIVE OUT FREE RIDES TO MEDICAL STUDENTS WHO WANT TO BECOME DOCTORS. When I was going to school and paying my own way, my taxes were going for affirmative action to give people of color a free ride in these same schools of higher education. I would love to see how much of Barack's and Michell's higher education were picked up by the taxpayer??????
    In the real world this lady doctor made a huge mistake and should be held responsible. However, also in the real world there are people who get preferential treatment and priority and have other people pay their way. I can easily see this to be the case in the above scenario.

  5. DEFEATOBAMAIN2012 says:

    Can't believe a highly educated person could be so stupid,
    honey there is no fairy god mother going to bail you out, your on your own.

  6. "The rich ruleth over the poor, and the borrower is servant to the lender." (Proverbs 22:7)

    It was noble that the framers chose to honor the nation’s and states’ past debts. However, had they intended to abide by Biblical law, this would have been the ideal place to stipulate a return to Yahweh’s sabbatical year and its provision for debt cancellation for future debts. Without this stipulation, the United States Constitution essentially provided for debt perpetuity, in contrast to Yahweh’s law provision for debt cancellation. Every seventh year (known as the sabbatical year) Yahweh requires the cancellation of all debts:

    "At the end of every seven years thou shalt make a release. …Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called YHWH’s3 release." (Deuteronomy 15:1-2)

    The seventh-year release is not a moratorium, but a cancellation of all private and public debts. If the framers (and today’s politicians) were earnest about balancing the budget, they would have returned to Yahweh’s law and its seventh-year cancellation of debt. Rather than choosing the only means by which America’s current budget can ever be balanced, politicians opted to shackle future generations with ever-increasing debt.

    Today’s ungodly, usurious economic system compounds the problem with each passing year. Under Yahweh’s economic system, the budget would never be unbalanced for more than six years. Inflation and recessions would all but disappear. One can only imagine the prosperity Americans would enjoy under such a system. In fact, Yahweh promises that if we obey His law, we will never experience a deficit. Instead of being the world’s greatest debtor nation, as we presently are, America would again be the greatest lending nation, as she was in the past when she adhered more closely to Yahweh’s law.

    For more, see Chapter 9 "Article 6: The Supreme Law of the Land" of "Bible Law vs. the United States Constitution: The Christian Perspective." Click on my name, go to our Online Book Page, click on top entry, and scroll down to Chapter 9.

  7. It is more than just the unpaid loans taxpayets will have to cover, and the fact that ‘bankers’ took the risk so shiuld take the hit. Higher education is a big, BIG business. They are more than happy to.encorage you to buy degrees that are worth less than the interst on your loans. Worse, their current marketing slogan -“Diversity” attracts people who are not “college material” and will drop out in a year, but with loans they cant repay. But the college has made a big profit off them.

  8. Bill in NC says:

    $1,000/month fixed in perpetuity for what is essentially a $560,000 signature line of credit isn't a bad deal at all.

  9. Let me get this straight, she is a doctor without enough brain power to understand that a loan must be paid back? I wouldn't trust this physician treating me.

  10. luke davison says:

    Lets assume she makes 100k per year and takes home 50% or 50 k per year(just to keep the numbers simple she will take home way more than that. That means that she can pay her 1000 per month and still have well over the median houshold income of 35000, plus if she pints up an extra 100 bucks she doubles her payment of principal. All she needs to do is downgrade her life style.

  11. Don't have an ounce of pity for this idiot. She has a sweetheart deal if it's locked in that all she'll ever pay is $1000/mo, though.

    On the other hand, she can't be the shiniest spoon in the drawer if it took her till age 41 to complete evreything to become a doctor, so she may not be all that hireable.

  12. Pure BS from the get go, the Idea its the Bankers fault, no its not the bankers fault, its her fault and her's alone. While education is good for the sake of education. The problem here was it never dawned on her or any one else to sit down with an good CPA and look at this from the point of how much the costs is really going to be vs what I am really going to be able to make and how much am I really going able to pay with after tax income. She is a doctor, ok I bet there are ways to get out of this, I know for a long time The Military would take care of a lot of this in exchange for service. Might have to spend 8 years in the Army but it would have been worth it in the long term. She be a Major or Lt. Col by now and no debt well a better future. I see this all the time with kids going to flight school. I am a pilot by profession and I know full well what living on the edge is. I live a debt free life style. all I have is my daily living expenses. And I drive a 18 year old car. It can be done.

