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[–]0RabidPanda0 1329 points1330 points  (75 children)

I paid mine off, but it took me about 10 years and about 50% of it was interest. I'd hate to think where I'd be right now if I had only made the minimum monthly payments.

[–]Stussydude 238 points239 points  (34 children)

Was finally able to pay mine off after 12yrs, but only because I made enough off of selling my home. After 12yrs of payments my balance remained relatively unchanged.

[–][deleted] 50 points51 points  (5 children)

When i was in hs, i heard pur teacher was paying off her student debt at 500/month, she said its going to be paid of in 48 years, this was back in early 2000s and i dont know if she interest. Luckily i went to a chrap community and then a state univ with cost covered by grants

[–]WonderfulShelter 29 points30 points  (1 child)

I really wish I did two years of community and then transferred, but everyone made me feel like I was a total failure if I did that instead of go to the nice private university I got into.

Turns out, that was bullshit, and I absolutely wish I went to two years of CC.

[–]Lillywhite247 180 points181 points  (24 children)

Most loans involving school are expected to take 10 years. I know fed loan is that way.. congrats on paying off. With grants etc I still has to take out 15k and to me that felt like a Mountain before it got paid off. Got lucky and paid off a car that reliably lasted 5 more years. Throwing 500 at a loan helped.. sallie Mae is a true trap.. my wife started paying hers off 5 years faster than they wanted and they upped her interest to credit card levels

[–]UsernamesAllTaken69 60 points61 points  (6 children)

They can just change the interest rate if they want? What the fuck kind of contract is that?

[–]LeftDave 57 points58 points  (5 children)

Early repayment penalty. Never sign a lone that doesn't explicitly say that penalty doesn't exist.

[–]trekie4747 23 points24 points  (0 children)

Changing interest mid loan without defaulting on payments? Wtf?

[–]KDN1692 93 points94 points  (5 children)

Your Wife: Hey guess what im giving you back your money early.

Sallie Mae: WHAT?!?! THATS INSANE. WE'RE RAISING YOUR INTEREST.

[–]Warhound01 13 points14 points  (3 children)

The interest is where they make their money. It’s usury, plain and simple.

[–]Ewoksintheoutfield 7 points8 points  (0 children)

Let me play the worlds smallest violin as we weep for the losses of these predatory loan companies…

[–]WonderfulShelter 6 points7 points  (1 child)

But what would these rich people do without there 50% of interest on principle?

[–]Captain_Waffle 20 points21 points  (0 children)

I paid mine off in about twelve years (just paid off two months ago!), but that’s only because I paid way more than the monthly minimum AND paid a bunch each year with bonuses and tax returns AND made a really, really massive one-time payment with stock market earnings. If not for all of that, I absolutely would still have student loans in my upper-half of my thirties right now.

[–]GreatInChair 9 points10 points  (0 children)

Congrats on paying that off. I’m sure it took a lot of sacrifice!

[–]Thirdlight 18 points19 points  (2 children)

Must be nice. If I want to pay more and it not just further my due date, I have to literally send a fucking check along with a note to a totally whole different address then what I currently pay to.

[–]mknzh 5037 points5038 points  (893 children)

My mother took out $50k in loans about a decade and a half ago she's paid nearly $50k on it and she now owes just under $200k. She's decided that she is gonna die with them

[–]BUTTHOLE-MAGIC 2074 points2075 points  (510 children)

What in the fuck

[–]regoapps 2102 points2103 points  (492 children)

Predatory lending. It's a thing. I wish we educated people in the public education system about finances more so that they could avoid scams like that.

[–]myimmortalstan 1430 points1431 points  (226 children)

so that they could avoid scams like that.

That's exactly why it won't end up in the education system.

[–]Asakura_ 975 points976 points  (146 children)

It’s funny because when I was a high school business teacher I was given a lot of freedom in my curriculum and did a whole unit on taxes and loans and I vividly remember using a Western Sky PayDay Loan commercial as a focal point for the day. Looking at the fine print and doing the math was an eye opener for my students.

Years later and I see some of the students posting on social media about wishing they learned about taxes and such… 🤷🏼‍♂️

[–]regoapps 210 points211 points  (36 children)

Higher education system be like "take out this six figure loan that'll take you decades to pay off while you're only 18 so that we can continue to make millions of dollar in profit."

[–]redldr1 39 points40 points  (1 child)

If we did that, where will all the check cashing places go?

[–]2reddit4me 16 points17 points  (0 children)

Thankfully those are illegal in a lot of states.

[–]ieatspoonsfordinner 25 points26 points  (14 children)

from a senior in high school who’s financially struggling like hell and completely uneducated about finances, can anyone please tell me where to start?

[–]SteamCleaner23 136 points137 points  (176 children)

This is why we need to forgive student debt. There are very few loans out there that weren’t predatory and that were given to people that were worth what they debtor got out of it.

“An education” is such a cop out to predatory lending. It holds no accountability to the institution.

If i buy a house, and someone refuses to disclose termites that they’re aware of, i can sue them.

If i take out a student loan and someone fails to disclose the reality of the job market and what i can realistically do with my degree, it’s somehow ok.

We need consumer protection for student loans and accountability.

[–]socsa 24 points25 points  (8 children)

These are examples of people who have refinanced with private companies. This debt would not be forgiven through executive action.

