samiamy

Student cashes in savings after private loan falls through - CNN.com





ATLANTA, Georgia (CNN) -- Eric Hahn thought his financial situation was set after he was approved for a private student loan with an 8 percent interest rate to supplement his federal education loans.


Eric Hahn, 21, estimates he will be in debt for the next five to seven years for his undergraduate tuition.

Just a few weeks later, Hahn, 21, was forced to cash in his savings and investments so he could make his rent and tuition after finding out that the lender, MyRichUncle.com, had suspended its private student loan program.

"Due to continued disruptions in the capital markets, combined with the continued demand we have experienced this year, we are reaching funding capacity limits," a message on his cell phone said, mimicking a statement on the company's Web site.

katliamom

Would someone please comfort Eric that "the fundamentals of American economy are strong"? Please?

LongPrime

Eric had savings and investments. Savings at a positive ROR. Investments at probable negative ROR. He wanted to borrow for a guaranteed negative ROR.

Eric, The American Economy, just saved your future.

katliamom

Yup. Eric's future is downright rosy.

BCEagle91

So he can pay 8% for a loan while earning 3-5% in a CD and getting negative returns or pay from savings and investments. I have the same choice. I can borrow at 8% or pay with my Discover Card which gives me cash back and 60 days to pay interest free. I haven't exactly run the numbers yet but I don't think that my investments have returned 8% this year. I think that they're up for the year but the percentage is probably low single digits.

What did people do during the 70s when the economy stunk for years and years and years? They did manage to survive, right?

bellaro23

We've become a nation of needy whiny crybabies. Yes the economy was worse in the 70's. When I bought my first house in '85 my interest rate was 18% (jumbo mortgage).

The economy has been a lot worse and I firmly believe that the foundation hasn't crumbled based on the events of the last few days.

guitars101

katliamom, I agree with post #2. Some are so out of touch with the reality of the average working person today

JustAMomOf4

yup

Oh gosh - the 70's. I hate even thinking about it. I remember being in college and thinking we would never be able to afford a home.

guitars101

we have become a nation of needy whiny crybabies. The rich keep crying about taxes being raised.

BCEagle91

"Some are so out of touch with the reality of the average working person today"

When I was a kid, we had to walk five miles uphill in the snow to school each way.

sueinphilly

I didn't own a house in the 80's but my first car loan was for 15 or 18% in 1982. I think I was earning high interest on my money market back then too. I'm sure there were some people who had $$ and bought long term CDs to lock in those rates (did banks offer that back then?). I had no money to speak of to invest

BCEagle91

You made out like a bandit if you were in a long-term bond fund. Long-term bond funds got scarce in the 1980s for some reason. At some point, I think that it was easier to just buy the bonds.

Many bonds were callable so that took a little zip out of the return.

If you had money, you were taxed into oblivion. Back in those days, it was very rare to see a very expensive car - people could afford them and the crazy credit terms weren't available. The well-off had to use crazy tax shelters or cheat on taxes to accumulate wealth.

soozievt

I feel really out of touch because when I saw the topic heading, I thought it was about someone's REAL rich uncle who suspended a private loan to his nephew due to these tough economic times. Shows what I know.

mercymom

"Back in those days"....are you using a cane yet? I'm beginning to feel like I need one. Anyhoo, for the young uns amongst us here's a Wiki entry on the early 80's recession which was far worse than what we are going through right now (unless of course things now get even worse still):

Early 1980s recession - Wikipedia, the free encyclopedia


When I was discussing the economy and the election with my Obama supporter D, I told her that the economy has been worse than it is now, and she rolled her eyes and said snarkily, "when...in 1929?" To which I replied, no, when your dad and I got married. She was shocked. Our 1st mtge was at 16%. We refinanced it twice, getting it down to 6%. Paid it off in 15 years and saved a lot of interest. Plus it was an old fashioned mtge, you know, 20% down and all that. The good old days when you had to have a real down payment and couldn't borrow more than 2 1/2 times your income.

I will also add that about a year after we bought our house, the oil bust happened. We lost about 20% of our purchase price equity in the house and it took 10 years to get it back. We didn't go whining about it and rushing out to sell or abandon our home because it was no longer worth what we paid for it. And this at a time when countless engineers all over the neighborhood were selling their houses at a loss as they'd been laid off or transferred. Scary times, but we survived.

mercymom

We also lost money in the 1987 stock market crash:

Black Monday (1987 - Wikipedia, the free encyclopedia)

Eventually it came back. Athough it scared me enough I sold both Exxon and Wal Mart as soon as I got my equity back. Could kick myself today about not keeping the Wal Mart.