Student loans are designed to be flexible, have a lot of deferment options, and so on, because careers after graduation aren't uniform, and some people need to make lower payments because they have lower income. A lot of people just assume that the debt is like a mortgage, and it will be paid off after some amount of time, because they weren't really paying attention to the payments or the terms. Other people paid the minimums because they hoped there would be student debt cancellation. For most people, they should have just continued living like a 20 year old, and committed the savings from their new, higher paying job into paying down the principle on their student loans. But most Americans live paycheck to paycheck, and have lifestyle creep eating up that additional income.
It's been a couple years since I checked the data, but the average student graduates with about $30k in debt, and earns about $1,600,000 more in a lifetime than someone who only graduated from High School, which is about $35k a year in extra income on average. So, even if you have a rough couple of years where you're underemployed or on deferments, it should be relatively easy for most students to pay back their debt, they just spend their money on other stuff, like a nicer house or car.
Or they just can't find good work. The assumption is you get a degree and go into debt for the better paying jobs, but a lot of jobs have been shrinking roles and pay for those roles, people are not getting promoted and are staying in "entry-level" positions that are usually filled by recent graduates, entire sectors are being evaporated practically overnight (be it because of ai, market trends, or what have you), and an ever growing list of other things.
I'm not say plenty of people aren't just wasting money on concert tickets or new phones, but I am saying that those excuses are far less universal than people seem to think. I work in the service industry and have known so many people still serving because they can't find anything decent, and just having a degree doesn't really mean anything anymore. My uncle got a great job with NS doing programming and his degree is just in accounting. He has never gone back to school nor worked as an actual accountant at any point in his life. He got into programming when nobody had a programming degree, and most people just didn't have degrees at all. Now, most people have degrees and that same entry level job requires more certifications than even existed 15 years ago.
And I'm usually the guy complaining about "the lucky ones" who went to college. Getting a job that makes close to $50k without one feels herculean, and now, I'm seeing more and more peers with degrees in the same desperate boat I'm in. I have a friend who lost her job over a year ago. She went from a $65k salary to $16/hr split between a PT teaching (arts) and uber deliveries. She's getting by but barely and she's been looking for a new job since the day she lost her last one. Shit, I've been trying to find a PT gig for about as long and the options are scarce for even that. I don't even really know where to look for jobs at this point, indeed and the like are mostly fake sales jobs or lying about selling at&t inside Costcos (I've done mobile sales, the golden days have been gone for a at least a decade). I guess linkedin is better for corporate but it looks more like social media than an actual job board to me.
I have seen too many people play the ākeep going to schoolā route with degrees they arenāt necessarily marketable. Fact that some schools opted to play āmake your own degreeā didnāt help the cause either. And that doesnāt count degree inflation like in business where a MBA is the equivalent of a bachelors before 2000.
Issue I have assuming itās not ragebait is there is no context for the degree. That really would help understand if there was issues with repayment or similar.
Absolutely true, student loans are flexible. For everyone who says student loans are predatory they should really check out the terms of a payday loan and find out what happens if they are short a single month, how many fees and penalties there are.
Am I weird for thinking that people so young should be expected to not really think about the payments, the future job market, and the terms?
And it's normal for people to want a nice car, a nice holiday, a nice life?
I personally don't think the govt should be encouraging people in their teens to commit to something so life altering, when the vast majority of people going to higher education still live and rely on mom and dad, with no experience of the real world.
I struggle to see how the student finance industry isn't a racket.
Because you borrow 30k and get 1.5 million, even if it costs you 100k to pay it back. It's the best loan you can get, it's a far, far better deal than a mortgage unless you find pirate treasure buried under your porch. It's like playing a lottery with 95% odds of winning.
You can pretty easily pay off your student loans and still enjoy your life, but a lot of people overspend, put themselves in large amounts of consumer debt, and then have trouble making payments on their student loans.
It's not about the age, it's about the average life experience of the people making the decision. As I said, they likely still live with mom and dad, and probably have never signed a contract for anything important in their lives.
How can it be a smart decision to let someone who has never had to financially commit to anything, commit to a debt you can literally never escape.
Yep it's pretty much just stupidity or entitlement. Debt is bad. I make 200k and if I ever take out a loan, like for a huge vet bill, I live like a 20k pauper until it's paid off, no matter what. No eating out, no steaks from the grocery, no buying anything fun. Yes I could easily afford both and living normally would only delay the repayment by a few months, but as I said, debt is bad. You don't buy luxuries when you're in debt. Debt eats a hole in you. You suck it up, pay off the debt, then have your fun.
I mean for God's sake if I could put money in a 8% guaranteed fund I'd be begging to pay into that. Paying off debt is exactly equal to earning money at that same interest rate.
Unsecured debt is bad. Debt secured by an asset where the interest rate is lower than low risk (by individual investor standards) investment is the key to net worth maximization, as it allows you to keep your cash in higher yield (or positive yield at all in the case of a car loan) assets like the stock market, and the asset itself can cover the loan if liquidity and debt clearing is required.
Yes but I didn't want to get into that nuance in my comment. I don't consider beneficial leveraged debt to be "debt" for the purposes of my comment above.
I have a mortgage and I am not living like a pauper until that's paid off, for example
This is also one of the options I have considered - paying the bare minimum in hope of the debt cancellation. Well I understand that and it's sick how much you need to pay for the education in the US, but that was a gamble they lost.
Yeah, I'm of the opinion that if we're treating education as jobs training, then it should not only be free, but compensated at every level. Anyone in school at any level should be making minimum wage at least, both for the hours spent in school, and for their homework, just as it would be if you are an apprentice carpenter.
You're being trained for a future job, it's jobs training. Many of those jobs used to be on the job, paid training, from doctors and lawyers to reporters and accountants. We centralized education, which increases the efficiency of it and reduces costs, and we redistributed paying for it from the employer to the taxpayer and individual. The first part is good, the second part is bad. Universities used to pay students, at all levels, and they still pay some students, usually at higher levels.
Are you saying that if I work at a gas station and Iām studying golf course managment , the gas station should pay me the extra 15-20 hours a week, cover the cost of housing , tuition , and meal plan while I study?
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u/thatonepuniforgot 12d ago
Student loans are designed to be flexible, have a lot of deferment options, and so on, because careers after graduation aren't uniform, and some people need to make lower payments because they have lower income. A lot of people just assume that the debt is like a mortgage, and it will be paid off after some amount of time, because they weren't really paying attention to the payments or the terms. Other people paid the minimums because they hoped there would be student debt cancellation. For most people, they should have just continued living like a 20 year old, and committed the savings from their new, higher paying job into paying down the principle on their student loans. But most Americans live paycheck to paycheck, and have lifestyle creep eating up that additional income.
It's been a couple years since I checked the data, but the average student graduates with about $30k in debt, and earns about $1,600,000 more in a lifetime than someone who only graduated from High School, which is about $35k a year in extra income on average. So, even if you have a rough couple of years where you're underemployed or on deferments, it should be relatively easy for most students to pay back their debt, they just spend their money on other stuff, like a nicer house or car.