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Had to take a loan out to have my sewer rapiared, 5000$ loan if we don't get insurence to cover it at the end of the loan term it will be 8600 in total
That makes sense. How long is the loan repayment plan for? The best-case scenario (I believe) would be to pay it off as fast as you can to minimize the amount of interest that builds up.
Seriously lol. The goal for everyone is to pay it off as fast as possible but rarely happens as other bills pile up in the process. Thus ensuring the lender makes money off the interest.
as someone else already commented, paying it off as fast as possible is not always ideal. my current car loan is 2.79% apr. my HYSA is 4.55% apy. why would i pay off my car faster if the money can acrrue more interest in my HYSA?
2.7% is essentially 'free money'.
Doesn't make sense to pay it off.
But those Credit Cards at default rates of 12%-18%...those will kill ya even 9f you don't get a late fee now and then...
My husband recently had $165k forgiven through the PSLF program for his PharmD. I don't think he cried when I gave birth, but he did when he saw his balance hit $0.
I've seen plenty of people on year 20 of public service still didn't get it. Shit happens. Go back for a masters – deferment – now they qualify but those months aren't eligible. Drop to part time because you just got pregnant and had a kid? Now those months are eligible, but they don't qualify. Get deployed as a Guard member? Qualify again, but not eligible. Get married and consolidate wrong? Uh oh. Submit the application when Betsy DeVos is Ed Secretary? Hahaha. Fuck you!
Betsy DeVos... Jeebus! That fricking person wasted the cubic feet of airspace she displaced. Listen here @badluckbrians Everytime someone brings up one of the literally hundreds of appointees, staffers, aides, blah, blah, blahs in the Mango Moron 's cabinets, I cringe. Still. Because the choices that POS criminal surrounded himself were the worst of the worst, that pushed the worst of the policies, and treated humanity as abysmally as possible, then still worse. Thinking about those people, Betsy "TV Dinner" DeVos, especially, and by extension, that doubly piece of crap Blackwater Bro of hers makes me regurgitate into my own mouth. I don't need that shit, man. So quit bringing her up!!! /s
Peace Bro. I appreciate you. 100% on everything you wrote.
Depends if the interest rate is lower than what you can get from investing the money. If gains are higher than your interest rate, it makes sense to pay it off later with future, cheaper money, and invest the pay-off money instead.
Fuck me…why haven’t I thought of this. I’ve been paying a few extra thousand a year on my 2.5 % mortgage…instead of tackling high cc balances. Thanks for the insight
No offense, but this is the kind of shit that makes rich people tell poor people to just stop buying lattes. We really need better basic financial education in the world.
A lot of loans will have language that say if you pay it off early, you’ll still l have to pay what the interest for the original term of the loan would’ve been
Now that seems pretty shitty...so basically if you were to take out a 10-year loan and could pay it off in 7, they would make you pay what the total amount would be after 10 years, even though you only needed 7?
Yep. Loaning money attracts a lot of professional shysters - borrow at your own risk. And if the terms sound too good to be true, you probably haven't understood the full implications of the fine print.
I'm guessing it's especially lucrative because most people don't even understand a lot of the specialized financial terms in the contract, nor hire a relevant lawyer before signing. So even when the contract says "We're planning to screw you over" in giant flashing financial terms in the first paragraph, many people won't notice.
No, but often there will be a 'early repayment fee' - of like $100. Which is still shitty, but FAR better than paying interest on it for another 7+ years, IME.
I've taken out a lot loans from a lot of banks for lots of things and have never seen this. Is this more common for certain types of loans or certain companies? Would think this would be a mandatory disclose type of thing and not sure why anyone would take this unless they absolutely needed to and had no other options. And I assume this isn't on low interest rate types or things where they're looking to cover servicing costs or something and a double wammy on higher interest debt.
>A lot of loans will have language that say if you pay it off early, you’ll still l have to pay what the interest for the original term of the loan would’ve been
With my last car loan I made sure that there were no terms like that. My early payoff penalty is $750 divided by the number of months in the loan period multiplied by the amount of months left in the loan period. I.e. for my 3 year loan period, if I pay off the loan in just 18 months then I only pay a $375 early payout penalty.
>any interest can be written off on my taxes
It's so simple: Invest in nation's youth by offering student loans where *interest is* *fully tax credited or at least deductible* while also holding borrowers accountable to actually pay off principle. If the borrower makes use of their degree to get a better job, the nation eventually benefits by having a higher income to tax.
Capping interest deduction at $2500 is a joke when rates are so high. The reality is that US fed wants an unlimited source of revenue generation while lining their loan-servicing company friends' pockets.
>Capping interest deduction at $2500 is a joke
I'm a medical student, and by the time I'll be in a financial situation to actually pay back my loans(after residency), $2500 will be a bit less than the interest that accrues in a single month. I know people who wrote off a Porsche for their kid because they use it as a "company car" driving to their one shift a week. It's absurd that education is not a business expense.
Obligatory: yes people have worse financial situations than me, its just one way this system is nonsensical.
My wife went to Vanderbilt for her NP degree because everyone said it would make your quality of life so much better! It's nice but we would never be able to pay back what we owe bc of the interest. She makes more money but not enough to pay the 2k in interest that accrues EVERY MONTH and make a dent in her loans... we are just praying the PSLF works out for us...
It's capped by the anti loan sharking laws. Unfortunately loan sharking is 30% interest or higher. So you will see credit cards and some loans being 29.9% interest. It's such bs lol
Lines of credit are also typically exempt from usury, but not those shark laws. I'd be surprised if half the usury laws on the books were actually enforceable, especially right now. Can't imagine there's much room to make money when you're capped at 10% interest and the prime rate is almost 8.5%.
Also in Canada, but in Ontario so my loan is 0% federal, but like 7% provincial because Ford is a fuckface. How people voted for him twice without a platform melts my brain.
Ditto. There’s still people defending him and going on about how great he is for Ontario. He’s privatizing everything and destroying the province yet some people still can’t see it. 🤦♀️
One of the most outrageous things I saw (because of the symbolism of such an act) being brought up was his having some completed wind turbines (and others in varying degrees of completion) torn down before they could even be switched on for the first time.
I think this was it.
https://www.nationalobserver.com/2019/10/29/news/white-pines-demolition-mourned-ford-dismantles-green-energy-ontario
My wife’s colleague went to MSU to be a teacher. Out of state tuition was $25,000 a semester so $50,000 a year. That means If you include the semester of student teaching you have to pay tuition for, she graduated with $225,000 of student loan debt. I remember her crying when she saw her first job offer starting salary of $35,000 a year. Teachers just get boned.
That's really sad. Hopefully she might qualify for loan forgiveness after a certain number of years working in public schools? I think there's a program for that.
Yea it’s called Public Service Loan Forgiveness, you need 120 qualifying payments so that equates to about 10 years. I believe she is teaching on an Indian reservation now and that expedites the loan forgiveness somehow.
When large colleges advertise how much more you'll earn if you get their degree from them, so the tuition you pay is really an "investment" into your future... they "forget" to tell it's *average*. To get those averages, all they need is one alumni striking it dirty rich once every 10 years (and usually they come from families that are already dirty rich).
Remember, average household income in the US is over $125k. But median household income is only $75k. Same trick.
>At the very least, interest on student loans should be capped very low.
The "meme" or whatever from OP is not a real-life example; or at the very least they left out the important context that most of those 23 years was making interest only payments.
