For love OR money?

[DTEJD]

Hey all:

Been a while since I've posted...

I have an interesting story to tell...

I have a friend who owns  a couple of "cheaper" rental properties in a very good part of town.  He had a prospective tenant and wanted my advice if he should rent to her.

The woman is in her mid 30's and is trying to move out of her parent's house...

She is a licensed attorney and has been for 3 years.  She was never able to get a job anywhere, so she hung her own shingle and does low level criminal work & domestic stuff (divorce, custody, support, etc.).

I actually met her in person and she is reasonably intelligent & well spoken.  She seems to have energy & industry...

So here is where it gets crazy...

She makes about $25k to $30k a year as an attorney.  She has just over $250k in student loan debt!  Her situation is not at all unusual for graduates of her school.  A good portion of them are unemployed and not even making what she is.

Her fiancee broke up with her a few months ago.  I strongly suspect it was because of her economic situation.

In the market that she is in, it is doubtful if her income will improve significantly.  In fact, she is at risk of it declining.  The courts are supposed to change the appointment system.  This will result in MORE attorneys getting work, but each individual gets fewer cases...

Obviously she will never be able to pay her loans under any reasonable circumstance.  How will she have children?  Get married?  Save for retirement?

Heck, she is just getting a place of her own in HER 30's!

I met her, she is nice, but she has NO FUTURE.  I hate to be rude, but she is really stuck.

Her education burden is simply too much.  She is on IBR (income based repayment) and her loans will be discharged in her mid 50's.

Who will date her?  How will she have a family? 

So here is the question, would you date/marry somebody who had over $250k in student loan debt?

I don't think I would...

[jone]

Get me her full name and phone number.  (Just kidding.)

While saddled with debt (that cannot be discharged through Bankruptcy) the simple fact is that it is not insurmountable debt.  My question to you is this:  How much money does it cost to raise a child?

Wouldn't there be almost as much perceived debt marrying a single mother?  How about marrying a woman with two children and a deadbeat dad?  People marry such women all of the time.

Everyone has baggage.  Baggage increases with the age of the individual.

If you are considering this woman, simply factor the debt into the equation. 

[Daveman]

It is an interesting question.  I think it is somewhat a parallel to what some of us face with transferring an education to the west.  Perhaps not to the tune of a quarter million, but the educational "baggage" is often there one way or another.

At least with this woman, the total cost is already known and she may very well rise up in the field of law. In such a case, within just a few years of living well below the level of means, that debt could be eliminated.  Outrageous yes.. and really is ridiculous that anyone should have to begin with that massive incumberance hanging around her neck. 

[DTEJD]

Daveman:

The odds are very much AGAINST this woman!

"Never say never", as there is a slight chance that she could refer a large case and take part of a large judgement, but that is rare, very rare...

I would hazard a guess that this woman might be making LESS money in the upcoming years...

She is in a very bad legal market that is oversaturated, and will get worse in the upcoming years.  Her best bet is to get out of the industry and maybe into real estate, or waiting tables at a higher end restaurant, or becoming a casino dealer?  Something that allows her to make a living AND pay towards her debt.

Her undergraduate degree is in "liberal arts" and is not economical.

I struggled for years with my student loans...but I had a good paying job for several years...

She is much worse off than I ever was...I feel bad for her.

[Slumba]

Mid 30s and hasn't moved out? What payment history of anything else, does she have?

If the parents are happy to see her move out, have them co-sign the lease for the first 6 or 12 months, if possible.

[Boethius]

I would rent to her without anyone cosigning.  She likely will be a responsible tenant.  I suspect she is moving as she wants independence.


$250,000 is not an insurmountable debt paid over 20 years.  Furthermore, the economy will, at some point, improve, and her prospects for a six figure income are good.  I graduated in a very depressed legal market, and a decade later, there were shortages of lawyers. 

[DTEJD]

Mid 30s and hasn't moved out? What payment history of anything else, does she have?

If the parents are happy to see her move out, have them co-sign the lease for the first 6 or 12 months, if possible.

Yes, that was my EXACT advice...her father co-signed the lease.  She had some difficulty coming up with the 1st month rent AND security deposit, but she got it done.

She has been there a couple of months, and everything is working out.

[Daveman]

Daveman:

The odds are very much AGAINST this woman!

"Never say never", as there is a slight chance that she could refer a large case and take part of a large judgement, but that is rare, very rare...

