Chicago Tribune: “How Broke Were Obamas?”
[Guest post by DRJ]
The Chicago Tribune has a brief article that provides more questions than answers about the Obamas student loans:
“The Obamas often say they would still be in debt if not for his best-selling books, which began to swell the couple’s bank account in 2005. In fact, for some period of time, Michelle Obama tells audiences, the couple’s college loan payments cost them more than their monthly mortgage.
As young lawyers, the Obamas pursued non-profit or public service during much of the 1990s. Obama once said he was so broke when he arrived in Los Angeles for the Democratic National Convention in 2000 that his credit card was rejected when he tried to rent a car.
Still, it’s hard to tell just how broke they were, when and for how long.
Public records paint only part of the financial picture. In 1993 they bought a condominium in Hyde Park for $277,500, paying about $111,000 as a down payment, according to county real estate records.
As for income, they earned a combined household total of slightly more than $240,000 in 2000, according to tax records they have since made public. (Their income fluctuated in that range until 2005, when they reported earning $1.6 million.)
But it’s unclear how much their college loan debts were, and aides to the Obama campaign said last week that they could not immediately provide records to clarify.
However, Michelle Obama graduated from Harvard Law School in 1988 and her husband graduated in 1991, around the time when the school’s dean estimated the cost of a Harvard law degree at $62,200. They both also earned undergraduate degrees from Ivy League schools.”
This is interesting to me because our oldest son considered and/or is considering Ivy League schools for college and law school, so I’m familiar with the costs. As the Chicago Tribune notes, however, it’s difficult to guess about their loans without more information.
Was the law school price tag of $62,200 for tuition only or did it include books, room and board? I suspect it included all items and, if so, the Obamas’ law school debt would be in the neighborhood of $375,000. (I’m not counting income they earned during any summer clerkships because those funds were probably used to pay for summer food, housing, transportation, clothing, and for discretionary expenses.)
In addition, did the Obamas have undergraduate loans? Given the humble backgrounds both Obamas have described, I would be surprised if they didn’t receive some or even significant financial assistance at the undergraduate level. Other than National Merit scholarships, need-based financial assistance was the norm even back in my college years 10 years before the Obamas went to college.
Other questions include whether either Obama received financial assistance in law school that defrayed their costs, and what were the interest rates on the student loans and when did the interest start to accrue.
If the Obamas were able to get Ivy League undergraduate and law school educations for under $200K each, that seems like a bargain to me – even at 1983 rates. If they release more information, it will be interesting to see what the actual numbers were.
— DRJ
I’d rather know where they got $111,000 for the down payment on the condo
SteveG (71dc6f) — 4/20/2008 @ 1:33 pmI can guess but they also could have saved it, which is why it was so hard to pay those student loans. Sometimes people resent having to pay off debt that they don’t see immediate benefit from – like a car loan when they no longer have the car. I think some people feel that way about student loans, too.
DRJ (a431ca) — 4/20/2008 @ 1:34 pmIts still amazing that Mrs. Obama can gripe about their debt of student loans. Again, they paid $10,000 for summer programs for their girls. Fiscal irresponsibility comes to mind.
We paid $7,000/yr for three kids for their prepatory high school. This was for each child’s entire academic year, not summer fun stuff. If the Obamas had enough discretionary money to for summer extras as opposed to school (obviously not at their local Y), then I also think they had misplaced priorities.
Surely, the debt of student loans (or any other) supercedes the bells and whistles we would like to give our kids but are not always able to.
And of course this all goes back to the fact that they could have very easily attended public universities and/or state colleges and non-Ivy League institutions…
Dana (1b8fba) — 4/20/2008 @ 2:05 pmI won’t fault the Obamas for not paying back their student loans more quickly than they were required to. The rates on those loans and terms of repayment are often fairly generous. Why on earth would you pay off a low-rate loan early when you can use that money for something more valuable to you?
Where I will fault them is claiming poverty and financial hardship, or claiming that repaying the loans is some extraordinary feat.
Steverino (6772c8) — 4/20/2008 @ 2:22 pmMy younger son went to Dartmouth from 1985 to 1990. The tab ran about $24K per year. They had this thing called the “D-Plan” were students attended Fall, Winter & Spring quarters of their Freshman and Senior years and the Summer quarter between Soph & Junior year, then took quarters off at their option. At one point, Andy went 5 straight quarters at $8K a pop. As an air force major, making $55K, $40K in 15 months just about killed us.