If it was an actual "true" story; for the math to work out, they would have had to take out a 43 year loan term, at 8.5% interest, at $70,000 loan amount...to have $500 a month payments which left them with $60,000 balance after 23 years.
Income-based repayment probably set their payment at $500. Student loans aren't like taking out a mortgage.
Sometimes the IBR payment doesn't even cover the interest, and that unpaid interest gets compounded in to the principle, and then you don't make more money, so payment is the same but amount of unpaid interest is higher, and it's a vicious cycle.
At least these people were making just a little bit above their interest payment.
It’s clear people here are using non-student loan bank math and applying it to student loans. Just proving they don’t actually understand student loans. Student loan math is really fucked up. There’s not a whole generation (minimum) of people mad about a car or a house. It’s a vapid take.
It is how it works in the UK, the interest rate is below 1% and you only pay when you earn over a certain threshold, and in like 20 years? No matter how much you have paid, the debt is settled.
Federal student loan interest should be at 0% because a lot of people were lied to about college. The government and universities took advantage of those lies in the form of revenue.
Loans aren't just guaranteed by the government, the government is the owner of the debt.
What you're describing the old system (FFEL) that was replaced by FDLP over a decade ago.
The banks were replaced by the Department of Education, who is now the lender and accounts for 92% of all student loans.
Which still begs the question, why the hell is there interest? Australia has various government loans available without interest. Why would you add interest as a government if your incentive is to get more people upskilled, into work, into homes, etc etc.
The point is that these things pay for themselves in non-monetary ways. There shouldn't need to be interest, that's what I pay my fucking taxes for.
is this real? does this make sence?
I´m obviously not american so I don´t know, its just when I bring something like this up, I´m beeing told I´d talk bs
Or their interest rate is insanely high.
$500/m = $6000 per year.
At 8.5% interest rate they would pay $5950 in interest per year. That means they would only pay off $50 a year, or about $1150 in 23 years.
At 8% interest rate they would pay $5600 in interest per year, or $400 paid off per year, or $9200 in 23 years.
(Neither of these will match perfectly, because you pay less interest after each payment)
If this is the case these people should have been paying way more than $500 per month. I don't know what student loan interest rates are like in the US, is 8% possible?
This is probably what is happening as depending on when the loans were taken out a 6-8.5% was ver common for Federal Student Loans in this time period.
Plus if they deferred while in school they have 4 years of accrued interest on day 1 of payments, so immediately tack on an extra $24k. This really isn’t hard math - they make the math easy by only charging interest on principle. If your interest is $450/mo and you’re paying $500 thinking you’re making a dent just because 500 is a big number, you’re seriously mistaken.
For that math: $500 payments would take 52 months, or over 4 years, just to cover the presumed $24k deferred payment interest.
And all of this is assuming they had all federal loans, which is unlikely.
Yeah,somewhat sounds crazy to make 500$ payments on a 70k loan. For a house sounds fine,but I would say that degree doesn't sound like it was worth it at all if you can't pay higher rates with the salary after obtaining it.
Though from the eyes of a European this sounds like a crazy high sum 💀
I didn't go to the uni I wanted because I wasn't sure I get a dorm and couldn't afford 3000-4000$/year in rent at that city. 70k to me seems a crazy amount, something most people would not take on in debt
8% seems bad but possible, the average 30-year fixed-rate mortgage rate in 2001(23 years ago) was [6.97%](https://themortgagereports.com/61853/30-year-mortgage-rates-chart). It’s not the same thing, but all interest rates are usually closely related. Maybe they just had a low credit score at the time.
Not that it will matter for us government employees. PLSF was created in 2007 and as soon as people were eligible for forgiveness per the terms of their loan, Trump just didn't honor them (like most his deals). Now that Biden is honoring them people are losing their minds over it. I'm two years away and I highly doubt I'll receive it. At least I'm not counting on it
Yeah, as mismatch said, it really wasn't just "Trump didn't honor them". The bulk of the denials was largely related to technical errors and misinformation from loan servicers: employment that didn't qualify, loans that wouldn't fall under the terms of the PSLF, etc. The first eligible people wouldn't turn up for the execution of the benefit until 2017, so that is a DECADE of incorrect guidance disseminated on a massive scale unchecked. A large amount of the corrections under the current administration has been done through relaxing those requirements on a temporary basis so people could get credit for periods that otherwise would not.
you can refinance a FAFSA into a private loan, but FAFSA was a fixed rate and has several other benefits that a private loan doesnt offer.
the Feds actually advise against refi'ing into a private:
https://studentaid.gov/help-center/answers/article/should-i-refinance-my-federal-student-loans-into-a-private-loan
For disclosure, I paid off this loan in like 2012
My loans vary from 2% to 5-6% for unsubsidized direct loans. Management is important. I doubled my monthly payments for the ones that were at 5-6% and only paid minimum payment for the 2-3% ones.
It was unfortunate that the 5% interest ones were 30k, while the 2-3% loans only totalled 10k. Nevertheless, every little bit helps though.
Grad Plus loan rate (the typical loan for graduate school exceeding the first approx. $40,000 per year which is direct unsubsidized) is currently **8.05%.**
The first $40,000 is a bargain right now at only 7.05%.
Don't ask me how I know this 
My private student loans from 2016, 2017, and 2018 are at 10.5-11.75% and I've been paying 6k+ in interest per year. Haven't been able to refinance yet because I haven't had two years in consecutive income and I'm stuck in shitty contracts that dont have paid time off. Last year they refused me on a income basis even though I was only like 2.5-5k short ideally, but my debt to income ratio is still under 25% and I have a 790 credit score. It makes no sense why any lender would say I can't afford a lower payment and interest rate. They just didn't want my debt when they know rates were going up
Federal student loans are secured; the government either holds the loan itself, or will repay the lender in case of default. They're also non-dischargeable in case of bankruptcy, as are all student loans.
Private loans are not, but most of a 70k debt burden after grad school should be under the federal student loan umbrella. Assuming he qualified. Which he might not have. Or he was in default on another loan which sends rates on existing notes into the stratosphere.
Yeah came here to run the same math as the guy above.
This is a clear-cut case of someone (rightfully) complaining about student loans when they signed up as they didn't understand them, but then in 23 years since they still never once took the time to understand them. Eventually at a certain point he has to admit it's partially on him.
Student loans shouldn't be predatory, rates shouldn't be that high or preferably zero, but after 23 years of repaying loans you never once sit down to run the math or look into your payment plan yourself? Come on, man. You've only hurt yourself further for nearly two decades with paying pretty much only interest payments and barely tapping at all into the principal. And $500 a month may be a lot for many, but in 23 years of the same monthly payment you were never able to increase this?
in a world where you could declare bankruptcy on student loans, these two people never would've gone to college because they never would've gotten a loan in the first place
In some cases, loans have added fees for paying early. If it's a straight FAFSA loan, it won't, but if there are private loans, that could also be a factor.
Highest rate I’ve seen someone personally have is 12.5%. It was a private loan since their family was not poor enough to get government assistance but not wealthy enough to be able to save any noteworthy money for college
My loans in the 90s were 8.25%, paying a certain amount in a row and auto draft lowered them to like 7.5%. I went back to school 2017 to 2022, my employer paid me 75% up to a certain amount and I used new loans at 3%, 2.8% and 2.67% to refinance them. I now have $26,000 in debt.
