How to solve the student loan crisis?

There's always money in the banana stand.

 

If all goes well in the 401K, he never pays taxes on that portion he contributed anyway (at least when he's alive), because he only ever uses the interest he has generated from the initial investment. Doesn't work that way for everybody, obviously.

 

Again, though, it's largely a wash. He can now contribute more than he could before he paid off those loans. He winds up in almost exactly the same place. He only loses out on: A) the tax/penalty haircut; and B) earnings on those dollars that he misses out on in the interim. If the market goes crazy these next couple of years, he might regret this one day. On the other hand, if the market tanks these next couple of years, he might wind up being the envy of everyone around him when he retires.

 

No, they weren't the only options. One year wouldn't have been available to him if he were making, say, $50,000 instead of $100,000. But using what you said here, if he were taking the three-year plan, he's now saved himself $2,800 a month. Instead of $700.

Try going into the bank and telling them you need $100,000 for an emergency because you have no cash, but you're good for it because you have no debt load. Let me know how it goes.
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Well, we don't really know what assets this guy has, but he can absolutely walk in and say, "I have no debt load and I just wiped out a $90k debt in nine months, and I still make $100k a year." I don't suppose all banks would go for that, but doubt he'd have much trouble finding one that would.

 

Maybe that's where we differ.

To me a mortgage is "good" debt. You not only own the real estate, but you are getting use from it (as shelter and a home) and possibly may get a positive investment out of it.

His student loan debt was "good" when he was in school, because it was an investment in his future. But now that the payments are due, the loan may be limiting his other options.

You said earlier that $90,000 debt wouldn't prevent him from buying a house. When I bought mine, I'm pretty sure the bank wouldn't have looked too kindly on me having ANOTHER $90,000 debt in addition to the money I wanted to buy the house.

Raiding a 401(k) is something I would advise against 99.8% of the time. But IF IF IF you are under 30 and IF IF IF it's to pay off something that MUST be paid anyway and IF IF IF IF you have an income that will allow you to rebuild this 401(k) in a hurry . . . THEN I can see it as a viable option. Not a no-brainer, of course. But not "stupid", either.

Time is the greatest friend of someone building a 401(k), and a 29-year-old with a six-figure income has plenty of time. That's why I mentioned 39- and 49-year-olds earlier. The younger you are, the less egregious it is to touch the money.

 

This is just more economic end-zone dancing by a silver-spoon scion of the One Percent (born with first-and-goal on the 4-yard-line and thinks he made a 96-yard run) who is archly concerned why all the peon children can't just pay off their $90,000 debt in two years off their oh-so-easy-to-fall-into six-figure income.

Bootstraps!!

 

Mihalic doesn't seem to have a qualms about being a product manager for a computer company that produces junk.

 

So if he was born with first-and-goal on the 4-yard line, why'd he: A) even bother going to school at all; and/or B) borrow a shit-pile of money to do so? Or is it simply the case that anyone with the unmitigated gall to pursue a career that, you know, pays well is by definition a "silver-spoon scion of the One Percent"?