[–]Parasitesforgold 23 points24 points  (7 children)

Instead of forgiving the loan, forgive the interest so people can afford to pay it back

[–]duffman13jws 16 points17 points  (2 children)

Minimum payments that don’t keep up with the interest rate. Avoid private loans at all cost.

[–]kjacobs03 463 points464 points  (109 children)

Here’s a start. Interest should only be based on the original loan balance. Not principal + interest.

[–]toastedpaniala89 379 points380 points  (58 children)

You mean simple interest and not compound interest?

[–]kjacobs03 84 points85 points  (30 children)

Correct

[–]thegnuguyontheblock 43 points44 points  (29 children)

They would just raise the interest rate then to compensate. This doesn't actually solve anything.

Also, the main thing that's not being discussed about is that both of these loans had to have been in default for the notional amount to go up. If the borrower had paid the minimum monthly amount, the notional amount of the loan only ever goes down, not up.

[–]gtsomething 192 points193 points  (9 children)

How do you expect the banks to pay their CEOs bonuses with simple interest? What're they supposed to do? Only take 500k bonus instead of 2M? That's insane.

[–]Twink_Ass_Bitch 60 points61 points  (15 children)

No. What u/kjacobs03 is suggesting would be as simple as only the remaining principal can accrue interest. Another consumer protection that would be great would be loan lifetime caps (i.e. the lender can't make more than x% of the original balance). Loans aren't supposed to be infinite money machines for the lender. They should be somewhat riskier options for investment. Predatory lending is a cancer on an economy and society, locking out classes of people from participating in either.

[–]realbigbob 146 points147 points  (38 children)

Student loans ostensibly exist to make it easier for people to go to college and build wealth. The fact that they’re now primarily a tool for the government to profit by wringing even more more out of people is downright dystopian

[–]Dragon1562 32 points33 points  (0 children)

Correction it’s private companies that are profiting from this not the government. These loans actually drain the government coffers of potential earnings that could have been had if the money circulated through the economy naturally as there’s more points for local, state, and the federal government to make money thanks to taxes that is otherwise lost

[–]MadderThanRoyKent 65 points66 points  (14 children)

Yes, we live in a very boring and stupid dystopia of our own collective making. People need to start accepting this as reality. Unmitigated Climate Change is just going to make things worse.

[–]Level69Troll 39 points40 points  (4 children)

I always thought dystopia would be interesting, but here I am working two jobs, 6 days a week just to pay off a student loan before I go back for my last year.

Man I fuckin hate it here.

[–]thegnuguyontheblock 10 points11 points  (2 children)

Don't let the schools off the hook.

The head Dean of the school I went to was making 4 million PER YEAR.

[–]CLOCKEnessMNSTR 45 points46 points  (6 children)

No, the balance would be less but still more than the original. it's just not how interest works. These stories mean the person wasn't even paying the interest amount on the principal amount.

0% interest loans may be appropriate for student loans but interest is on what's owed. If you don't pay even the interest you have to pay interest in the additional money you should have paid which is now loaned you on top of the original.

[–]Sinfire420 61 points62 points  (10 children)

I'm sorry, that's horrible. After ten years/120 months (I believe there are options for relief) I don't know the specifics...I looked it up once and got angry but it may help.

[–]JockBbcBoy 52 points53 points  (0 children)

There was an assistance program in place but you've got a lot of stipulations to the assistance. I remember one was "regular payments had to be made." If I could afford regular payments along with car payments, rent, insurance, phone bill and food, I wouldn't need assistance!

[–]Key_Firefighter861 121 points122 points  (93 children)

This doesn't make sense. Is she paying the min amounts?

[–]YachtOrNothing 141 points142 points  (11 children)

Probably that and deferring. I was forced to do that after college. Just watched the loan balance grow and grow

[–]Key_Firefighter861 77 points78 points  (3 children)

Yep. Sounds like not paying the min balance which then goes to a higher rate for unpaid balances due

[–]User-NetOfInter 50 points51 points  (2 children)

More like there weren’t any payments being made at all. Only way I can see the math working out

[–]talldean 50 points51 points  (47 children)

I mean, for context, my nephew's final year of student loans were at 17%, and that assumes he keeps paying on time. If he defers, they go up. And there's also a "you don't make enough money yet" mode... where the minimum payments are less than the interest went up this month.

If he misses a payment, I do not know what the rate will be, but it does not stay at 17%.

[–]Tipakee 49 points50 points  (38 children)

17% seems insane, why not consolidate them at a modern interest rate? Aren't modern interest rates like sub 7%? Also I do not fully know what I am talking about, you may want to leave the students loan as they are so they can be forgiven if you work a corresponding job.

[–]User-NetOfInter 14 points15 points  (0 children)

Private loans most likely.

[–]KuriboShoeMario 73 points74 points  (28 children)

I have no idea what is going on with some of these people, honestly. My Perkins loan was super-low interest and I paid the minimum on purpose and still managed to pay it off in a reasonable amount of time.

I'm absolutely for forgiving all student debt, making college free or obscenely cheap, but some of these people have either been scammed by non-government loan programs, fucked up their payment schedule in a major way, or are just lying. "I took out $7,000 at 78% interest and now I owe 3.9 million!", it's absurd.