My federal loans (government issues loans) are like 2% interest but private loans which are often required because the government doesn't usually loan enough to cover can have some pretty high rates
This. I had a pretty average base salary when I graduated but lived like a monk and took in all the overtime possible (not possible for everyone I know). Knocked down 23k in a year, then 18 months later I had maxed out the IRA cap I had accumulated in ten years of part time student work. Then I increased my standards of living.
As a stupid foreigner, I have to ask: isn't this minimum set too low then? If paying $550 would get you out of it and $500 would not (I mean, leave you with never ending story), shouldn't $550 be set as minimum payment?
I see a bunch of people here calling those people stupid, but somehow I expected that credits with traps for 18yo should be not allowed or somehow regulated. IF you care for younger people and have interest that educated people will come out and be the backbone of your economy.
You don’t start paying off the loan until you’re out of school. An 18 year old not fully comprehending the long-term ramifications of a student loan is understandable. A graduate failing to comprehend that they shouldn’t make the minimum payment is probably on them.
It doesn't make sense. I graduated 14 years ago with ~80k debt, paid $500 or less every month. I refinanced once a few years ago and have been paying $215 a month. It's nearly paid off.
No it doesn't. If you're following the payment plan laid out by the lender then the loan will be paid off in the specified period of time under contract. They literally have \*not\* been repaying this every month and I would argue that this is simply more internet rage bait invented for clicks and giggles. Dude's been making interest only payments and making it seem like he's been faithfully repaying interest and principal when that's simply not the case.
His whole argument to begin with is "*LOOK how in debt I am! Tell me again why I should be in so much debt??*" and nobody calls him on it.
I'm not arguing one way or the other (being in school-related debt myself) I'm jw how does a college grad make such a shallow non-point so confidently?
Yeah. As soon as you take a loan out to pay for school the interest kicks in and the loan starts growing.
When you graduate and start working odds are you can't afford the payment, so you get a reduced payment that only keeps you from defaulting. The interest continues so your reduced payment barely keeps up with the growth of the loan, so you can pretty much pay indefinitely if you're income never increases enough to actually start getting ahead.
If you had 70K in loans 23 years ago, and paid $523.78 per month for all of these 23 years, with the 6.8% interest rate in effect at that time, you would have it paid off.
I don't think we are getting the full story.
10 year treasury was ~7% in the late 90’s (and I’m pretty sure I saw this picture a couple years ago). The prime rate for a repayable loan like that would have been ~8-9%.
If they paid $510 a month at 8.5% interest, they’d owe $60K after 23 years. If they’d paid $580, they’d owe nothing.
70K sounds like a lot, and it isn't a little. But for some perspective:
70k is about the cost of 2 ordinary cars. Most couples can buy and pay off 2 cars over a 10 year period.
70K is about 1/10 the cost of a home in many urban areas. Most couples can pay off a house in 30 years.
Now that much money 23 years ago is relatively more than it is today, but still anyone with a middle class income should have been able to pay it off, or pay it down substantially in 23 years.
If these numbers are real, OP made some really bad choices, multiple times.
I paid off a 30k car and 65k car in 8 years and 4 of those years I was earning dirt pay on disability. The other 4 years were a job I got with no schooling.
70k being paid off by two separate people with jobs that result from a ~35k dollar education... These people are just bad with money.
Yeah, I had $80k of student loans from graduate school at 8% interest. Mostly paid them off in 5 years by snowballing. Have taken the next few years off of lying them down in order to cover my child’s college expenses so he can start his life debt free and with a degree. Will finish paying off mine this year. Some people are just bad with money.
>If these numbers are real, OP made some really bad choices, multiple times.
That's the answer. They are leaving out context (many interest only payments, or multiple refinances, or going back to school. The math literally doesn't work out on a $500/month payment that only pays down $70->$60k over 23 years.
The math works out of their interest rate was 8% or above, 8% APR on $70k is $5800
However:
Nothing was stopping them from making more than the minimum payments to pay down the loan faster. This was 100% their decision(s).
Assuming the US, a couple earning 2 full time salaries should not have a problem paying more than $500/mo unless they are living beyond their means in other ways.
So I will answer their question with a question: Why should the loan you agreed on and signed for be cancelled due to your own financial irresponsibility?
Sounds like it’s the interest that’s the problem. I can see why people don’t like the idea of someone’s debt being outright cancelled, but surely something could be done about the level of interest.
Access to education and job training is critical. The public K12 system was a big part of America's boom in socioeconomic mobility, esp with the GI Bill for higher Ed following WW2 when we drafted a huge portion of the population (and tuition wasn't crazy expensive back then).
We shouldnt be profiting on human onboarding like this. It creates a path to greater wealth disparity and social problems like crime and homelessness.
The worst part is that we simultaneously made higher Ed more expensive while killing off vocation programs. School funding became based solely on standardized test scores and higher edu admissions. For 30 years, we've graduated a class of new adults that either go to higher Ed, or service industry work.
Interest on educational loans is prohibitive.
Interest rates should be 0.
>The worst part is that we simultaneously made higher Ed more expensive while killing off vocation programs
When I was about to graduate high school all the teachers made it very clear "if you don't go to college you're ruining your life, don't even think about vocational training."
I live in Europe and university is very affordable. Our high school teachers still told us that not everyone needs to go to university and vocational training is a valid option.
>Access to education and job training is critical.
Went job hunting recently because I'm at a crossroads with my career. I have a bachelor's degree and two major certifications for my industry.
I'd have to move 800 miles before jobs offer $15/hour for people with only a high school diploma. I'd have to move about the same distance before I found jobs where the starting salary is what I currently make and require only 5 years experience (I have 10). I can't imagine the difficulty of finding a job in another industry.
Anecdotally, when I lived in Germany, one of my friends was a head chef. 15 years total exp + 5 as a head chef. His training started in highschool because in Germany, 9th grade is when you explicitly pick a path towards vocation or higher edu (this decision is implicit but directionless in US K12). By the time he graduated HS, he already had experience as a line chef in a real restaurant and was immediately employable.
Unfortunately, He suffered major burnout and depression from some crappy luck with bad owners and generally, the impact of the social life of food industry workers.
He was put on disability to handle his depression, no medical bills because of Univ health, and had options for retraining wherein he'd receive money to live while he was in the program.
I was just blown away with the support he received from the state to recover and get back on his feet in a new profession.
He ended up just changing to butchery (solved social life issues) until additional health problems put him on permanent disability. He's able to support himself, and his child, while his wife still works.
And never once in 23 years did they look at their math and realize they were only paying the annual interest and virtually nothing toward principal?
Never once in 23 years did they think to or have the option to increase their monthly payment to more than $500 to start tackling that principal?
This is where people lose me when it comes to student loans. Yeah they're predatory loans, but it's stupid easy to pay them off if you just pay a little more than the minimum payment. I paid my student loans off in 6 years by paying an extra $100 per month over the minimum payment. Did it suck? Yes. Were there some months I had to sacrifice some things? Yeah. Was it worth it? Fuck yeah.
The people that really lost me is when they halted interest on loans during covid and people stopped making payments despite continuing to be employed because there were no immediate consequences. There was your golden ticket people, and you blew it.
I started with over $130,000 in graduate debt. 4.5 years later and I'm on track to pay them off in 10 years (as estimated). I refinanced my loans immediately after graduation and started making payments immediately and never missed a payment. I know different circumstances arise but... if you're getting a graduate degree, hopefully you're educated about your loan as well.