I would hazard a guess that this woman might be making LESS money in the upcoming years...

She is in a very bad legal market that is oversaturated, and will get worse in the upcoming years.  Her best bet is to get out of the industry and maybe into real estate, or waiting tables at a higher end restaurant, or becoming a casino dealer?  Something that allows her to make a living AND pay towards her debt.

Her undergraduate degree is in "liberal arts" and is not economical.

I struggled for years with my student loans...but I had a good paying job for several years...

She is much worse off than I ever was...I feel bad for her.

Well, I know nothing of what opportunities there are in that field, but historically, it's a field that *always* bounces back.  Tell her to sue the government over the constitutionality of Obamacare.. that'll be a start.

I feel bad for her and every other student starting out with debt like that in an economy like this... but all is not lost.. as jobs disappear and reappear elsewhere, wall street has performed quite well and made many of the rich richer. So, all is right with the world.. and yeah, I made money as well.

Health insurance for a family more than the cost of a mortgage in many cases. The cost of an education more than an average citizen can save in a lifetime.  Reminds me of an exploitation thread... 

[DTEJD]

Well, I know nothing of what opportunities there are in that field, but historically, it's a field that *always* bounces back.  Tell her to sue the government over the constitutionality of Obamacare.. that'll be a start.

I feel bad for her and every other student starting out with debt like that in an economy like this... but all is not lost.. as jobs disappear and reappear elsewhere, wall street has performed quite well and made many of the rich richer. So, all is right with the world.. and yeah, I made money as well.

Health insurance for a family more than the cost of a mortgage in many cases. The cost of an education more than an average citizen can save in a lifetime.  Reminds me of an exploitation thread... 

Daveman:

That is the problem.  The only opportunities in the legal field is selling legal educations!

In the last decade, there has been a structural shift.  There are FEWER jobs, and MORE graduates.  That trend is accelerating!  I think there are 8 or 9 law schools in her state, with several more being right on the border an hour or so away...If there were equilibrium, there would be 2, maybe 3 schools at most.

She is in the "midwest" in a depressed state and a depressed city.  I don't see that situation ever changing much for the better either.

She is not the only one, not by a longshot...

Student loans will be a huge problem in the near future.

[Slumba]

The back-office / legal off-shoring business, where you have 1 lawyer licensed in a state managing the work of 50 well educated people in a 3rd world country, is just getting started. 

In Manila, you drive around an area that in just 8 years went from grassy land surrounding 1 luxury condo complex, to having that same complex now surrounded by shops, restaurants, and multi-story office buildings. 

Many of the people there work for international companies at good local wages that are still much much less than that person would make if they were living in the USA or Europe.  Having a highly trained lawyer and paying them $5K per month (10 years experience, top marks from a top school) is a steal from the perspective of those companies.

The 2 areas I know of are "the Fort" or Fort Bonifacio and Eastwood, where the call center workers work during the evening - and the cafes are full in the wee hours of the morning as the shifts end or change.  The names on the office buildings: IBM, JP Morgan Chase, Citibank, etc.

[Boethius]

Most of what is done offshore is not high end, profitable legal work.  The type of work moved offshore is typically work done by juniors, or even paralegals in big law firms, and only in larger commercial or litigation transactions.  It isn't going to put lawyers out of work. 

[DTEJD]

Most of what is done offshore is not high end, profitable legal work.  The type of work moved offshore is typically work done by juniors, or even paralegals in big law firms, and only in larger commercial or litigation transactions.  It isn't going to put lawyers out of work.

Well actually yes, it is going to keep a lot of USA graduates from ever getting employment...

Low end work used to be done in house at the big firms and new associates did it for their first few years.  Clients (rightly) balked at the high fees being charged for this...so it was outsourced/offshored.

Now it is much harder to get into "biglaw".  Of course it has always been difficult.

Low end work was done by graduates of low end schools.  Now that work has becoming much scarcer.  There is pressure at the top, and everybody lower on the ladder gets pushed down.  Those farther down the ladder to begin with may get pushed off or not even be able to get on.

The split in the legal profession is wider than it ever has been.  You have the top end from the top 20 schools or so, who have a decent shot.  Then you have the poor slobs at the other 180 law schools.  If you are s graduate of the 180 or so schools, and NOT in the top 10% of your class, your outcome is probably going to be very, very bad.

At some of the lower ranked schools, it is not surprising to see 50%+ of graduates not able to find ANY work in the legal profession...