My Dad got his MBA at Harvard and paid nothing. The U.S. Navy sent him. That’s the way to do it.
arch (4a85b8) — 4/20/2008 @ 2:23 pmLet’s just limit the analysis to the years since 2000 – based on the information in your post, the Obamas earned a gross of $240k per year. It is probably safe to assume that they paid no more than $60k in taxes in each year (with two hot-shot law-school graduates, they should have been able to organize their finances to keep their <> tax rate below 25%), leaving $180k annually for housing, food, kids, etc.
Even if the total student loans were in the $300k range, I suspect that the interest rate on those was under 6%, indicating an annual payment in the area of maybe $25k on the high end.
I would strongly suggest that the Obamas were living large, with significant disposable income, at least for the last 7-8 years. Michelle Obama’s protestations about their finances are just crocodile tears – they had (and probably still have) plenty of do-re-mi to live on. Of course, when you’re trying to run as the common-man agent of change, you need to burnish your limited-income skills; however, I think it is all a smoke screen.
Drewski (6416f7) — 4/20/2008 @ 2:55 pmI have a feeling that this legend about financial hardship, etc is going to be Barry’s undoing. I can’t go on anything more than my gut right now…
paul from fl (47918a) — 4/20/2008 @ 3:20 pm…mark my words.
Perhaps the NYT will be able to ferret out this info; it’s appearantly a “state secret”, or else the O’s would have released it already.
All he needs to do is release his IRS data for his State Senate years (including any data for his wife, if they filed seperately).
Another Drew (8018ee) — 4/20/2008 @ 3:31 pmOne consequence of the student loans that are available has been the rampant inflation of tuition. In 1956, I started USC with a scholarship but tuition rates were $17 per unit. That meant that a full-time schedule of 16 units would cost $272 per semester. The dollar has declined a lot in value but the actual cost can be estimated by considering that I could earn enough working for the summer (after I lost my scholarship by too much partying) to pay the tuition and then make enough with part-time work to live on.
By 1961, medical school tuition has risen to $600 per semester or $1200 per year. It is now $37,000 per year, last time I checked. The inflation of tuition has far outpaced general inflation and is fed by these student loans. Of course, one way to offset high tuition is to join ROTC and serve as an officer after graduation. The services, in spite of the Uniformed Services Medical School, will pay a medical student the salary of a first lieutenant plus all tuition and expenses. I don’t know if this applies to law school and I doubt the Obama’s would have ben interested but it is another way to pay for an education.
Mike K (86bddb) — 4/20/2008 @ 4:41 pmI don’t know if the armed services will pay for law school today, but when I was attending law school in the mid ’90’s my class included a full time student who was attending on Uncle Sam’s dime as a USAF lieutenant.
SPQR (6cd738) — 4/20/2008 @ 4:58 pmIt’s hard but you can also work your way through school, making sure to choose an economically priced college or community college. In addition, many employers help employees pay college costs.
DRJ (a431ca) — 4/20/2008 @ 5:16 pmPatrick,
corwin (d0e132) — 4/20/2008 @ 5:27 pmThe cost -62K was only for tuition.Had a cousin at Northwestern then and they’re roughly equal.When I was outof residency a couple yrs,a local doc wasn’t repayin her loans and was publicized in the paper.her defense was I’m working at a state clinic and only making about $90K a year.I suspect Mr nad mrs Obama had an adequate income,and this will be a troublesome issue
So two incompetent boobs could not make the American dream work for them and it’s all America’s fault? But now they think they can run the country?
nk (0e6820) — 4/20/2008 @ 7:08 pmUSC…$17/unit!
Another Drew (f9dd2c) — 4/21/2008 @ 8:38 amI remember being at LAState in the late 60’s when USC went to $22. There were more than a few of us who would take specialized under-grad courses over at USC who wondered how in Hell we would ever be able to afford that.
Is the CHICAGO TRASHBIN trying to gerate sympathy for OBAMA?
krazy kagu (a2e13d) — 4/21/2008 @ 12:47 pm