Am I Heartless?
I listened to a story on NPR’s All Things Considered on the drive home Tuesday about the rising cost of Medical School. The first person they talked to was horrified that her daughter would be paying 8.5% interest on her federally backed student loan and wanted the government to cut that rate in half to match the interest rate they just received on their refinanced mortgage. They said she was going to have to borrow a total of $300,000 (the entire cost of her education.)
For some reason, this grabbed me in a similar way to the story last year about the health care executive (not a CEO or President, just an executive) who had paid $18 million for the largest yacht ever built, but it was sitting half completed at a bankrupt shipyard. I had a hard time feeling any empathy.
Yes, she is going to be saddled with that debt for a long time. Yes, the interest rate is higher than that for a mortgage, but with a mortgage, you have collateral. What are you going to put up to back a student loan? And while $300,000 is a lot of money, how much is the house she is going to buy to live in, as a doctor, going to cost? It seems a matter of scale, a scale that most people in middle America are not going to deal with and maybe since I don’t have any sort of connection, I can’t relate to her situation.
If you don’t want to pay interest on that amount, there are several things you can do, like, say, not borrow. Plus, she will not have to pay more than 15% of her income towards the loan, and there is talk of lowering that down to 10%. I think she is going to survive.