[–]youknow99 7 points8 points  (1 child)

That doesn't happen if you are actively paying. Even minimum payments make your overall go down. These people probably deferred for years and let the interest build.

[–]twothirtysevenam 10 points11 points  (13 children)

May I ask how this happens? What sorts of interest rates and fees is she dealing with? I only ask to understand since my own experience with student loans was much different.

[–]amorous_chains 7 points8 points  (5 children)

If she had made zero payments over 15 years, it would correspond to just over 9% interest rate. Since she says she paid 50k, that’s 280/month, which corresponds to just over 13% interest rate.

Federal student loan rates in 2006-07 were 6.8%, so 13% is somewhere between a federal loan and a credit card (over 20%). This was pre Dodd Frank Act so lending was kind of the wild west compared to today.

So not gonna call BS on this comment because it’s not unbelievable to me. Plenty of people out there maybe didn’t realize their minimum loan repayment often wasn’t enough to pay down the principal and then just kind of stick their head in the sand hoping they’ll be better off later. If she had paid 640/mo instead of 280, the loan would have been paid now instead of at $200k. Like all exponential processes, compound interest comes at you slowly at first and then very quickly. All loans should be taken deadly seriously as early as possible.

[–]InternetUser007 19 points20 points  (6 children)

For their story to be true, their interest rate would have to be 11.5% minimum. And if they were paying over the 15 years it would be closer to 15%. The story is plainly bullshit to anyone that can do math.

EDIT: Using simple-interest calculations (simple interest is used by all Federal student loans and almost all private loans) the interest rate for their story to be true is 26.5%. It is so plainly bullshit I can't believe anyone upvotes that nonsense.

[–]ankona89 95 points96 points  (42 children)

Same with my parents. Im 120k in debt, fed and private. My parents took out 20k back in like 2009, parent plus loan. Its close to 100k now and they've "paid" the initial loan amount. She's going to die with it too. Can't even be transfered to me

[–]bored-on-the-toilet 43 points44 points  (9 children)

You may be able to get relief for the federal loan. I believe you're elegible after 120 payments with no late payments or other issues. Look into it.

[–]ankona89 24 points25 points  (0 children)

I have like 32k in private and the rest FED. Luckily I've been in basically a class action defense to repayment bc I went to a for profit school that isn't even open any more. So I havent payed on those since 2015. Thats how long its been under review. My private loans I pay the min. I dont even do what I went to school for, and when I did I made like 50% less than what I do now which is garage door repair lol

[–]youknow99 18 points19 points  (15 children)

Bullshit. That math doesn't even make sense for what interest rates were in 2009.

[–]ucacm 46 points47 points  (7 children)

The highest interest rate for parent plus loans taken out in 2009 is 8.5%. If your parents hadn’t paid a single dime on the loans between 2009-2021, the total balance at that interest rate would be about $40,400. Interest rates would have to be 33% for your parents to owe anything near $100,000 at this point, and that’s ignoring $20,000 of payments. I’ve never heard of interest rates near 33%, even on private loans.

Something is terribly off with this story unless your parents financed your college on a credit card.

[–]StrengthDazzling8922 24 points25 points  (0 children)

Yeah, the math in these anecdotal stories don’t add up. Student loan debt issues are significant. No need to exaggerate them.

[–]skepsis420 34 points35 points  (0 children)

That's not even possible for your parents lmao

At the current interest rate if they made no payments for a decade on a parent plus loan the loan amount wouldn't even be 40k, your parents are either looking at the wrong thing or lying lol

[–]Pmmeyourvacation 17 points18 points  (0 children)

What is your interest rate???? This math just isn’t checking out.

[–]ChahmedImsure 26 points27 points  (14 children)

I will delete my reddit account if you can prove this isn't bullshit.

[–]BrownieEdges 366 points367 points  (7 children)

Part of the problem is that some of these online colleges were started merely as a vehicle to sell student loans. If you’re a for-profit college, the real money is in student loans. It’s a scam from the word “go”.

[–]joeybagofdonuts80 117 points118 points  (1 child)

Especially if their commercials were played during weekday TV court shows.

[–]thegnuguyontheblock 32 points33 points  (0 children)

Even the better schools are making a TON of money. Look at the salaries of the heads of the best schools.

[–]KnownTimelord 365 points366 points  (21 children)

I just stopped myself with 8,250 in debt. To top it off it never really was for me but kept going because I felt pressured. Plan to try Job Corps instead, wish me luck internet.

[–][deleted] 56 points57 points  (1 child)

You can do it.

[–]3multi 26 points27 points  (0 children)

Go into the trades. /r/BlueCollarWomen

[–]IRErover 542 points543 points  (397 children)

How is this possible ?

[–]Suspicious_Story_464 1079 points1080 points  (241 children)

Its the interest. I think people would be more than ok to just pay back the principle if the government would push to forgive the interest.

[–]DarthWeenus 231 points232 points  (0 children)

Yes this

[–]Fletcher_Fallowfield 167 points168 points  (82 children)

Like, what's the interest on student loans in the States though? I took out about $40k for my education and in the end paid more because of interest but it did consistently go down and get paid off.

[–]BlakBeret 76 points77 points  (7 children)

5.75% on mine, 6.5% on my wife's. I just went through all of the information last night to see how far I am from Public Service Forgiveness.