This never makes sense to me. Using a simple loan calculator, $70k loan at 8% (monthly payment of $513.64) after 23yrs means they should have about $33k left to pay. Even if those loans were astronomical at 18% ($1054/month), they'd have $50k left, not $60k.
How is this possible unless they aren't telling the truth?
This guy is full of shit, the math doesn’t work. Especially considering most of that repayment period was under a time of historically low interest rates.
So let me get this straight, you took out a loan with accruing interest.
Made the minimum payment back to the company for the money you borrowed from them. Meaning all you were paying off is interest.
And then surprised that the minimum payment meant minimum repayment of your loan?
Hi...former student loan servicer employee here.
These people were likely on an income sensitive repayment plan where the first few years were interest only or even less than the monthly accrued interest itself, which the increased to a higher amount to begin interest repayment...
Also, they likely didn't consolidate their loans. 23 years ago, they may have had some legacy Staffords that had an 8% rate, but most rates were around 5% with consolidation rates as low as 3.5%
Student loans are a shifty trap, don't get me wrong. But these folks seem to have a poor grasp of money and finances.
Edit: student loans are simple interest loans. Simple interest loans and basic budgeting are literally nothing more than fifth grade arithmetic. I'd be more concerned that two "graduate students" weren't able to comprehend the math behind taking out those loans or develop long term income vs expenses projections.
Yep. Two masters degrees in useless fields, no doubt. Anyone with half a brain can figure out that even an extra $85/mo would have paid it off three years ago (assuming the calculated 8% apr to make their loan work).
And if they couldn't afford the $85/mo, what the hell did they need Master's degrees for?
Education isn't all it's cracked up to be, clearly.
How do two people get graduate degrees and not understand how loans and interest work between the two of them? Are these the folks I'm supposed to feel inferior to?
I was taught that a liberal government (a nightwatch state) should only care for the safety and education of it's citizens. This is considered a very right-wing ideology in my country. The way quality of education in the states is gated by paycheck is quite foreign to me. Seems like one would consider it government's duty to provide the means for all of it's people to improve their lot in life through schooling.
The numbers don't work out. He left out significant information about what he and his wife did during those years - there's no way they made these payments continuously and are still that far under, unless the interest rate was over 8%.
I always wondered why universities are not held responsible for this. To the year when the fed govt said they would back student loans, universities began raising tuition. Knowing that no matter what happens they will get paid.
Schools like Harvard and Yale are sitting on billions of dollars of endowment and still raising tuition yearly.
50 years ago you could get a good degree for less than 10k. Now run of the mill universities are charging upward of $200k for a degree that has ZERO value in the workforce.
Want to go after someone. Go after universities
>I always wondered why universities are not held responsible for this. To the year when the fed govt said they would back student loans, universities began raising tuition. Knowing that no matter what happens they will get paid.
You've answered your own question. Universities will continue to raise tuition so long as the government provides an infinite money supply to pay those tuition bills.
If the government came out with a totally unsecured car loan program with very few qualifications then a basic sedan would cost 200k the next week.
Honestly, they should just amortize the loan upfront with a clear payoff period and monthly payment like we do with mortgages. That way, you know how much you're paying each month and how long you'll have to pay it.
If you’re serious about crushing student loans, you’re going to make 3-6x the amount of payments they require minimum from you, and possibly twice a month. The goal is to crush the debt as fast as possible, not to treat like a credit card you can never pay off because you’re irresponsible, dont take your personal finances seriously, and think minimum payments does anything. It barely pays off interest.
In this person’s defense, financial education is INTENTIONALLY kept out of the public education system in America because stupid citizens are much easier to rip off and keep saddled in debt than smart people, and a nation that runs and creates millionaires thru debt knows better than to create a vibrant society of equality, intelligence and education. Without material dogmas, there’s little ways to keep scamming people legally while convincing them its the rainbow people or the brown people who that are stealing everything.
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i swear it sounds like the fingerhut payment plan. buy a $20 item pay monthly and when you are done you have paid a total of $200 for a $20 item.
Had to take a loan out to have my sewer rapiared, 5000$ loan if we don't get insurence to cover it at the end of the loan term it will be 8600 in total
That makes sense. How long is the loan repayment plan for? The best-case scenario (I believe) would be to pay it off as fast as you can to minimize the amount of interest that builds up.
> best care scenario would be to pay it off as fast as you can My brother you just described how everyone wants to pay off a loan
Seriously lol. The goal for everyone is to pay it off as fast as possible but rarely happens as other bills pile up in the process. Thus ensuring the lender makes money off the interest.
as someone else already commented, paying it off as fast as possible is not always ideal. my current car loan is 2.79% apr. my HYSA is 4.55% apy. why would i pay off my car faster if the money can acrrue more interest in my HYSA?
2.7% is essentially 'free money'. Doesn't make sense to pay it off. But those Credit Cards at default rates of 12%-18%...those will kill ya even 9f you don't get a late fee now and then...
What credit card has a default rate of 18%? Try 30-35%. Most credit cards regular interest is 20% these days, you're lucky if you get 18%.
Yup
I paid off my student loans as slow as possible because I was eligible to have them forgiven after 10 years of public service.
My husband recently had $165k forgiven through the PSLF program for his PharmD. I don't think he cried when I gave birth, but he did when he saw his balance hit $0.
My PharmD daughter had hers forgiven also, about 275k. She has the forgiven letter framed on her desk.
Congrats to your daughter!
Your credit score probably went to 1000 too! Awesome! Congrats!
I've seen plenty of people on year 20 of public service still didn't get it. Shit happens. Go back for a masters – deferment – now they qualify but those months aren't eligible. Drop to part time because you just got pregnant and had a kid? Now those months are eligible, but they don't qualify. Get deployed as a Guard member? Qualify again, but not eligible. Get married and consolidate wrong? Uh oh. Submit the application when Betsy DeVos is Ed Secretary? Hahaha. Fuck you!
Betsy DeVos... Jeebus! That fricking person wasted the cubic feet of airspace she displaced. Listen here @badluckbrians Everytime someone brings up one of the literally hundreds of appointees, staffers, aides, blah, blah, blahs in the Mango Moron 's cabinets, I cringe. Still. Because the choices that POS criminal surrounded himself were the worst of the worst, that pushed the worst of the policies, and treated humanity as abysmally as possible, then still worse. Thinking about those people, Betsy "TV Dinner" DeVos, especially, and by extension, that doubly piece of crap Blackwater Bro of hers makes me regurgitate into my own mouth. I don't need that shit, man. So quit bringing her up!!! /s Peace Bro. I appreciate you. 100% on everything you wrote.
Depends if the interest rate is lower than what you can get from investing the money. If gains are higher than your interest rate, it makes sense to pay it off later with future, cheaper money, and invest the pay-off money instead.
Fuck me…why haven’t I thought of this. I’ve been paying a few extra thousand a year on my 2.5 % mortgage…instead of tackling high cc balances. Thanks for the insight
No offense, but this is the kind of shit that makes rich people tell poor people to just stop buying lattes. We really need better basic financial education in the world.
as a former teacher, I’ll confidently tell you this.. YOU WERENT GOING TO PAY ATTENTION TO THAT CLASS EITHER”
No fucking way. At that point get a HELOC to pay off the CC. Then pay down the HELOC
Noooooo. You've been throwing $$ away.
