This seems to be a popular "reason" for never paying them off. Along with "it's so low interest there is no point."
What other excuses have you heard?
What other excuses have you heard?
Random morbid thought…..Are they forgiven if death is a suicide?
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This seems to be a popular “reason” for never paying them off. Along with “it’s so low interest there is no point.”
What other excuses have you heard?
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A lot of people don’t realize Social Security payments are garnished to pay student loans
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Random morbid thought…..Are they forgiven if death is a suicide?
Click to expand...
This seems to be a popular “reason” for never paying them off. Along with “it’s so low interest there is no point.”
What other excuses have you heard?
Click to expand…
I don’t feel like being in a rush to pay off my $15,000 from undergrad at 2.1% non-compounding interest in favor of investing in equities using a buy-and-hold strategy is an “excuse.” I think it’s more a “reason.”
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My favorite is when folks say that paying down your student debt is the dumbest thing you could possibly do because you can make so many higher yielding investments as a business minded physician. Leverage is how to get rich so the more leverage the better.
I ask them if they know how to calculate the pre-tax equivalent yield on a 7.9% grad plus loan at a 45% combined federal state and local income tax rate and that the resulting yield beats every stock index fund’s long term performance record known to man.
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Random morbid thought…..Are they forgiven if death is a suicide?
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You mean are they assessed against the estate? No.
For those who are actually considering this tactic, I recommend this post:
http://thecollegeinvestor.com/18219/suicide-student-loan-debt/
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Even the folks sitting at 1.9% rates from the consecutive payment discounts that existed briefly in the mid and early 2000s aren’t sitting on free money. As you point out the deduction phases out at the higher AGI.
Hence it’s 1.9% after tax money, which means for an attending physician in NYC it’s more like 4% in a retirement account. Since virtually anyone who uses a target retirement fund or invests in bonds in their 401k or IRA is earning less than that, the 1.9% is most decidedly not free money. These folks better have 100% stock allocations or they’re practicing negative arbitrage
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My favorite is when folks say that paying down your student debt is the dumbest thing you could possibly do because you can make so many higher yielding investments as a business minded physician. Leverage is how to get rich so the more leverage the better.
I ask them if they know how to calculate the pre-tax equivalent yield on a 7.9% grad plus loan at a 45% combined federal state and local income tax rate and that the resulting yield beats every stock index fund’s long term performance record known to man.
Click to expand...
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