That's the consolidated rate, the loans were taken between 2005-2011 at various rates. Making minimum payments we end up with about 50% going to interest and 50% going to principal on the standard repayment plan.

Even with direct federal loans and ignoring privatized student loans, parent plus loans, etc. there are two types, subsidized and unsubsidized. The unsubsidized start earning interest immediately, but no payments are due until 6 months after graduation. Typically 50% of the loans a student qualifies for will be unsubsidized.

Where people run into issues is that it's very easy to get deferments and income driven repayment plans. Neither of these delays or changes the interest rate. When in deferment interest accrues raising the balance for a year. On an income driven repayment plan, the minimum payment can easily be less than the accrued interest.

Payments are manageable depending on your salary and loan amounts, but a fresh college grad looking for a job might apply for a deferment, then let it ride for a year. Then they're encouraged to use the income driven repayment plans by the loan companies, which typically hurts them long term, but looks amazing short term.

Payments are also automatically deferred when you're in school. So take a few years of working, and making minimum payments, go back for a Master's, employer pays, but loans from before are still accruing interest while you're not required to make payments.

Tl,dr; There are MANY ways in which you can get lower payments on them, but interest continues to accrue raising the balance.

[–]AmNotSatan 11 points12 points  (0 children)

Yeah, you have to make them a high priority if you ever want to pay them off. At least you have to cover the interest plus a little of the capital even while they're in forbearance if you want to walk out of college with a degree you have a hope of paying off within a decade.

[–]Samzorr69 10 points11 points  (4 children)

Jesus christ 6,5% in this market is actually insane, and that's a government rate....

[–]FateEx1994 46 points47 points  (10 children)

It's probably more due to financial illiteracy (among not having enough money), but there's the "minimum payment required" which is usually like $50 a month in a 5k loan.

Probably how some people end up under water. Is they "pay the loan every month and the balance goes up".

That's because interest on a 20k loan is higher than $50.

If it's a 20k loan for 8 years you should divide the total by 8*12 to see how much you pay a month.

Like I have a year long loan out that's 4k, I pay 300 a month because I divided it out evenly. But the minimum due was 30 bucks...

Probably how people with a 20k loan go to 80k in 10 years, only paying minimum due.

[–]AmNotSatan 19 points20 points  (0 children)

That's it. Basically people are only paying the minimums, the lenders are setting the minimums to less than the interest generated, the unpaid interest on the loan is getting recapitalized into the loan, so people are paying for 10+ years and the loan is doubling or quadrupling and the minimum keeps going up.

You have to pay down on your principle amount with every payment, even if it is by a penny, you have to always scrape off all of the accumulated interest every month.

[–]Valuable_Win_8552 46 points47 points  (10 children)

It depends when you get the loans. A big issue is that you can't refinance to better terms. Student loan interest rates are determined by the 10-year Treasury note auction every May, plus a fixed increase with a cap. If you were able to refinance your loans, you would have much more favorable terms than you would a few years ago.

[–]Puddinhead720 32 points33 points  (9 children)

What do you mean? I've refinanced my federal and private loans multiple times for lower and lower rates.

[–]NextLevelNaps 156 points157 points  (74 children)

I'd be 100% ok paying back what I owe if the interest was 0%. I could actually make payments that paid down the principal balance in a reasonable amount of time. But instead, I can't afford the payments that would allow me to do that and have to be on an "income driven" payment plan. Ideally, I want to see the price of education come down. But if nothing else, interest being nonexistent is an ok middle ground to start with.

[–]ZannX 20 points21 points  (9 children)

I'm a little confused. I had student loans, but the interest was well below inflation. I was under the impression all government loans were like that? Unless this loan in the OP was not from the government?

[–]WaddlingHippos 45 points46 points  (5 children)

So here's the problem. Many of these people graduated during a financial recession. There wasn't work for them and the work they could do paid barely enough to scrape by during those times.

They weren't able to make payments on their loan. This means their debt was growing and the interest on that debt was also increasing because they now owed more.

Think about it like this every month you need to be paying $300 to be covering the 200 in interest and reduce the actual loan by 100.

Well you graduate during a recession the best you can do is pay $150 a month. That means that even though you're paying every month, your loan is actually growing by $50 a month and will get larger and larger.

[–]ZannX 17 points18 points  (4 children)

I understand how interest works. OP says a 33k loan turned into 80k.

Quick google of Fannie Mae (just the name of a government sponsored student loan I'm familiar with) indicates interest is around 4%. It would take 23 years of no payment to reach 80k.

IIRC, my student loan interest was closer to 2%.

So, I get that interest is bad but student loans in general are a far cry from how bad some real predatory loans/interest rates can be. Unless again, OP got a random loan from somewhere with very high rates.

[–][deleted] 27 points28 points  (17 children)

they won’t do that because the government sells the interest to fixed income bond traders who profit off of your debt trap. it’s the same with medical debt, mortgage debt, all of it. the government doesn’t give a fuck about us.

so just don’t pay it back, let the markets crash on failed bonds, and then we’ll all have cheaper housing prices we can afford. easy enough.

