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Chicago Public Schools to pay $850 million in interest on $500 million loan

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posted on Aug, 1 2017 @ 03:09 PM
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originally posted by: Antipathy17
a reply to: xuenchen

What a horrible idea to lend Chicago this money especially at that rate. Who lent the money? Cause I wanna know who is going to be given assets to sell off once the first check bounces.


Banks mentioned





posted on Aug, 1 2017 @ 03:09 PM
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originally posted by: annoyedpharmacist
a reply to: xuenchen

And even worse than the interest on the loan is, how much of that 500 million will be lost to fraud , waste, and abuse?

My guess, almost half.


Public education is full of nepotism and cronyism that has caused it to grow out of control. Anyone see an issue with the numbers below? Checkout the Staff numbers compared to teachers. Also, private schools cost less than public and run about a 12 to 1 ratio. My friends in the school system as teachers tell me they are paid well below what many of these staffers are paid and they don't even know what they do typically, but there is one repeating pattern in many are related and or long time friends as staffing jobs just keep growing and growing. This also means pensions keep growing and growing.

That is basically 56 staffers per school with an average of 600 students per... 660 schools 396,000 students




edit on 1-8-2017 by Xtrozero because: (no reason given)



posted on Aug, 1 2017 @ 03:15 PM
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a reply to: Nothin




D: Who do you think is really in charge around here?


Exactly



posted on Aug, 1 2017 @ 03:49 PM
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originally posted by: xuenchen
Big money for the Chicago Public School system that's so far in debt already they can't figure out what else to do.

Not only financial failures, but they have a real efficiency problem as well.

Now they go and borrow $500 Million and agree to pay off over extended time and get zonked for $850 Million in interest alone, not counting the administrative costs either.

WTF ?

Chicago Public Schools to pay $850 million in interest on $500 million loan

In July, Chicago Public Schools borrowed $500 million in long-term, high-interest loans. These loans, taken out at interest rates between 7.25-7.65 percent, will cost the district more than $850 million in interest costs alone for a total cost of $1.35 billion, according to a Chicago Tribune analysis.

CPS will pay off the loans over 25 years, paying roughly $35 million a year in interest. Adjusted for inflation, the total value of the interest on the loan is roughly $405 million.

As the Tribune notes, by the time the loan is paid off, CPS students entering kindergarten this fall will be in their mid-30s.


Big fail as usual for anything "Chicago".



This article is bunk. To be clear, Chicago government and CPS are run by corrupt bureaucrats. However, the article is attempting to sensationalize with big numbers because the public simply is financially illiterate. OMG, $850 million!

Every loan with interest that is paid back over an extended time will have result in you paying a ton in interest. Every single person that has a mortgage on their home will see the same results as CPS in this article if they keep that loan for 30 years.

Let me show you an example. A $500,000 mortgage at 7.25% (just using the rate in the article to be consistent and reducing from $500 million to $500,000) paid back over 30 years yields a monthly payment of $3411. A total of $1,227,917 in payments. In other words, you borrowed $500,000. The interest over 30 years is $727,917. No different from the article. The interest exceeds the original loan amount by quite a bit. This is why people take 15 year loans or attempt to payoff long term debt quicker if possible.





edit on 1-8-2017 by Edumakated because: (no reason given)



posted on Aug, 1 2017 @ 03:52 PM
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a reply to: xuenchen

The governor has been trying to fix it. He wobt pass any budget they send to him because of all the added pork. I think we might have a good governor for once. At least a little less corrupt anyways. I have heard of some shady business deals he made in the past



posted on Aug, 1 2017 @ 04:22 PM
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Interest like that shouldn't be legal for schools, who accepted the loan anyway?

That person just signed away the soul of public schools in Shy town!

Now there will be only private schools that have dress codes and metal detectors. This is a good thing.



posted on Aug, 1 2017 @ 04:42 PM
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a reply to: Edumakated

You're not helping the argument much.

The end result is still that Chicago is paying more than they should in interest if they were being wise with their money. You said yourself - even long-term mortgages are a bad lookout for this very reason.



posted on Aug, 1 2017 @ 04:55 PM
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originally posted by: ketsuko
a reply to: Edumakated

You're not helping the argument much.

The end result is still that Chicago is paying more than they should in interest if they were being wise with their money. You said yourself - even long-term mortgages are a bad lookout for this very reason.


There is no argument. The article is sensationalizing. It is just math and simple interest amortization. If you borrow money for 25+ years you are going to pay more in interest than the original principal balance. Every loan works this way whether it is a $75,000 loan on a double wide trailer in Bumblestank, Arkansas or Chicago borrowing $500 million.