So this woman has already beat the odds...the problem is that she is not really making much money AND she has CRUSHING debt levels.  A toxic combination.

The legal profession has undergone a seismic shift and I don't see it ever getting any better.

[Faux Pas]

Daveman:

That is the problem.  The only opportunities in the legal field is selling legal educations!

In the last decade, there has been a structural shift.  There are FEWER jobs, and MORE graduates.  That trend is accelerating!  I think there are 8 or 9 law schools in her state, with several more being right on the border an hour or so away...If there were equilibrium, there would be 2, maybe 3 schools at most.

She is in the "midwest" in a depressed state and a depressed city.  I don't see that situation ever changing much for the better either.

She is not the only one, not by a longshot...

Student loans will be a huge problem in the near future.

DTEJD
These things almost every where are ebb and flow. To pretend you know what the market conditions are 8-9 years down the road in your particular area is a fantasy at best. I would suggest that this gal's employment and income prospects are not as bad as you see them. Perhaps in the area she is currently eeking out a meager survival may never change, maybe it will. The thing is, she has the education, she seems pretty bright (as you've described her) she has the tools and ability to increase her income and position. One should expect that she will in either her current industry/field or another. Her debt is managable especially as a student loan debt. Her chances of having the loan paid before it matures is very good.

I don't really understand your dogmatic feelings on this gal's situation and her future prospects? What is your interest? Is it just fleeting fodder for discussion or are you contemplating asking her out? What is your skin in the game?

[Wayne]

If you are a landlord, you advertise your rental and wait to see who is interested. You have an excellent application form for people to fill out. Then you chose the best person or persons to rent to.
 
The lease always favors the tenant over the landlord. If the tenant fails to pay the rent when it is due, you must follow the court rules and forms to give the tenant a notice to either pay up or move out. The landlord can fill all the forms online and does not need an attorney to evict.
 
Now, if you are renting to an attorney, it would be better to rent to a lousy one! If you rent to a good one, it could be difficult to evict. They could find some excuse, some minor thing over looked in the lease, or whatever.

[Lily]

Thanks for this thread. I can relate to this person. Except that as a former Russian person, I had zero debts after my graduation, as the Russian economy is cash and not credit oriented. Instead, I had to severely restrict myself in all consumption areas in order to be able to pay for my studies.
 
Your topic raises a few complicated issues like diminishing the burden of debts, earning her living, and dating.
 
It was a clever move on her part to negotiate her education debts with the credit organization. I heard that for the banks, the education debts are the most risky investments as people seldom pay them in full. So the income based repayment is a good option, well done. Perhaps there is some more room to diminish the burden again. If I'd be in her shoes, I'd educate myself in depth about any available options. I'd become an active participant on the finance related Internet groups, read the opinions, ask questions. Probably she could find out even more options that she thinks are available to her.
 
Then, increasing her income. She probably could consider thinking about deepening her legal specialty. This is just my personal opinion, though. I admit that I don't fully understand her particular situation, but nevertheless. Increasing her professional network belongs here, too. Is she active in the legal organizations? Does she offer to speak at the conferences? Any mentorship options available? How about moving in another area where she could have more opportunities?
 
Last but not the least, her dating life. Do you guys really believe that you could decline someone only because he or she is in big debt? If this would be the case, people would probably not marry until late 30s when the most debts are paid out. My guess would be that in the West, people still manage to live with debts as far as the debts are manageable, and let the people sleep well in the night.
 
Honestly, my belief would be that her dating chances mostly depend on her personal attractiveness and pleasant personality rather than her financial situation.

[pokerintherear]

How much is the monthly rent?

If I had the information you provided in front of me I would not rent to her.

[GQBlues]

1. Presumably this woman is Russian and likely on the cute department or else this won't even be a consideration. Had she been a fat AW since all of them are, then no way Jose, right?

2. She's at the least on poverty level or just above. Not sure what rent rate were speaking of, but even 35k with living standard In a good' neighborhood leaves her with almost nothing without having to pay for any rent eg, car, obamacare even with subsidies, food, etc..

3. We have two rental properties and I know how volatile renting business is and you'd like the most stable and qualified tenants whenever possible, so...

What this appears to me is the X factor comes into play so find out if she'll give up the sex part for free so he doesn't have to risk losing rent money. If not rent to someone more qualified, have him go to Russia or Ukraine and get a gal there. They are pragmatic and have a penchant for much older men because they know they have money and will be a good provider for a loving family.