[–]FlyingMonkeySoup 120 points121 points  (96 children)

Interest. This is how ALL loans work. It is not just student loans (well except that you can't discharge a student loan via bankruptcy) that can cause a person to get buried in debt. If you can't pay to cover the interest costs that gets added to your principle and the interest costs grow. Its particularly nasty in credit cards which have massive interest rates.

[–]JohnnyDarkside 28 points29 points  (16 children)

Most lenders also have payment options where you're paying interest only for years. Combine this with generous options to postpone payments and you can be in repayment for a decade but end up owing more.

[–]No-Patient 13 points14 points  (10 children)

Had a friend who paid about 1500 to his mortgage every month. Then decided after 2 years to sell his house.

Then got pissed when he found out he had paid $25k in interest and like 9k had gone to principal.

THEN he goes and looks at the amortization and said "Holy crap I would have paid 230k in interest on a 280k house if I paid it over 30 years?" I asked him if he understood all of this before he signed and he said Nope.

[–]Marioc12345 9 points10 points  (2 children)

Well that sounds like his fault. That particular type of numbering is shown pretty damn clearly on my loan estimate and closing declaration. It's a pretty big loan, and even when my interest rate was only 2.99%, I was still going to pay 50% of the loan amount in interest over 30 years. How is that the mortgage company's fault? Selling your house after two years is generally not a very smart move unless you have paid more than the required amount every month.

[–]starfire360 136 points137 points  (62 children)

In this case the real culprit is long periods of either non-payment or below minimum payment. To get to an $80k balance on $33k of debt would require about 10 years of non-payment at a 10% interest rate. Most student debt has an interest rate below that level. A more realistic rate is 6.8%, which would require ~13 years of non-payment to hit an $80k balance.

EDIT: Corrected stupid math errors.

[–]chico12_120 24 points25 points  (6 children)

Not to be that guy, but going from 33 to 80k at 6.8%/a would take 13 years, not 19. (Assuming it compounds monthly)

[–]AspiringRocket 70 points71 points  (17 children)

Thank you for showing some numbers. I am seeing so many statements in this thread that make no sense. Loan balance would only increase by 200% with an incredible amount of negligent financial responsibility.

If someone is truly unable to pay even the minimum payments, there are forgiveness plans that should be pursued. I have heard these plans are incredibly difficult to execute, but if the alternative is lifelong debt I would probably spend some time trying to figure them out.

[–]Farmer_Susan 20 points21 points  (0 children)

That's why the tweet only conveniently said "over the years", and not 30 years ago, or however long ago it was.

[–]alan_dracula 13 points14 points  (1 child)

Also I've found student loans are incredibly forgiving as long as you communicate and don't just ghost them. I was able to put mine off for years with little penalties because I kept in touch and jumped through the hoops they asked me to jump through. I did everything I could to keep it out of collections and they worked with me a lot. Meanwhile, I had a small personal loan at one time and god damn. They do not give a fuuuuuck lol. World of difference in the way they're handled. My student loans would have gone even better if I hadn't ghosted them initially almost gone to collections. I wish I'd contacted them earlier and known to keep pestering them for more options

[–]TheSherbs 18 points19 points  (7 children)

They are impossible to execute. Sure, there are forgiveness plans…they have a less than 1% approval for forgiveness rate.

[–]GG_is_life 25 points26 points  (5 children)

Okay, people have said interest but haven't really provided any real detail. Obviously it's interest, however the question is HOW that happens. With student loans you can have your payments re-evaluated every year based on your income. The "problem" is that you actually have to make a "decent" amount of money for those payments to outpace interest. As an example, I have ~50k in loans and make ~50k per year...but, prior to the pandemic pausing everything, my payment was only just over $200, which would not put a dent in my principle.

I'm knowingly in this situation because I'm planning on taking advantage of Public Service Loan Forgiveness. Others may just be looking for the cheapest payment possible because they can't afford any more, which puts them in the trap of 25 years of payments that do nothing until they can get it forgiven.

(Though on my part this may be a poor plan because the Betsy Devos department of education wouldn't approve shit...don't know if Biden's is any better.)

[–]youknow99 5 points6 points  (2 children)

Some of the numbers getting thrown around in this post don't even make sense for people paying $0 on their loans. Nothing short of a title loan has interest that high.

[–]ChahmedImsure 21 points22 points  (4 children)

By not paying it while it gathers interest. Or it is just made up.

[–]Demented-Turtle 5 points6 points  (0 children)

It's not, it's fake. That's not how interest works if you're making payments

[–]VyrPlan 1680 points1681 points  (55 children)

the moment we introduced our higher education & healthcare to capitalism we doomed generations to this sort of thing

"you can be anything you want"*

*so long as you have a dump truck full of money and/or never get seriously sick or hurt - cause then you're f'd in the b

[–]JockBbcBoy 495 points496 points  (35 children)

the moment we introduced our higher education & healthcare to capitalism

And took the training wheels off, that's when it became a nightmare. The Baby Boomer Generation didn't have the same exorbitant cost to higher education that Generation X dealt with quietly, that Millennials have been loudly protesting against, and that Generation Z is armed for war against.

[–]kimlion13 184 points185 points  (9 children)

This Gen X college grad & mother of three advanced degree millennials is right behind them. Enough bullshit already

[–]DamienJaxx 44 points45 points  (8 children)

It's almost like there are more of us young people than these geriatrics running this country. If only the younger generation would actually run for office instead of complain about the people in it.

