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Should You Walk Away From Your Student Loans?

mint.com — It’s not surprising that you didn’t realize what you were getting into with your student loan. You were just barely out of your teen years when you signed the paperwork. If you’re like most people, you probably had little understanding of what it means to incur debt and were lulled into a false sense of security.

Who dugg this? Made popular May 8, 2009

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  • _skin_, on 05/08/2009, -3/+87Should You Walk Away From Your Student Loans?
    FTA... NO!
  • xxsweetdreams, on 05/08/2009, -3/+77Obviously not?

    Most student loans have very reasonable monthly payments after college that can be adjusted based on your income or lack there of. Walking away from your debt is pretty stupid.
  • balla786, on 05/08/2009, -4/+50Don't sign the agreement with your own blood. Use cow's blood to make the contract illegitimate!
  • RandoTheKing, on 05/08/2009, -3/+40Go to community college then transfer. Save $40+K
  • Greengoo, on 05/08/2009, -2/+32While I won't say it's *good* to have student loans, you can write off a crap ton of them on your taxes if you make < $80,000 / year. It makes them more manageable when you're right out of school.
  • kplo, on 05/08/2009, -2/+29Bummer. I thought it was going to recommend I walk away...
  • Hetman, on 05/08/2009, -2/+26What would be the point of going to school if you graduate and change your identity? When they look for your college records they are not going to find them if you are using a fake identity.
  • DickyT83, on 05/08/2009, -0/+19Article brought to you by Sallie Mae.
  • TCBevolver, on 05/08/2009, -2/+20What I said there:

    The whole student loan industry is a scam on the working class, brought to you by conservative politicians and the corrupting influence of big-business campaign money. A generation ago, students did not graduate owing tens of thousands of dollars. A good example was California’s free (FREE!) state college system, the envy of the world. Governor Reagan put an end to that because economically secure students spent too much time protesting against war and discrimination. Economically enslaved debt hostages don’t cause trouble, you see, and make a good money cow for well-connected businesses.

    So the real answer to your loan problems is to THROW THE BUMS OUT.
  • inactive, on 05/08/2009, -0/+17just make sure your parents don't make too much money.

    just enough to support you, but not so much that you fall too far down the financial aid list.
  • robbob, on 05/08/2009, -1/+17Bank will offer you MORE money than you need. Don't take any extra cash to buy a laptop or to finance your spring break.
    Also, if you ever declare bankruptcy, you still have to pay off college loans.
  • mpn401, on 05/08/2009, -1/+17I'm going to be applying for student loans soon. Tell me all the n00b mistakes so I don't end up agreeing to them.
  • inactive, on 05/08/2009, -1/+15Hell no! They'll take 10% of your salary till it's paid off and you're credit will be in the toilette.
  • smashblu, on 05/08/2009, -1/+15Student loans never go away? Has anyone ever thought of paying them off with the money they made from their fancy education?
  • Ziggy7273, on 05/08/2009, -2/+16Break their legs if you have to.
  • 80hd, on 05/08/2009, -18/+31if you can't tell the difference between subsidized and unsubsidized loans, do yourself a favor and don't go to school, you won't graduate anyway.
  • Tanktunker, on 05/08/2009, -1/+14You can kill children, but you can't kill a bank.
  • thehans, on 05/08/2009, -0/+12What it you pay off your student loan debt with credit cards, and then declared bankruptcy?
  • gamerbambi, on 05/08/2009, -9/+20No!!! This is the problem with America. There about $6 Billion in student loans debt that have not been paid, some of them are from students that have not made a single payment since 2004. Some students get a loan for $200,000 to get a worthless degree in Music and become fugitives by leaving the country and not paying back. I predict Sallie Mae asking for a bailout soon thanks to those who don't pay their student loans. I got a student loan, and yes, I am paying it back with monthly payments $200 payments. At the rate I am going, I will be debt-free in 5 years.
  • Dronez, on 05/08/2009, -0/+11I like the way you think.
  • herojon, on 05/08/2009, -0/+11Student loans are maybe the only personal loans that tend to pay for themselves. The average increase an income from a college grad vs someone who just has a high school diploma is substantial. The problem isn't the loans themselves, but rather the lack of understanding by the average person in how to manage their finances. Most kids these days start their career, and their incomes instantly jump sometimes 2-5 times what they previously enjoyed before graduating. Rather than using these new funds to pay off the debt first, they tend to instantly increase their standard of living and incur additional debt.

    If you finish college and choose to live with a low standard of living for only a few years, you will have the loan paid off much sooner, and pay much less interest, in the long run leading to a much higher standard of living.
  • Biscuitz, on 05/08/2009, -0/+11It goes away when they turn 18.
  • Ymeg, on 05/08/2009, -4/+15Nothing is free.
  • lawrenceboland, on 05/08/2009, -0/+10I call BS on your comments. 4 yrs schools can easily be $20k-25k per year. By the time you get your education, you're underwater by $100k. These payments are not small. I pay $700 a month, and I have a fairly low interest rate. To pay it off under 5 years, I'd have to pay upwards of $2k/month on the loans. Not going to happen if you don't live in your parent's basement.
  • kreneskyp, on 05/08/2009, -2/+11That applies if you're going to a business/finance major. I graduated with high honors and didn't have a clue about my loans.
  • kreneskyp, on 05/08/2009, -0/+9I second the BS. I came out of school with around 115k in debt, much of it due to private loans accruing interest for 5 years while i thought i just didn't have to pay them.