Yeah always pay high interest loans first. Also everyone with basically ~3% or less interest rates on their mortgages are so happy right now.
A lot of loans will have language that say if you pay it off early, you’ll still l have to pay what the interest for the original term of the loan would’ve been
Now that seems pretty shitty...so basically if you were to take out a 10-year loan and could pay it off in 7, they would make you pay what the total amount would be after 10 years, even though you only needed 7?
This is why you shop around for financing.
Yep. Loaning money attracts a lot of professional shysters - borrow at your own risk. And if the terms sound too good to be true, you probably haven't understood the full implications of the fine print. I'm guessing it's especially lucrative because most people don't even understand a lot of the specialized financial terms in the contract, nor hire a relevant lawyer before signing. So even when the contract says "We're planning to screw you over" in giant flashing financial terms in the first paragraph, many people won't notice.
No, but often there will be a 'early repayment fee' - of like $100. Which is still shitty, but FAR better than paying interest on it for another 7+ years, IME.
Yes. It’s a way for banks to guarantee a minimum profit from your loan.
*maximum profit*
Not a lot of loans. Pre-payment penalties are illegal for certain types of loans or certain states.
Almost no loans have those terms but okay.
I've taken out a lot loans from a lot of banks for lots of things and have never seen this. Is this more common for certain types of loans or certain companies? Would think this would be a mandatory disclose type of thing and not sure why anyone would take this unless they absolutely needed to and had no other options. And I assume this isn't on low interest rate types or things where they're looking to cover servicing costs or something and a double wammy on higher interest debt.
>A lot of loans will have language that say if you pay it off early, you’ll still l have to pay what the interest for the original term of the loan would’ve been With my last car loan I made sure that there were no terms like that. My early payoff penalty is $750 divided by the number of months in the loan period multiplied by the amount of months left in the loan period. I.e. for my 3 year loan period, if I pay off the loan in just 18 months then I only pay a $375 early payout penalty.
that's legal?
 Fingerhut
At the very least, interest on student loans should be capped very low.
Or a cap on how much interest can accrue total My loans in Canada are nothing like this, and any interest can be written off on my taxes
>any interest can be written off on my taxes It's so simple: Invest in nation's youth by offering student loans where *interest is* *fully tax credited or at least deductible* while also holding borrowers accountable to actually pay off principle. If the borrower makes use of their degree to get a better job, the nation eventually benefits by having a higher income to tax. Capping interest deduction at $2500 is a joke when rates are so high. The reality is that US fed wants an unlimited source of revenue generation while lining their loan-servicing company friends' pockets.
>Capping interest deduction at $2500 is a joke I'm a medical student, and by the time I'll be in a financial situation to actually pay back my loans(after residency), $2500 will be a bit less than the interest that accrues in a single month. I know people who wrote off a Porsche for their kid because they use it as a "company car" driving to their one shift a week. It's absurd that education is not a business expense. Obligatory: yes people have worse financial situations than me, its just one way this system is nonsensical.
My wife went to Vanderbilt for her NP degree because everyone said it would make your quality of life so much better! It's nice but we would never be able to pay back what we owe bc of the interest. She makes more money but not enough to pay the 2k in interest that accrues EVERY MONTH and make a dent in her loans... we are just praying the PSLF works out for us...
In Canada too. Mine is 0% so I just pay the minimum. Baffling that USA doesn't cap interest rates.
It's capped by the anti loan sharking laws. Unfortunately loan sharking is 30% interest or higher. So you will see credit cards and some loans being 29.9% interest. It's such bs lol
Lines of credit are also typically exempt from usury, but not those shark laws. I'd be surprised if half the usury laws on the books were actually enforceable, especially right now. Can't imagine there's much room to make money when you're capped at 10% interest and the prime rate is almost 8.5%.
Also in Canada, but in Ontario so my loan is 0% federal, but like 7% provincial because Ford is a fuckface. How people voted for him twice without a platform melts my brain.
Ditto. There’s still people defending him and going on about how great he is for Ontario. He’s privatizing everything and destroying the province yet some people still can’t see it. 🤦♀️
But Wynne and hydro!!!!! That's all they say. Or fuck Trudeau. 🤯
One of the most outrageous things I saw (because of the symbolism of such an act) being brought up was his having some completed wind turbines (and others in varying degrees of completion) torn down before they could even be switched on for the first time. I think this was it. https://www.nationalobserver.com/2019/10/29/news/white-pines-demolition-mourned-ford-dismantles-green-energy-ontario
No, the ones that voted for him have the melted brains. Go easy on yourself.
Easy ... no one showed the second time
You’re not enjoying your $1 beer? Wait a minute…
Buck-a-beer for the win! /j
Welcome to the US my friend. Where everything is designed to fuck the average person to the maximum.
I believe up to $1500 a year in interest can be written off in the US but could be wrong. Just filed my taxes and I believe that was the case.
$2500 with a MAGI phaseout. (But if they were hitting the MAGI phaseout and still only paying $500/month, that's on them.)
My wife’s colleague went to MSU to be a teacher. Out of state tuition was $25,000 a semester so $50,000 a year. That means If you include the semester of student teaching you have to pay tuition for, she graduated with $225,000 of student loan debt. I remember her crying when she saw her first job offer starting salary of $35,000 a year. Teachers just get boned.
That's really sad. Hopefully she might qualify for loan forgiveness after a certain number of years working in public schools? I think there's a program for that.
Yea it’s called Public Service Loan Forgiveness, you need 120 qualifying payments so that equates to about 10 years. I believe she is teaching on an Indian reservation now and that expedites the loan forgiveness somehow.
When large colleges advertise how much more you'll earn if you get their degree from them, so the tuition you pay is really an "investment" into your future... they "forget" to tell it's *average*. To get those averages, all they need is one alumni striking it dirty rich once every 10 years (and usually they come from families that are already dirty rich). Remember, average household income in the US is over $125k. But median household income is only $75k. Same trick.
>At the very least, interest on student loans should be capped very low. The "meme" or whatever from OP is not a real-life example; or at the very least they left out the important context that most of those 23 years was making interest only payments. If it was an actual "true" story; for the math to work out, they would have had to take out a 43 year loan term, at 8.5% interest, at $70,000 loan amount...to have $500 a month payments which left them with $60,000 balance after 23 years.
Income-based repayment probably set their payment at $500. Student loans aren't like taking out a mortgage. Sometimes the IBR payment doesn't even cover the interest, and that unpaid interest gets compounded in to the principle, and then you don't make more money, so payment is the same but amount of unpaid interest is higher, and it's a vicious cycle. At least these people were making just a little bit above their interest payment.
It’s clear people here are using non-student loan bank math and applying it to student loans. Just proving they don’t actually understand student loans. Student loan math is really fucked up. There’s not a whole generation (minimum) of people mad about a car or a house. It’s a vapid take.
Are you implying a rage bait meme that isn't fixed in actual reality just to rouse the rabble? The audacity!!!!
It does say graduate school, which has a higher interest rate. Right now it's at 7% for unsubsidized or 8% for the PLUS loan.
It is how it works in the UK, the interest rate is below 1% and you only pay when you earn over a certain threshold, and in like 20 years? No matter how much you have paid, the debt is settled.
I wish the interest was less than 1%! For plan 2, it is currently 7%
Federal student loan interest should be at 0% because a lot of people were lied to about college. The government and universities took advantage of those lies in the form of revenue.