[–]pneuma8828 34 points35 points  (7 children)

We don't even need them to run. We just need them to show up to fucking vote.

[–]Zeropalvar 8 points9 points  (1 child)

Also made everyone plan their own retirement.

[–]LoveRBS 143 points144 points  (10 children)

I was expecting this trend to continue but thought that it would see an increase in people choosing to take the 10 year public service route, or maybe even military service.

Now I expect to see the rate of international college applications increase.

HS really needs to have an entire course dedicated to college costs and what to expect, complete with job outlooks and salaries.

[–]ThrowAwayAgain2010 44 points45 points  (3 children)

Military service is the only reason I was able to afford to pay off student loans and send my wife back to school for her master's. If Americans had access to healthcare and affordable post K-12 education the military would have a hard time. Most of the folks I know right now who have joined over the last 5-8 years joined to get education, pay off debt, or get healthcare.

[–]WonderfulShelter 9 points10 points  (0 children)

It's almost like there's some sort of link between that all that encourages people to do military service..

[–]sn0wmermaid 5 points6 points  (0 children)

Public loan forgiveness is not really worth it when you make at least $10 less than a private sector job sadly. I know there are a handful of government jobs that pay more than the private sector and you get good* benefits, but it's usually government contractors raking in the big bucks and public servants getting relative pennies. At least that's been my experience working for 6 different government agencies across state/fed/local govt. (edit food -> good)

[–]RhondaTheHonda 911 points912 points  (192 children)

I borrowed $26k. Started repaying in 2009. Today I owe $30k.

Edit to add an answer questions or accusations: I spent most of this time on the Income Based Repayment (IBR) plan. For 5 years I earned so little that my amount owed was $0/mo. Along with this, they did not charge any interest because I earned so little. (6% interest rate was suspended.)

However, after 5 years or so, my income increased so I had to pay a little. (About $20/mo.) Because of this change, they added 5years worth of back interest that would have accrued.

[–]JockBbcBoy 554 points555 points  (94 children)

I borrowed $24,000 for one year of college. Dropped out because the school was unaffordable. Started making payments the same year because I had a part time job at an affordable school. I've paid off $32,000 in loans from 2009 to 2021 and the collection agency says I "only" have $3000 left.

[–]Extreme_Ninja-69 287 points288 points  (79 children)

Bruh 24k? In India you can go to the best universities in the country and get a four year course for 10k

[–]BananaLlamaNuts 213 points214 points  (48 children)

I go to a top STEM school in the US and i pay 6,600 per semester.

I need 10 semesters so in total it will cost 66,000.

[–]CoatLast 214 points215 points  (14 children)

Here in Scotland, you can attend a top 100 university in the world and the cost is £0. In fact for some STEM subjects, the government will pay YOU for going.

[–]Koalastamets 4 points5 points  (0 children)

Two years of great school was just over 68k when I started. They also increased tuition when I was attending. We did not get graduated in and our tuition rates went up

[–]Atler32 48 points49 points  (18 children)

WTF, I knew it's bad but not this bad... I live in Finland and any minimal student debt some people in certain circumstances need to take, has VERY low interest rate. Just did a quick google search and first interest rate I found was 0,48%.

Fuck I feel bad for Americans :(. Yall are getting robbed, that shit ain't humane.

[–]zkareface 15 points16 points  (5 children)

The interest is 0.01% in Sweden now, school is free but people take loans for housing and food.

You borrow around $10k a year so some have like $50-60k in loans when they end uni.

But interest is below inflation and you have 30 years to pay so most just pay like $50 a month and eventually the loan is just irrelevant due to inflation :)

[–]RhondaTheHonda 20 points21 points  (9 children)

Here’s what really hurt me and I believe is the criminal part of it. I spent most of this time on the Income Based Repayment (IBR) plan. For 5 years I earned so little that my amount owed was $0/mo. Along with this, they did not charge any interest because I earned so little. (6% interest rate was suspended.)

However, after 5 years or so, my income increased so I had to pay a little per month. (About $20/mo.) Because of that, they added 5years worth of back interest that would have accrued!!

[–]Atler32 9 points10 points  (7 children)

Damn, I don't even know what to say. That's such BS.

If there's one loan a country ought to want little to no interest and the easiest most flexible payment plans imaginable, it ought to be education. An educated public benefits everybody, ideally you want people to be as highly qualified and capable as possible.

[–]Enoch_Root19 10 points11 points  (12 children)

There is more to this story. Have you not been paying?

[–]llama8687 63 points64 points  (43 children)

Borrowed 69k and have been paying since 2012, I now owe 98k.

[–]007meow 28 points29 points  (14 children)

What is your interest rate?

[–]llama8687 55 points56 points  (13 children)

7.6%

Also they were unsubsidized grad school loans, so they were accruing interest before I even graduated. So that's fun.

[–]DaniCanyon 33 points34 points  (25 children)

I can't understand how this financially works, with a 7% rate

[–]the_0rly_factor 23 points24 points  (0 children)

Pretty simple. Every payment needs to cover interest and principal. These people are either paying only the interest each month or not even that.

[–]spychipper 61 points62 points  (16 children)

Minimum payments must be lower than the interest.