I am not arguing that CPS is a model of efficiency and learning. Just saying that the article is attempting sensationalize the basic amortization of a loan just because the numbers sound big is not being intellectually honest.

People usually don't get 10 or 15 year loans on large debts whether it is a house, student loan, or a government bond issue because they simply cannot afford to make the shorter amortized payment even though they'd pay less interest over the life of the loan.

I agree that CPS should be making cuts and doing things so they don't have to take out loans like this but the terms of the loan really aren't all that bad.



posted on Aug, 1 2017 @ 05:01 PM
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That sounds like loan you take with no intent to pay back the 💰



posted on Aug, 1 2017 @ 05:54 PM
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This might be a smart move for the schools.
Illinois will declare bankruptcy before long and the school will follow suit.



posted on Aug, 1 2017 @ 06:18 PM
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lmfao. this is because rahmemanuel pledges allegiance to a foreign flag. he helps out his fellow internationalists with scams like this.

i remember bloomberg pulling this off for his buddy. they 'leased' a building for like 400 million over next 20 years, the building was worth like 50 million lol.

these guys all pat 'each other' on the back behind the scenes.

at least bloomberg never fought for a foreign army.



posted on Aug, 1 2017 @ 07:34 PM
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originally posted by: DustbowlDebutante
a reply to: butcherguy

I don't think they teach common sense things like how to balance a checkbook, read a contract, etc...in public schools anymore, do they???

My mom taught me how to do that by age twelve. I don't recall the subject ever being broached in school at all.


When I was in high school in the mid 90's I took a personal finance class as an elective. It covered things like balancing a checkbook, understanding interest rates, how loans worked, how investment works, and how to build a budget at various levels of income.

As far as I'm aware, finance classes tend to not be offered at most schools, I went to a good one and got one but most of the time they just don't have a teacher or time. Which is too bad, because I think it should be a mandatory class.



posted on Aug, 1 2017 @ 07:37 PM
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a reply to: xuenchen


Take out a $100,000 home loan at 7% and pay it back over 25 years, you pay out approx. $193,000 to the bank. Most long-term loans suck.
edit on 8/1/2017 by carewemust because: (no reason given)



posted on Aug, 1 2017 @ 07:40 PM
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originally posted by: carewemust
a reply to: xuenchen


Take out a $100,000 home loan at 7% and pay it back over 25 years, you pay out approx. $193,000 to the bank. Most long-term loans suck.


And people call me crazy when I say you can't afford your home unless you can pay it off fully within 1-2 years. Of course, almost no one can do that. Maybe housing isn't fairly priced.



posted on Aug, 1 2017 @ 07:51 PM
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When "government" runs deficits, it only proves incompetence and corruption.

A high percentage of Chicago spending goes bye-bye without the "services".




posted on Aug, 1 2017 @ 07:59 PM
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originally posted by: Aazadan

originally posted by: carewemust
a reply to: xuenchen


Take out a $100,000 home loan at 7% and pay it back over 25 years, you pay out approx. $193,000 to the bank. Most long-term loans suck.


And people call me crazy when I say you can't afford your home unless you can pay it off fully within 1-2 years. Of course, almost no one can do that. Maybe housing isn't fairly priced.


Housing prices reflect the fact that most people get a mortgage. When debt is available it tends to cause price inflation. You see the same thing with student loans. The availability of student loans is why college tuition is so high.

Most people are payment driven. They don't look at the long term costs like total interest paid, etc. Most car loans now are like 7 years because by extending the term, the payment is lower and it allows people to "afford" nicer cars.

Debt is not bad, but you do have to manage it effectively and know when to use it and when not to.



posted on Aug, 1 2017 @ 08:26 PM
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Sounds like what they do to third world countries. Give them a loan they can't afford to improve their infrastructure. The money goes to crony corporations. The people are stuck with the debt. When the loan defaults, the banks move in to take any worthwhile resources.



posted on Aug, 1 2017 @ 08:28 PM
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a reply to: Edumakated

Never seen a car loan go beyond 60 months or five years.



posted on Aug, 1 2017 @ 08:39 PM
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originally posted by: ketsuko
a reply to: Edumakated

Never seen a car loan go beyond 60 months or five years.


Because you are probably a responsible borrower.

US Borrowers Are Paying More and Longer

From the article:



In the first quarter, almost a third of all auto loans came with repayment terms of 73-84 months, which was the most popular term among new vehicle buyers



posted on Aug, 1 2017 @ 08:47 PM
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a reply to: Edumakated

Some person at work bought a car and had it financed for 72 months.
When I heard about it, I said.... "WTF? Six freaking years... paying off a car?"




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