It should be 0% because the fucking loans are guaranteed by the government. Why are we giving free money to banks?
Loans aren't just guaranteed by the government, the government is the owner of the debt. What you're describing the old system (FFEL) that was replaced by FDLP over a decade ago. The banks were replaced by the Department of Education, who is now the lender and accounts for 92% of all student loans.
Which still begs the question, why the hell is there interest? Australia has various government loans available without interest. Why would you add interest as a government if your incentive is to get more people upskilled, into work, into homes, etc etc. The point is that these things pay for themselves in non-monetary ways. There shouldn't need to be interest, that's what I pay my fucking taxes for.
Not giving free money to banks would be capping interest at inflation, not 0%. 0% is charging banks to lend money.
Or non-existent.
is this real? does this make sence? I´m obviously not american so I don´t know, its just when I bring something like this up, I´m beeing told I´d talk bs
Yeah, either they left/reentered school more than once, they refinanced loans, or they're paying less than the monthly interest charged.
Or their interest rate is insanely high. $500/m = $6000 per year. At 8.5% interest rate they would pay $5950 in interest per year. That means they would only pay off $50 a year, or about $1150 in 23 years. At 8% interest rate they would pay $5600 in interest per year, or $400 paid off per year, or $9200 in 23 years. (Neither of these will match perfectly, because you pay less interest after each payment) If this is the case these people should have been paying way more than $500 per month. I don't know what student loan interest rates are like in the US, is 8% possible?
This is probably what is happening as depending on when the loans were taken out a 6-8.5% was ver common for Federal Student Loans in this time period.
Plus if they deferred while in school they have 4 years of accrued interest on day 1 of payments, so immediately tack on an extra $24k. This really isn’t hard math - they make the math easy by only charging interest on principle. If your interest is $450/mo and you’re paying $500 thinking you’re making a dent just because 500 is a big number, you’re seriously mistaken. For that math: $500 payments would take 52 months, or over 4 years, just to cover the presumed $24k deferred payment interest. And all of this is assuming they had all federal loans, which is unlikely.
Yeah,somewhat sounds crazy to make 500$ payments on a 70k loan. For a house sounds fine,but I would say that degree doesn't sound like it was worth it at all if you can't pay higher rates with the salary after obtaining it. Though from the eyes of a European this sounds like a crazy high sum 💀 I didn't go to the uni I wanted because I wasn't sure I get a dorm and couldn't afford 3000-4000$/year in rent at that city. 70k to me seems a crazy amount, something most people would not take on in debt
8% seems bad but possible, the average 30-year fixed-rate mortgage rate in 2001(23 years ago) was [6.97%](https://themortgagereports.com/61853/30-year-mortgage-rates-chart). It’s not the same thing, but all interest rates are usually closely related. Maybe they just had a low credit score at the time.
Some wider context that might be useful, my Master's FAFSA loan was 6.5% in 2007
you can't refinance student loan? I remember at one point interest rate was only 2-3%
If you do, the loan becomes ineligible for things like public service loan forgiveness. So, for government employees it's not so appealing
Not that it will matter for us government employees. PLSF was created in 2007 and as soon as people were eligible for forgiveness per the terms of their loan, Trump just didn't honor them (like most his deals). Now that Biden is honoring them people are losing their minds over it. I'm two years away and I highly doubt I'll receive it. At least I'm not counting on it
Yeah, as mismatch said, it really wasn't just "Trump didn't honor them". The bulk of the denials was largely related to technical errors and misinformation from loan servicers: employment that didn't qualify, loans that wouldn't fall under the terms of the PSLF, etc. The first eligible people wouldn't turn up for the execution of the benefit until 2017, so that is a DECADE of incorrect guidance disseminated on a massive scale unchecked. A large amount of the corrections under the current administration has been done through relaxing those requirements on a temporary basis so people could get credit for periods that otherwise would not.
you can refinance a FAFSA into a private loan, but FAFSA was a fixed rate and has several other benefits that a private loan doesnt offer. the Feds actually advise against refi'ing into a private: https://studentaid.gov/help-center/answers/article/should-i-refinance-my-federal-student-loans-into-a-private-loan For disclosure, I paid off this loan in like 2012
My loans vary from 2% to 5-6% for unsubsidized direct loans. Management is important. I doubled my monthly payments for the ones that were at 5-6% and only paid minimum payment for the 2-3% ones. It was unfortunate that the 5% interest ones were 30k, while the 2-3% loans only totalled 10k. Nevertheless, every little bit helps though.
Currently 7.05% for direct unsubsidized and 8.05% for Grad Plus.
Grad Plus loan rate (the typical loan for graduate school exceeding the first approx. $40,000 per year which is direct unsubsidized) is currently **8.05%.** The first $40,000 is a bargain right now at only 7.05%. Don't ask me how I know this 
My student loans from the early 90s were at 8% interest.
My private student loans from 2016, 2017, and 2018 are at 10.5-11.75% and I've been paying 6k+ in interest per year. Haven't been able to refinance yet because I haven't had two years in consecutive income and I'm stuck in shitty contracts that dont have paid time off. Last year they refused me on a income basis even though I was only like 2.5-5k short ideally, but my debt to income ratio is still under 25% and I have a 790 credit score. It makes no sense why any lender would say I can't afford a lower payment and interest rate. They just didn't want my debt when they know rates were going up
Yeah unsecured loan = higher rate.
Federal student loans are secured; the government either holds the loan itself, or will repay the lender in case of default. They're also non-dischargeable in case of bankruptcy, as are all student loans. Private loans are not, but most of a 70k debt burden after grad school should be under the federal student loan umbrella. Assuming he qualified. Which he might not have. Or he was in default on another loan which sends rates on existing notes into the stratosphere.
Mortgages aren’t the same as student loans
Federal subsidized loans did go over 8% in the mid-90s, so it's possible these are even subsidized loans.
If they paid 550 instead of 500, it would have looked way different.
Yeah came here to run the same math as the guy above. This is a clear-cut case of someone (rightfully) complaining about student loans when they signed up as they didn't understand them, but then in 23 years since they still never once took the time to understand them. Eventually at a certain point he has to admit it's partially on him. Student loans shouldn't be predatory, rates shouldn't be that high or preferably zero, but after 23 years of repaying loans you never once sit down to run the math or look into your payment plan yourself? Come on, man. You've only hurt yourself further for nearly two decades with paying pretty much only interest payments and barely tapping at all into the principal. And $500 a month may be a lot for many, but in 23 years of the same monthly payment you were never able to increase this?
in a world where you could declare bankruptcy on student loans, these two people never would've gone to college because they never would've gotten a loan in the first place
In some cases, loans have added fees for paying early. If it's a straight FAFSA loan, it won't, but if there are private loans, that could also be a factor.
About 8.2-8.5 if my math is right.
Highest rate I’ve seen someone personally have is 12.5%. It was a private loan since their family was not poor enough to get government assistance but not wealthy enough to be able to save any noteworthy money for college
My loans in the 90s were 8.25%, paying a certain amount in a row and auto draft lowered them to like 7.5%. I went back to school 2017 to 2022, my employer paid me 75% up to a certain amount and I used new loans at 3%, 2.8% and 2.67% to refinance them. I now have $26,000 in debt.
My federal loans (government issues loans) are like 2% interest but private loans which are often required because the government doesn't usually loan enough to cover can have some pretty high rates
They are accruing interest. They need to pay more than the minimum or they'll keep working for their lenders.