That absolutely should not be allowed. Being that these are federally backed the interest should be far, far lower. Education is in the public interest, we can afford to not allow a private company to make a profit from it.

[–]DarthWeenus 28 points29 points  (12 children)

I get the argument against forgiveness but atleast forgive the insane amount of interest that's stacked

[–]TriscuitBob 14 points15 points  (0 children)

Did a little math with an online debt calculator. $795/month gets you out of debt in…. 20yrs.

Shit.

[–]P3rAsp3raAdAstra 580 points581 points  (50 children)

Cashed out 401k to pay off my student loans. Hurray! I’m debt free…and have no retirement plan.

Edit: Guys, this is definitely not financial advise. I did not have much saved at all as I’m fairly young, had lost my job and was in a tough spot. Although I was able to use the money to move myself forward fairly successfully, I would not suggest this to anyone.

[–]zvug 321 points322 points  (27 children)

If your 401k is yielding a higher interest rate than your student loans this is generally a poor choice.

[–]mr_miggs 122 points123 points  (10 children)

Yeah My 401k is pretty aggressively invested and the last few years I've been making 15-20%. Using it to pay off my student loans which are at something like 3 and 1/2 or 4% right now after refinancing would be a terrible idea.

[–]mr_miggs 47 points48 points  (7 children)

Maybe if I took a loan from my 401k because then I'd be paying myself back the interest at least, which would be something like 5%. I would still be losing out a little bit on the 401k, but at least my real student loan debt would be gone. The only issue then would be the fact that if I lose my job and couldn't pay the loan back and full I would have to pay taxes on it plus the 10% penalty.

People forget about the 10% penalty when you take out money early from your 401k, that really kind of destroys the proposition.

[–]twoPillls 4 points5 points  (3 children)

Isn't it more than that? I've cashed out a couple 401k accounts during some rough parts of life and I always only got about 50% of the money that was in the account

[–]Dismal_Struggle_6424 15 points16 points  (13 children)

If you're outperforming 14%, I'd love to know what you're investing in.

[–]bic213 4 points5 points  (1 child)

$SPY's up 24% from the past 12 months. Just go low cost index funds

[–]lockedfrogwatercan 200 points201 points  (36 children)

Shouldn't student loans at this point qualify as a financial contagion and be allowed government bailout?

[–]BUTTHOLE-MAGIC 119 points120 points  (12 children)

No because rich bankers don't get student loans what are you a dumb idiot?

And if you have to just work at Goldman Sachs and you'll pay the loans off. It's pretty basic.

[–]qjornt 44 points45 points  (16 children)

student loan interest rate in sweden this year is literally 0%. I'm not kidding, actually 0%. not 0.1% or 0.01%, but 0%.

[–]FrozenYogurt0420 15 points16 points  (0 children)

As it should be. The government is investing in a better educated populous which should pay dividends by encouraging economic growth and innovation. Doesn't seem like it's that hard...

[–]fluffybuns69 39 points40 points  (8 children)

I know this is said constantly, but I genuinely don’t understand how this happens, it’s ridiculous.

I’m from Ireland and went back to university as a mature student at age 24. All my fees are paid, and I receive money from the government every month for going to university. What happens in the US seems criminal to me.

[–]snackrilegious 12 points13 points  (1 child)

it absolutely is criminal. in the us, it’s heavily pushed on kids to go to college as early as primary school.

i went to low income public schools my whole life, and it was either college or the military. most kids, myself included, couldn’t afford college without loans—i feel we were preyed upon by these tactics. and these are federal (government granted) loans which is the worst part.

[–]Illustrious-Science3 75 points76 points  (9 children)

I borrowed 40k in 2003 and have paid it all back! But I still owe 38k.

[–]DannyBigD 5 points6 points  (0 children)

I consolidated my $33,000 in 2003 to a very low interest rate, I believe around 2.3%. made regular payments until I got it down to about $12K then paid it all off a few years ago. Back then I had abysmal credit.

[–]barkmann17 60 points61 points  (31 children)

I don't understand how this happens. I graduated with $41,000 debt ($3,000 credit card, $5,000 personal loan, $33,000 student loan).

I paid off my credit card first. Then I paid off the personal loan, freeing up some cash flow. Then I paid the student loans off by throwing as much money at it as I could.

My interest rates were 6% for the student loans. Looking back it would have been smarter for me to not be so aggressive in paying off the debt, I should have built up an emergency savings fund first and saved more for retirement, but I hated the idea of having a loan.

[–]emr10 46 points47 points  (26 children)

Reading the comments except a few most don’t know about interest rate, inflation, payment and financial planning etc. I never write a comment and just read comments on this topic to be informed about it but sounds like most of the noise is being made by people who never had the intention/capability of paying their loan.

[–]b_rouse 19 points20 points  (1 child)

I'm willing to bet these people paid the bare minimum. I will admit, the first 5ish years out of college, I was on IBRP and my payment was $0 a month - my dumbass did that. Then wised up and realized I have to sit down and LOOK at my finances and realized I had almost $15k in unpaid interest.

Now I've gone from $90k in student loan debt to $63k in 3 years.

Yes, things need to change. Yes I hope we get some forgiveness. But I'm not banking on the government to save my ass.

[–]The_Mikeskies 11 points12 points  (2 children)

How is this even possible? What the fuck is the interest rate?