  13. Not to worry. With obamacare the government will set her salary and all doctors will be paid the same. I'll bet the government will be darn generous too.

  14. Shamus McQuade says:

    With Obama supporting students like these and his policy that EVRYONE should have equal opportunity to go to college AND people like this woman ………………….we'll save the republic yet. Now with Obama care doctors salaries will rival gas station attendants. Stupid is, is what Stupid does. I have to laugh…. the article at the end states" Dr. Bisutti told her 17-year-old niece the story of her debt as a cautionary tale "so the next generation of kids who want to get a higher education knows what they're getting into," Are you kidding me!!!! The entire policy should, change where the monies for college should be severely restricted. Not everyone needs to go to college. Most of the time it is all about self aggrandizement. Becoming a lawyer or doctors for sake of their ego and the money they THINK will be falling their way. The US needs engineers, scientists and technicians, electricians, bricklayers, trades people. Lawyers are like mice they are everywhere, we don't need lawyers and there are plenty of doctors.

  15. LIberals are idiots. They do things for the moment; there is never any thought about the future consequences. When things go south, they are always surprised and it is someone else's fault.

  16. Those highly educated persons who are stupid are called liberals.

  17. Jennifer says:

    500k??? I am willing to bet my savings that her debt includes the money she spent “living like a doctor” while in college and medical
    School! She financed her lifestyle and figured it would all work out. And now with the hourly work week caps in residency, I am also willing to bet all my money that she is only going to want to work 40 hours a week.

  18. Fat chance! We can’t even abide by God’s law concerning abortion and marriage. Do you really think we would ever abide by God’s law, meaning OT law, concerning debt? It would be nice if we could, but I see little chance of it because so few believe in God.

  19. jorland428 says:

    It’s the bank’s fault.
    It’s George Bush’s fault.
    “She didn’t make it there on her own. The government helped” with the education system.
    Besides, now she is one of the one percent. She should be paying more in taxes._

  20. From our finite horizontal perspective (from which everything looks like giants – Numbers 13:33), I agree with you. However, from Yahweh's infinite vertical perspective (from which the giants look like only a larger variety of grasshoppers – Isaiah 40:22), nothing is impossible.

    Moreover, it's important for Christians to have a multi-generational vision. What is impossible for this generation may not be for a future generation. What I preach today to this generation is so that a future generation of our posterity will have an opportunity at doing it right.

  21. toosmarttovotegop says:

    Replace "LIberals(sic)" with "Republicons" and THEN you'll be accurate. In fact, in “The Battle for Reagan’s Soul,” published in the Wall Street Journal on May 16, 1980, Irving Kristol wrote:
    "… And what if the traditionalist conservatives are right and a Kemp-Roth tax cut, without corresponding cuts in expenditures, also leaves us with a fiscal problem? The neo-conservative is willing to leave those problems to be coped with by liberal interregnums. He wants to shape the future, and will leave it up to his opponents to tidy up afterwards."

  22. Republican vs. Democrat Women…
    CAUTION: If you have a weak heart, please
    don't watch this video. Pictures of these Democrat women
    are so frightening, they've been known to cause heart failure. http://www.youtube.com/watch?v=sq09hAl5EkI&fe

  23. Colonialgirl says:

    LOOK LOOK and idiotic liberal with out any brains that votes for the democraps; a total moron.

  24. Our nations problem is not a revenue problem! It is an overspending problem, period! Money used time and time again to buy votes from those who are lazy and ignorant and mostly Democrats.

  25. One of life's ironies is that no one really teaches kids about the two most important things in their lives: finances and child rearing. Most parents blunder their way through their finances, and kids learn about raising their own kids by watching their parents who may be terrible examples…..A few lucky ones learn early, the others learn through the School of Hard Knocks!

  26. […] have known better.  I try not to judge people as harshly as those, like Gary North, who ascribe 100% fault to the student loan borrowers.Even North recognizes others are involved in the student loan scam. What is most appalling is that […]