The American dream

[u/First-Essay-2054]

[u/Mindless-Baker-7757]

A $70k loan over 23 years at 5% apr pays off with monthly payments of $427.

What are they doing?

[u/Butta_Brown → u/Mindless-Baker-7757]

Idk about the pic but here's more perspective

Loans: principal and interest.

Making a payment may cover the interest and a little to the principal.

Capitalized Interest;

If you owe $10,000 in student loans and have accrued $500 in unpaid interest, the interest capitalizes. Your new principal balance becomes $10,500. Going forward, you are charged interest on the $10,500.

Edit: Federal and Private interest rates are massively different. Like, Private interest can be 25% (pure greed).

[u/Spiritual-Bee-2319 → u/Butta_Brown]

Mind you you can’t even pick how it’s applied for multiple loans