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August 08, 2014


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Just saying...

Just as the student loan crises is exaggerated (the average amount of student loan debt is $25K, not hundreds of thousands of dollars), so too is the medical debt "crises." Many people have small unpaid medical bills that they are not aware of (co-pays not covered by insurance) and these hit their credit record and thus impact FICO, which does not focus on the amount as much as the days past due.

Yes, this will help improve FICO scores and thus credit-worthiness, Most of these people are not "strangled by medical debt." However, for those with substantial medical bills, even if these debts are removed from their credit record and improve their FICO score, are they in a position to take on more debt (like a mortgage)? It would seem not.


@Just saying...

A recent poll of college graduates found that people who take out significant college loans score worse on quality-of-life measures, a trend that persists into middle age, the Wall Street Journal reported today. Even 24 years after graduation, students who borrowed more than $25,000 are less likely to enjoy their work and are less financially and physically fit than their counterparts who graduated without debt. For more recent college grads, the discrepancy is even more pronounced. The data come from a March survey conducted by Gallup Education in conjunction with Purdue University of 30,000 college graduates of all ages in all 50 states. The amount of debt students are taking out to get through college has been climbing for years. About 70 percent of college graduates have debt, and the average debt today is more than $33,000, up from $18,600 in 2004. Among those who took the poll, 11 percent took out more than $50,000 and an additional 21 percent borrowed between $25,000 and $50,000. Read more. (Subscription required.)"

Now, you don't have to personally care, of course, but medical debt and student debt are still Real Things, at least in this economy.

Just saying...


From the NY Times, June, 24, 2014:

"The Reality of Student Debt Is Different From the Clichés

The deeply indebted college graduate has become a stock character in the national conversation: the art history major with $50,000 in debt, the underemployed barista with $75,000, the struggling poet with $100,000.

The anecdotes have created the impression that such high levels of student debt are typical. But they’re not. They are outliers, and they’re warping our understanding of bigger economic problems.

In fact, the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday. Only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000."

Unfortunately, the media and some people, prefer to focus on the outliers -- makes for a better story. As this cited study notes, repayment plans are more generous than they were 20 years ago.

Anyone who borrowed $25,000 24 years ago and is still feeling the pain is doing something very, very wrong.

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