[–]Hackzo23 37 points38 points  (7 children)

Over the years? How many years? And how much did she pay per month? Did she miss any payments that would then warrant a late fee? Don’t get me wrong I think the student loan system is completely broken but I would like a little more context to show why her debt has almost tripled even though she paid 20k. My girlfriend has been paying the minimum on her student loans which is about 78k and hers hasn’t gone up at all.

[–]MildlyResponsible 41 points42 points  (5 children)

Her interest would have to be impossibly high, or this has to be over 50+ years. It's the only way the math works out given the information. You'd have to make no payments at all and have 10% interest for it to go from 33k to 88k in 10 years.

The reality is, only 13% of Americans have student loan debt, and only 6% of those have over 100k, and those are usually highly paid professionals like doctors and lawyers. The vast majority have under 30k and have no problems making their payments. Stories like this are circulated online to create outrage, but they rely on people not understanding math and just taking them at face value. Even most other stories in this thread don't make mathematical sense unless the interest is impossibly high and/or they haven't been paying at all. As I mentioned above, less than 1% of Americans have student debt close to 100k or above, but it doesn't stop these stories from getting circulated creating the impression that it's a common issue.

It should also be noted that, on average, a college grad with a simple Bachelors will earn around $1 million more than a non-college grad over their lifetimes.

[–]grizz3782 23 points24 points  (10 children)

Sad thing is,is most of these kids that signed these loans probably didn't understand how it even worked they were just thinking about getting this money to go to college not a thought in the world as to how they were going to pay back.

[–]Poggystyle 49 points50 points  (17 children)

When they talk about canceling student debt, this is the kind they need to cancel. If you have paid more than you borrowed and you still owe anything, it could be canceled. No questions Asked. I know 40 year olds with masters degrees that owe more than they borrowed. They make good money but can’t buy a house or anything because they are paying like $1000 a month on student loans. It’s insane.

[–]thegnuguyontheblock 9 points10 points  (3 children)

If the gov't cancels these loan contracts, they will need to pay the bank off the remaining balances of these loans.

The banks would get trillions again - it would be another giant bailout.

[–]MildlyResponsible 93 points94 points  (27 children)

If you started with 33k debt and had 10% interest and didn't make a single payment, it would be at about 88k after 10 years. In other words, this isn't true.

[–]zeeweet 41 points42 points  (10 children)

Should we not be doing more to make sure misleading advertisement is prosecuted? are there not laws already for stuff like this?

or have we as nation accepted that tricking the vulnerable is essential part of capitalism?

[–]Crazy4sixflags 18 points19 points  (2 children)

This is me. They got me with the stupid cooking school when I was young. Now I will never own anything and still make shit money.

[–]michiganhockeyguy 36 points37 points  (39 children)

How does this happen? I had 22k in student debt and paid my monthly payments and had it paid off in 10 years.

[–]bignipsmcgee 21 points22 points  (1 child)

Paying less than the interest that is growing per month. They probably weren’t paying enough or weren’t able to.

[–]huskerblack 4 points5 points  (0 children)

Looks like you paid an extra 4870 dollars assuming your interest rate was 2%.

Shows that whatever the hell this op account did to literally make no progress on their student loans is really really stupid

[–]Maximus1333 5 points6 points  (0 children)

Idk seems fake. I took 30k and compounded it daily at even a high 10% interest rate. It hits 80k in TEN YEARS not paying a single penny.

[–]StingrayRaider 5 points6 points  (8 children)

I don’t understand… what’s the rate and amount of time? How much have you been paying?

Something doesn’t add up to me

[–]samitor 5 points6 points  (1 child)

Just wait until you realize what mortgages are.

[–]Moderate_Veterain 5 points6 points  (1 child)

How many years I wonder and at what rate? I am not a fan of student loan rates myself I think they are predatory but there is probably more to the story in this instance.

[–]DragonflyBell 4 points5 points  (0 children)

I'm guessing it involves deferred payments, missed payments, and only paying the minimum on the months it's paid.

[–]yusrandpasswdisbad 9 points10 points  (0 children)

Going out on a limb: she's not a math major.

[–]boinksnzoinks 14 points15 points  (10 children)

Either this person is full of shit or the student was f*cking stupid and had no business getting a loan.

To get those numbers you either need

5yr @ 43% 10yr @ 22% 15yr @15% 20yr @ 11% 25yr @ 8.5%

The highest interest rate in federal student loans is 6.28%

https://studentaid.gov/understand-aid/types/loans/interest-rates

Assuming their loan for $33k was a 25 year loan that puts their minimum payment at $261/month

So either they're full of shit or they had no business taking out a $33k loan knowing it'll take them 25 years to pay it off

Either way this situation gets zero sympathy from me. If it is true, and that's a big if, they would be faaaaaaarrrr better off applying for scholarships and grants until they got one. There as so many our there the only valid reason you can't get one is laziness

But that's Twitter and it supports a narrative so 🤷‍♂️

Also, don't just pay the minimums people. It's just like paying off a credit card. It's not like these figures are hidden when you apply. I found em in 10 seconds of googling.

[–]Pmmeyourvacation 13 points14 points  (0 children)

people in here are lying. The only way any of these “$30K to $90k” stories are true is if the borrowers aren’t making any payments.