Stars: They’re Not Paying Off Their Student Loans Just Like Us!
I have no idea what movie stars make, but I’d like to think that a star with top billing in at least four movies (The Spectacular Now, Whiplash, 21 & Over, and the upcoming Fantastic Four remake) as well as a supporting role in the Divergent quadrilogy, should be making enough to put a little aside for his student loans.
But Miles Teller is a lot like us when it comes to student loans, as Vulture reported in February 2014:
[Miles Teller] moved to New York to study acting at NYU, where he racked up $100,000 in student loans he says he still hasn’t paid down.
Now, a little over a year later, Vulture asks Teller to explain why he’s not paying off his student loans:
I read last year you hadn’t paid off your student loans from NYU. Now that you’ve played a superhero, that still true?
That is true. My business manager says the interest is so low, there’s no sense in paying them off. I can, if I want to have that badge of accomplishment, but until then I still very much have my NYU loans.
I totally get this logic: if you can earn a better interest rate investing your money than the interest your debt earns while it remains unpaid, it kind of makes sense to invest. But what interest deal is Teller looking at here? What could possibly be earning him more money than what he’s losing by not paying down a six-figure student loan?
As a quick comparison, my 403(b) is currently earning a 3.1 percent rate of return. Taking money out of my 403(b) to pay off debt would be foolish, but so would putting more money into that kind of investment instead of paying off debt—right? According to the U.S. Department of Education, a direct unsubsidized loan taken out between 2006-2013 runs at 6.8 percent interest, and interest rates only go up from there.
It could be that someone like Teller might choose to invest in a house, or—as he told Vulture in 2014—want to help out his parents:
Teller just wants to make enough money so that his parents can retire in Citrus County, where nothing much ever happens and the people are “normal.”
Or maybe he just likes the idea of amassing money in stackable units instead of sending all of his money away to pay off his debts. You can do a lot more with $100,000 in cash and some debt than you can with no cash and no debt.
What do you think? If you were a movie star whose career was taking off, would you put your cash towards paying off your student loans, or would you do something else with it?