    I graduated into a recession with very few full time employment options. I went on to a much better job but now support a wife and child.

    In some cases it might work a) single no children b) dual earning family
  • zomgflamer, on 05/08/2009, -3/+12I failed drivers ed
  • InfinitySnatch, on 05/08/2009, -2/+11Bush isn't in the White House anymore.
  • booyahbitch, on 05/08/2009, -1/+10Yeah...just in case anyone is thinking they CAN walk away from them...that would be a WRONG assumption. They will hunt you down like the assclown you are and start _taking_ it from you. You don't have a choice, unlike traditional loans, you can not file bankruptcy on them.
  • thcobbs, on 05/08/2009, -3/+11Why the FTA? Its common sense.
  • smashblu, on 05/08/2009, -0/+8"It’s not surprising that you didn’t realize what you were getting into with your student loan. You were just barely out of your teen years when you signed the paperwork. If you’re like most people, you probably had little understanding of what it means to incur debt and were lulled into a false sense of security."

    Seriously? I remember them explaining everything to me until they were blue in the face. Then I had to take a test to ensure I knew what I was getting into. But even if I didn't do all that, I was 18 and obviously it's a student LOAN. Not to mention that student loans have great interest rates so it's not as big a deal as say, credit card debt. I'm glad the article says not to walk away from their loans, that's the last thing we need. Sallie Mae will need to be bailed out and guess who's going to pay for that? You and me.
  • nextekcarl, on 05/08/2009, -0/+8I doubt he has much control over that, but just in case, also make sure they don't own any assets (like land) since that can hurt you as well.
  • herojon, on 05/08/2009, -2/+10I know plenty of people who paid off their student loans within 5 years. Not being able to pay them off is either a result of poor budgeting, or failure to get a worthwhile job with your degree. The first is completely on the loanie, the second is usually on the loanie for either picking a poor major or not doing well in job hunting, but in current times, I'd blame the banks and government for putting our economy in a high unemployment level.
  • Hnnnnnghhh, on 05/08/2009, -3/+11A) Go to a state school and do 4 years of engineering for $15k. Graduate making $60k+.
    B) Go to a private liberal arts school in Oregon and get a communications degree for $200k. Graduate giving handjobs in a bus station restroom.
  • Hetman, on 05/08/2009, -0/+8RTA.
  • 8FoldPath, on 05/08/2009, -1/+9As a rule of thumb, don't walk away from any debt you agreed to. But student loan debt is out of control. Both my wife and I would gladly pay 50% taxes to not have to pay for education and health care like people in other countries.
  • inactive, on 05/08/2009, -2/+9so... don't get a loan? good advice champ.
  • OnAsideNote, on 05/08/2009, -3/+10Student loans never go away unless you have a terminal illness and get a judge to dismiss them.
    The only thing to owe that is worse is child support.
    Both never go away and will haunt you until you die,
  • zuiquan, on 05/08/2009, -0/+7Actually, if you NEED a laptop and don't have a way to procure one the extra cash is an excellent way to get one. The loan is deferred, and if you get it at a low interest rate you're way ahead of the game. Also, the interest is tax deductible when you file your returns. So, low interest rate, which is tax deductible and payments that are deferred until after you graduate and are quite reasonable beats going to best buy or dell.com and spending money you don't have using their credit. Of course this assumes you can't afford one outright. Credit is almost never the way to go but student loans beat regular credit hands down.
  • RyanBlueThunder, on 05/08/2009, -0/+6There is no such thing as walking away from student loans. They will hunt you down and find you. Then they will garnish your wages and slap penalties on you. Plus, federal student loans have incredible rates and terms. My law school loans are at ~2% over 20 years (with no pre-payment penalties).
  • inactive, on 05/08/2009, -5/+11I would walk away from them. IMO, the government already paid them off for you in the bailout.
  • lostinseganet, on 05/08/2009, -0/+6Oh please tell me more. I would love to learn about that.
  • Anand999, on 05/08/2009, -0/+6You don't have to itemize the get the deduction. It says so right in that article:

    "The deduction is claimed as an adjustment to income so you do not need to itemize your deductions on Schedule A Form 1040."

    Anyway, my student loan is at 2.something% interest and most of the little interest I do pay is deductible. That sucker will be the absolute last thing I pay off...
  • TitoBob, on 05/08/2009, -0/+5One useful piece of advice: if you get married, don't refinance by mixing the loans of you and your spouse. Keep them separate. If by some chance you DIE, your spouse doesn't have to assume the responsibility of paying that back.
  • AmishMack, on 05/08/2009, -1/+6That's what I did.
  • JasonCox, on 05/08/2009, -0/+5Allow me to plug a jailbroken app for the iPhone called iBlacklist. It's a great way to stop those annoying 6-7 times a day (starting around 8am) calls from the Sallie Mae robo-dialer.
  • skubiszm, on 05/08/2009, -0/+5Just like all of those people that are paying off their fancy houses?
  • greenlight2001, on 05/08/2009, -1/+6What you're not telling people: you went to a 2 year tech college.
  • lilrabbit129, on 05/08/2009, -1/+6While every degree might have a value, a lot of the people getting those degrees have much less value.
  • Balanced, on 05/08/2009, -0/+5The student loan agencies will generally give deferments for any sensible reason, however, so you can push them off without it hitting your credit report from what I understand. At the least, it's not as bad of a hit as defaulting.
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