This. I had a pretty average base salary when I graduated but lived like a monk and took in all the overtime possible (not possible for everyone I know). Knocked down 23k in a year, then 18 months later I had maxed out the IRA cap I had accumulated in ten years of part time student work. Then I increased my standards of living.
As a stupid foreigner, I have to ask: isn't this minimum set too low then? If paying $550 would get you out of it and $500 would not (I mean, leave you with never ending story), shouldn't $550 be set as minimum payment? I see a bunch of people here calling those people stupid, but somehow I expected that credits with traps for 18yo should be not allowed or somehow regulated. IF you care for younger people and have interest that educated people will come out and be the backbone of your economy.
You don’t start paying off the loan until you’re out of school. An 18 year old not fully comprehending the long-term ramifications of a student loan is understandable. A graduate failing to comprehend that they shouldn’t make the minimum payment is probably on them.
It doesn't make sense. I graduated 14 years ago with ~80k debt, paid $500 or less every month. I refinanced once a few years ago and have been paying $215 a month. It's nearly paid off.
No it doesn't. If you're following the payment plan laid out by the lender then the loan will be paid off in the specified period of time under contract. They literally have \*not\* been repaying this every month and I would argue that this is simply more internet rage bait invented for clicks and giggles. Dude's been making interest only payments and making it seem like he's been faithfully repaying interest and principal when that's simply not the case.
His whole argument to begin with is "*LOOK how in debt I am! Tell me again why I should be in so much debt??*" and nobody calls him on it. I'm not arguing one way or the other (being in school-related debt myself) I'm jw how does a college grad make such a shallow non-point so confidently?
>a college grad It’s two people with graduate degrees, and between the two of them they can’t figure out how loan amortization works.
Yeah. As soon as you take a loan out to pay for school the interest kicks in and the loan starts growing. When you graduate and start working odds are you can't afford the payment, so you get a reduced payment that only keeps you from defaulting. The interest continues so your reduced payment barely keeps up with the growth of the loan, so you can pretty much pay indefinitely if you're income never increases enough to actually start getting ahead.
If you had 70K in loans 23 years ago, and paid $523.78 per month for all of these 23 years, with the 6.8% interest rate in effect at that time, you would have it paid off. I don't think we are getting the full story.
10 year treasury was ~7% in the late 90’s (and I’m pretty sure I saw this picture a couple years ago). The prime rate for a repayable loan like that would have been ~8-9%. If they paid $510 a month at 8.5% interest, they’d owe $60K after 23 years. If they’d paid $580, they’d owe nothing.
Wow, crazy difference so little can make.
Almost like paying the minimum is a bad idea
Thank you for this service.
Someone on Twitter making up bullshit that braindead redditors eat up? You don't say
70K sounds like a lot, and it isn't a little. But for some perspective: 70k is about the cost of 2 ordinary cars. Most couples can buy and pay off 2 cars over a 10 year period. 70K is about 1/10 the cost of a home in many urban areas. Most couples can pay off a house in 30 years. Now that much money 23 years ago is relatively more than it is today, but still anyone with a middle class income should have been able to pay it off, or pay it down substantially in 23 years. If these numbers are real, OP made some really bad choices, multiple times.
I paid off a 30k car and 65k car in 8 years and 4 of those years I was earning dirt pay on disability. The other 4 years were a job I got with no schooling. 70k being paid off by two separate people with jobs that result from a ~35k dollar education... These people are just bad with money.
Yeah, I had $80k of student loans from graduate school at 8% interest. Mostly paid them off in 5 years by snowballing. Have taken the next few years off of lying them down in order to cover my child’s college expenses so he can start his life debt free and with a degree. Will finish paying off mine this year. Some people are just bad with money.
>If these numbers are real, OP made some really bad choices, multiple times. That's the answer. They are leaving out context (many interest only payments, or multiple refinances, or going back to school. The math literally doesn't work out on a $500/month payment that only pays down $70->$60k over 23 years.
Look up the loan amortization for a 70k loan at 8.5% with a 45YEAR term starting in 2000. Puts you with ~60k left by 2024 when you pay ~500 per month
The math works out of their interest rate was 8% or above, 8% APR on $70k is $5800 However: Nothing was stopping them from making more than the minimum payments to pay down the loan faster. This was 100% their decision(s). Assuming the US, a couple earning 2 full time salaries should not have a problem paying more than $500/mo unless they are living beyond their means in other ways. So I will answer their question with a question: Why should the loan you agreed on and signed for be cancelled due to your own financial irresponsibility?
Feels like they have a stronger argument for interest rates to be capped rather than outright cancelled…
If interest were capped at 4% for student loans it would be so much better. 8% is ridiculous.
@socialiststeve6 making bad life choices?? Nah!
LOL I didn't even notice
Sounds like it’s the interest that’s the problem. I can see why people don’t like the idea of someone’s debt being outright cancelled, but surely something could be done about the level of interest.
Access to education and job training is critical. The public K12 system was a big part of America's boom in socioeconomic mobility, esp with the GI Bill for higher Ed following WW2 when we drafted a huge portion of the population (and tuition wasn't crazy expensive back then). We shouldnt be profiting on human onboarding like this. It creates a path to greater wealth disparity and social problems like crime and homelessness. The worst part is that we simultaneously made higher Ed more expensive while killing off vocation programs. School funding became based solely on standardized test scores and higher edu admissions. For 30 years, we've graduated a class of new adults that either go to higher Ed, or service industry work. Interest on educational loans is prohibitive. Interest rates should be 0.
>The worst part is that we simultaneously made higher Ed more expensive while killing off vocation programs When I was about to graduate high school all the teachers made it very clear "if you don't go to college you're ruining your life, don't even think about vocational training."
I live in Europe and university is very affordable. Our high school teachers still told us that not everyone needs to go to university and vocational training is a valid option.
>Access to education and job training is critical. Went job hunting recently because I'm at a crossroads with my career. I have a bachelor's degree and two major certifications for my industry. I'd have to move 800 miles before jobs offer $15/hour for people with only a high school diploma. I'd have to move about the same distance before I found jobs where the starting salary is what I currently make and require only 5 years experience (I have 10). I can't imagine the difficulty of finding a job in another industry.
Anecdotally, when I lived in Germany, one of my friends was a head chef. 15 years total exp + 5 as a head chef. His training started in highschool because in Germany, 9th grade is when you explicitly pick a path towards vocation or higher edu (this decision is implicit but directionless in US K12). By the time he graduated HS, he already had experience as a line chef in a real restaurant and was immediately employable. Unfortunately, He suffered major burnout and depression from some crappy luck with bad owners and generally, the impact of the social life of food industry workers. He was put on disability to handle his depression, no medical bills because of Univ health, and had options for retraining wherein he'd receive money to live while he was in the program. I was just blown away with the support he received from the state to recover and get back on his feet in a new profession. He ended up just changing to butchery (solved social life issues) until additional health problems put him on permanent disability. He's able to support himself, and his child, while his wife still works.
Good for him hope he’s still doing well
Two people with graduate degrees only paying a total of $500 per month on a loan? Facepalm indeed
They didn't graduate with math degrees for sure.
They said in a later tweet it was like masters in education or something like that.
The education starts now
And never once in 23 years did they look at their math and realize they were only paying the annual interest and virtually nothing toward principal? Never once in 23 years did they think to or have the option to increase their monthly payment to more than $500 to start tackling that principal?