Good luck and that's how I see it.

[Wayne]

What does her credit report say about her?

[vwrw]

I think a huge debt can scary off some candidates. On a positive side, her debt is close to what it takes to bring up a kid. So if she couples with a man with a kid, they will be about equal in the financial burden they are carrying. All she will need to do is to present her situation properly.

[GQBlues]

I think a huge debt can scary off some candidates. On a positive side, her debt is close to what it takes to bring up a kid. So if she couples with a man with a kid, they will be about equal in the financial burden they are carrying. All she will need to do is to present her situation properly.

+100

As we all know, they are very pragmatic and resilient and soon they'll be able to grow up and get adjusted and will be able to contribute to the household

[fathertime]

 

So here is the question, would you date/marry somebody who had over $250k in student loan debt?

I don't think I would...

Hi Dtejd,

The IBR (Income based repayment) for somebody making around 25-30K is very low, often nothing at all...especially if she were married and with child.  If the new spouse is working and the household income is 75K the payment is still not that much.  The loans can be forgiven in as little as 10 years if she were to obtain a qualified governmental job/non profit type of job.  Like with welfare, having a child or two can actually benefit her in a financial sense regarding the student loan.   This is my basic understanding.

As far as marrying the lady, higher earners have much more to lose financially because the household might be on the hook for the full 250k in those cases.  If it were a younger single version of me, and I really enjoyed the lady, I wouldn't let the student debt bother me much given the new lax rules...

Fathertime! 

[DTEJD]

Wow:

I am surprised at how much interest this thread is generating...

It would be interesting to know the age of the posters...I think there is very LARGE generational gulf here...

The world has shifted and is shifting.  It used to be that if you got an education and worked hard, stayed away from drugs & alcohol, you would get ahead in life.  That is no longer the case.  Education in the USA has become a very poor investment for a lot of people, this woman is a prime example.

I have many reasons to be interested in her situation...I have many family members in the legal profession.  I have many friends & associates in the profession too!  So I know a little bit about the industry...

What is so interesting is that people think this is not too large a problem, or that her debt is manageable.  It is manageable from the perspective that she is not starving or out in the gutter...but she has no retirement and will not be able to retire.  She will not own a house....most likely get married or have a family, or ever have any financial security.  She will most likely be relegate to a "lower class", downwardly mobile life.

That is what she, and most of the graduates from her school face in life.

Here is how here IBR works....She pays a percentage of her wages above poverty level for 20 years.  I believe it is 15% above $20k a year.  So her payments are between $100-$200 a month.  That is manageable....

Here is where the problems crop up:

A). Her payments don't even come close to covering the interest expense.  Every year her loan balance goes up.  What will her loan balance be 5,10,15 years from now?  15 years from now it could be WELL over $500k.

B). If she does start making serious money 4-5-6 years from now, her payments will be HUGE, wiping out whatever increase she makes, unless she makes WELL over $150k a year.

C). When the debt is discharged, the government is going to take a HUGE hit, not the lenders.  So the taxpayers will shoulder the burden.

D). She will then get a HUGE tax bill, as discharged debt is treated as income.  So she will then need to enter bankruptcy as she can't pay her tax bill.  At this point in time she will be in her mid 50's.

E). So when she is in her mid 50's she will be free of the debt, but will have a bankruptcy.  So then she can start saving for her retirement.

F). Certain government positions or charity positions will qualify for a 10 year repayment plan...BUT these are highly competitive as everybody is trying to get into these.  Good work if you can get it, most people can't...

G). Maybe she can qualify for other government benefits...but she won't have a middle class lifestyle.  Why go to school if you need to be on the dole?

This is a situation that a lot of young people will find themselves in.

Her education and debt situation will affect most parts of her life including dating...

[Lily]

DTEJD why wouldn't you make this post on some financial forum instead? It may even bring some conceivable ideas for her. It looks like us the RWD members are not a real experts in advising on debt management.   

[pokerintherear]

What you are describing is the next financial balloon to bust.

You can justify all you want but there will be thousands of young skulls of mush affected in the coming years.

It wont be as noticeable or big as the housing bubble but it will have a big impact on many peoples life in the future.

250,000 for student loans is absurd. The guidance counselor who sold her the dream should be fired.

[Lily]

If you don't invest in yourself, meaning your professional education after all, what else are we supposed to do with our lives?