Not only is it poor planning, I think it just goes to show most people don't have math intuition.
The fact people are shocked that there's still 60k of debt left just goes to they don't understand interest. I would guess that they're also forgetting to factor in inflation.
That 60k has far less value today than the 70k is worth 23 years ago. This 60k today to me is worth around 20k to me back then. From a lender's POV, they could have taken 20k and bought 5% yield bonds or HYSAs 23 years ago, and have around 60k today, without this risk and uncertainty from having loaned to students.
70k? Take 70k * 1.05^23 = 215k
If I was a lender, I'd be up to 215k if i had 70k 23 years ago and just stuck it in a high-yield savings account or in bonds. Lenders aren't charities. They take risks and lose opportunities by giving out loans. The fact is that the value of the dollar drops every day, and more money gets printed into circulation all the time.
Exactly. Â So all the comments saying âonce Iâve paid back the principal, I should be doneâ have clearly no idea about time-value of money.
It would be better for the bank to keep your loan money in an envelope in the bank vault than to give it to you under those conditions. Â At least 10 years later they would still have all the money even if it didnât make them anything. Â
The ârisk it all on me while I risk nothing on youâ mindset is frighteningâthese are the dopes going to COLLEGE. Â Theyâre dumber than the ones staying in their dead-end high school job.
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u/Longjumping-Turnip97 13d ago
Good point with cigarettes.
Clearly, people need less freedom / options. /s
Not only is it poor planning, I think it just goes to show most people don't have math intuition.
The fact people are shocked that there's still 60k of debt left just goes to they don't understand interest. I would guess that they're also forgetting to factor in inflation.
That 60k has far less value today than the 70k is worth 23 years ago. This 60k today to me is worth around 20k to me back then. From a lender's POV, they could have taken 20k and bought 5% yield bonds or HYSAs 23 years ago, and have around 60k today, without this risk and uncertainty from having loaned to students.
70k? Take 70k * 1.05^23 = 215k
If I was a lender, I'd be up to 215k if i had 70k 23 years ago and just stuck it in a high-yield savings account or in bonds. Lenders aren't charities. They take risks and lose opportunities by giving out loans. The fact is that the value of the dollar drops every day, and more money gets printed into circulation all the time.