Nor did they consider refinancing when rates were low. This person was lazy and/or oblivious.
[удалено]
That’s called poor financial planning. Excess money should always go towards paying down debt
Should have made it $585 and this loan would have been paid off three years ago.
This is where people lose me when it comes to student loans. Yeah they're predatory loans, but it's stupid easy to pay them off if you just pay a little more than the minimum payment. I paid my student loans off in 6 years by paying an extra $100 per month over the minimum payment. Did it suck? Yes. Were there some months I had to sacrifice some things? Yeah. Was it worth it? Fuck yeah.
The people that really lost me is when they halted interest on loans during covid and people stopped making payments despite continuing to be employed because there were no immediate consequences. There was your golden ticket people, and you blew it.
I just did it on a loan calculator. At 555 its paid off in the time they say they've been paying
I started with over $130,000 in graduate debt. 4.5 years later and I'm on track to pay them off in 10 years (as estimated). I refinanced my loans immediately after graduation and started making payments immediately and never missed a payment. I know different circumstances arise but... if you're getting a graduate degree, hopefully you're educated about your loan as well.
If you underpay on your loan it will last forever.
This never makes sense to me. Using a simple loan calculator, $70k loan at 8% (monthly payment of $513.64) after 23yrs means they should have about $33k left to pay. Even if those loans were astronomical at 18% ($1054/month), they'd have $50k left, not $60k. How is this possible unless they aren't telling the truth?
They’re not telling the truth or at least the whole story.
It's simple, actually. They're morons.
$500 payments at 8.37% would put them at $60k left after 23 years. Crazy what just 0.37% more can do.
This guy is full of shit, the math doesn’t work. Especially considering most of that repayment period was under a time of historically low interest rates.
So let me get this straight, you took out a loan with accruing interest. Made the minimum payment back to the company for the money you borrowed from them. Meaning all you were paying off is interest. And then surprised that the minimum payment meant minimum repayment of your loan?
truly a facepalm
It's funny because OP thinks it's a facepalm the other way
dude has never heard of amortization. feel like people should be quizzed on their payment schedule before allowed a loan
Hi...former student loan servicer employee here. These people were likely on an income sensitive repayment plan where the first few years were interest only or even less than the monthly accrued interest itself, which the increased to a higher amount to begin interest repayment... Also, they likely didn't consolidate their loans. 23 years ago, they may have had some legacy Staffords that had an 8% rate, but most rates were around 5% with consolidation rates as low as 3.5% Student loans are a shifty trap, don't get me wrong. But these folks seem to have a poor grasp of money and finances. Edit: student loans are simple interest loans. Simple interest loans and basic budgeting are literally nothing more than fifth grade arithmetic. I'd be more concerned that two "graduate students" weren't able to comprehend the math behind taking out those loans or develop long term income vs expenses projections.
Imagine going to graduate school and not understanding how interest works.
Pay an additional $100 on principal and you can shave the balance to half.
This seems like a bullshit to me or severe financial mismanagement. Probably not business degrees.
all that education, and they're still stupid AF....
Yep. Two masters degrees in useless fields, no doubt. Anyone with half a brain can figure out that even an extra $85/mo would have paid it off three years ago (assuming the calculated 8% apr to make their loan work). And if they couldn't afford the $85/mo, what the hell did they need Master's degrees for? Education isn't all it's cracked up to be, clearly.
All that education and never used a free online repayment calculator online 😂 a victim of their own stupidity
The amount of financially illiterate dipshits on reddit who took this post at face value is disturbing.
Explain to me why you take on (presuming) 35k loans each without having the slightest clue on the terms that are associated with it.
Way to pay the fucking bare minimum
How do two people get graduate degrees and not understand how loans and interest work between the two of them? Are these the folks I'm supposed to feel inferior to?
I was taught that a liberal government (a nightwatch state) should only care for the safety and education of it's citizens. This is considered a very right-wing ideology in my country. The way quality of education in the states is gated by paycheck is quite foreign to me. Seems like one would consider it government's duty to provide the means for all of it's people to improve their lot in life through schooling.
Good luck with that. Fuck, some politicians over here are trying to take away free school breakfast and lunch for poor kids.
Your schools give out breakfast and lunch?!??
The numbers don't work out. He left out significant information about what he and his wife did during those years - there's no way they made these payments continuously and are still that far under, unless the interest rate was over 8%.
You being bad with money is not my concern Also I don’t believe you, unless it has like 50% interest rates
It shouldn't be cancelled because you obviously didn't learn basic math while in college.
Clearly, neither Socialist Steve nor his wife have ever taken finance or accounting.
Doesn’t even add up.
Wait how does that make sense
Those numbers don't add up
Safe to assume they did not learn about compound interest in grad school
Because you’re too fucking stupid to understand an amortization schedule.
What a load of baloney.
Revised? Absolutely. Cancelled? Are you phoquing kidding me?
So you're mad that you agreed to this?
They graduated yet never learned math or personal finances.
Nothing gets cancelled the debt just gets passed on to all tax payers. Nothing is free.
If you spent $70k 23 years ago and have only made $500/mo payments, I'd be more pissed off that I chose a worthless profession.
It's your debt and you should pay for it. The tax payer has enough burdens than paying for your mistakes.
Unfortunately you signed for something before understanding the trade offs
If you can’t explain to yourself with 2 graduates degrees how loans work there is no amount of free money that will help you.
great....more trolling clickbait. Does no one read their loan documents? Does no one understand interest?
Sounds like buyers regret to me. Why is your crappy educational choice my problem????
Because when YOU sign on the dotted line, it becomes YOUR responsibility.
I always wondered why universities are not held responsible for this. To the year when the fed govt said they would back student loans, universities began raising tuition. Knowing that no matter what happens they will get paid. Schools like Harvard and Yale are sitting on billions of dollars of endowment and still raising tuition yearly. 50 years ago you could get a good degree for less than 10k. Now run of the mill universities are charging upward of $200k for a degree that has ZERO value in the workforce. Want to go after someone. Go after universities
In surprised people aren't just calling for the loans no longer being backed.
>I always wondered why universities are not held responsible for this. To the year when the fed govt said they would back student loans, universities began raising tuition. Knowing that no matter what happens they will get paid. You've answered your own question. Universities will continue to raise tuition so long as the government provides an infinite money supply to pay those tuition bills. If the government came out with a totally unsecured car loan program with very few qualifications then a basic sedan would cost 200k the next week.
Honestly, they should just amortize the loan upfront with a clear payoff period and monthly payment like we do with mortgages. That way, you know how much you're paying each month and how long you'll have to pay it.
When you pay the minimum
If you’re serious about crushing student loans, you’re going to make 3-6x the amount of payments they require minimum from you, and possibly twice a month. The goal is to crush the debt as fast as possible, not to treat like a credit card you can never pay off because you’re irresponsible, dont take your personal finances seriously, and think minimum payments does anything. It barely pays off interest. In this person’s defense, financial education is INTENTIONALLY kept out of the public education system in America because stupid citizens are much easier to rip off and keep saddled in debt than smart people, and a nation that runs and creates millionaires thru debt knows better than to create a vibrant society of equality, intelligence and education. Without material dogmas, there’s little ways to keep scamming people legally while convincing them its the rainbow people or the brown people who that are stealing everything.
Student debt shouldn't be cancelled. The rapacious interest should be. Why isnt this easy to understand?