Student Loan Debt Affecting Future Borrowing?

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nowinGA
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Student Loan Debt Affecting Future Borrowing?

Postby nowinGA » Tue Apr 20, 2010 11:06 am

If I decide to go big and pay sticker at a top rated school...and I take on $210K+ in loan debt...is there the possibility that it could hinder me in the future? Even if I have great credit? For example, might I have trouble buying a house someday?

Curious any thoughts...I should add that I already have some debt and will probably come out with even more than $210K. The new IBR program makes it easier to stomach, in terms of what my monthly payments would be...but I am wondering how it will affect other borrowing in life.

ram jam
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Re: Student Loan Debt Affecting Future Borrowing?

Postby ram jam » Tue Apr 20, 2010 11:17 am

Your total debt owed compared to your salary will be less a factor than your REAL debt load as measured in monthly payments. Therefore, if you would like to buy a house, the loan officer is going to assess your ability to pay based upon how much net income you have minus taxes and student loan monthly payments. For example, if your student loan payments are $2,000/month and you earn $5,000/month after taxes (Salary of $80,000) you will have an effective earning of $3,000/month. The total mortgage you can qualify for will be percentage of that amount, say 35%. Therefore, you would be able to qualify for a home with monthly payments at about $1050/month, a total value of $180,000.

If you qualify for IBR, which you probably will, you will pay much less per month, probably about $650.00. Therefore, the total amount of your home can increase.

I think most people are weary of IBR because it has not been fully tested and proved to be a dependable option. For example, what if we rely upon IBR and we take out massive loans, then one day, the percentage on IBR is raised to accommodate Gov spending concerns, etc. from 15% to 20%. OR what if the entire program is repealed? This is unlikely, but still, do you trust the government enough to take out over $200K and rely on their promise? I sure don't.

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Captain Jack
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Re: Student Loan Debt Affecting Future Borrowing?

Postby Captain Jack » Tue Apr 20, 2010 11:27 am

I've always heard that student loan debt is not considered bad debt. I could be wrong, though.

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blerg
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Re: Student Loan Debt Affecting Future Borrowing?

Postby blerg » Tue Apr 20, 2010 11:35 am

Captain Jack wrote:I've always heard that student loan debt is not considered bad debt. I could be wrong, though.


Debt is debt.

dontknowwhereimgoin
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Re: Student Loan Debt Affecting Future Borrowing?

Postby dontknowwhereimgoin » Tue Apr 20, 2010 11:47 am

Debt is debt.[/quote]


profound. actually, depending on the interest rates, all debts are not created equal.

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nowinGA
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Re: Student Loan Debt Affecting Future Borrowing?

Postby nowinGA » Tue Apr 20, 2010 12:06 pm

Student loan debt IS, indeed, "good" debt if there is such a thing. That is...better than credit car debt, or a car loan, etc. But yes, it is still debt.

If you take loans under the IBR program, they cannot just repeal it. (come on people, we are going to be lawyers!)

And the program IS 10% max...that is, that is how it is written...not just a fluctuating rate. At least that is not how I read it. I guess I could be wrong.




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