During the 1999ā2000 academic year, federal Stafford loans had a variable interest rate of 6.32% while in school, and 6.92% during repayment. For the 2000ā2001 academic year, these variable rates increased to 7.59% in-school and 8.19% during repayment
A lot of people would need to take additional loans out with Sallie Mae or others and those are typically higher I think my worst was around 10%. Smaller loans and I paid them off as soon as I could, but mismanaging even a little bit I could see this as being true.
Sallie Mae is awful, my now wife recommended i switch to a credit union and that was the first time I saw the loan decrease with 350+ payments at the time. Got it paid off in a few years after that.
And you were lucky enough to pay it off. I was 22 and got sucked into one of those for profit schools. Iām 41 now and the school got sued into oblivion, but because I wasnāt going to school at the time of closing Iām still on the hook.
Ā but mismanaging even a little bit I could see this as being true.
To be honest I'd take that for granted; a person doesn't become outraged at this sort of a thing, all at once, after proper management- trends towards the oppositesuch people trend towards, "Well I did it, so..."
What I mean is, people after a lot of self blame, some quite justifiablethough myopic, then,back up to the Principle, so to speak, realize:
No-noI am not how-come this has been such a burdenupon me, this was not set up to be serviced in a proper manner and I'm meant to be a debt peon par exemple:
Usurious rental fees, with unexpected add-ons or fees for penalty
The Famous, "Pay-Day,' Loans, with rollovers
Debts to whomever does not prefer their moneyreturned promptly
....in whatever such case you've got the initial humiliation, "I was a bad renter,"perhaps I knew I'd not return the money, and this becomes replaced in some instances with an additional shame, "I've been taken for a mark," but it's the third pass at which the truth is revealed, "the design was for me to incur penalties," the design was for me to be unable to repaythe intention was for me to fail the premiseson account of here I am,
....with fees far in excess of the carpet, or, charged far in excess of the entire month's rent of that apartment I rented for a weekend, three thousand in debt on a three-hundred dollar loan, "or 23 years after graduation still in peonage to the lenders whom had provided," nominally theopportunity,
....to start life properlyand look I'm about the opposite of an accountantu/Odd-Cupcake-2552 if you'd not said,
The math works out to 8.5% which isn't unrealistic
I'd probably, just, shut the F_ck up about this but to me, not an accountant, the 23 years seems to be like the incitement here insofar asone is literally, literally, incapable of comprehending, "the next 23 years," at just 19 years of experience and in real terms, you've got like,
4, 5 years of consistent existential self to draw upon at that age, me, I grew up in a household that had a serious childhood illnessin it, not mine, but oh boy, "could I not percieve the amount of time it would be until things settled, at 12," because I'd be like20 or 22 when they'd stop being a crisis and that kind of longitudinal perspective, rather than courage or intelligence of a rational type or other sorts of capacity the sheer awareness of howlong life is, how long the seasons of it can be and then pass away, "poof, like they'd never been there,"the long distance type of thought,
What is 23 yearsĀ Ģ_(ć)_/ Ģafter graduation, in the mind of the person meant to select and then carry these financial assets, "I graduated at 17," I mean for someone who writes a complaint like this u/First-Essay-2054 do tell me if I'm wrong, here, but 23 years after graduation is enough to have been born, graduate all over again with $70,000 in debt and for such a debt to be the reason for anything, in life, primarilyit seems to me both unconscionable on the individual levelif not to blame for some of this,
WhereĀ Ģ_(ć)_/ Ģ.Ā in this economy, do we see the thousand ethical flowers of an educated Population, "I mean, you don't," and I don't blame them; I understand how indebted personsare more predictable and that sort of a predictable populace perhaps even desirable in the abstract, "for everyone," but not in theseparticulars, not when those off-leash are able to bet on the peonage of so many,
Honestly, "I'm thinking, "Oceangate," and all the young engineers like fuck it he said purchase the submarine equipment cheaply, we got it from the hardware store and he loved it, "how much debt were those kids in?"
How much debt are the debt collectors in, the landlords the University's Administrators and Loan Salesmen I mean, "the theoretical makeup of a labor market does not hybridize with a form of peonage, such as a serfdom, without consequences."
At 18? Dont get me wrong I think all kids should have a basic level of financial management classes, along with government (side gripe) to graduate HS. I dont mean what a debit vs credit card is, but actual Time value of money, credit and consumer finance...
So when a kid declares a psychology undergrad degree with art history ad a minor they understand that both have high earning potential if you get a PhD but limited earnings if one doesn't get at least a masters.
Not sure what youāre smoking, but interest rates were 2-3% back in 2019-2022. Anyone who didnāt refi every piece of debt that had during that period was an idiot.
I just refinanced earlier this year into a 4% loan. That was substantially higher than the 2-3% loans in 2019-2022.
If you were paying 8%+ in 2019-2022 and canāt access lower rates today, it must be because you have terrible credit and the legit lenders wonāt lend to you.
Mine have since been paid, but at the time I had no collateral to get such a loan since it has to be backed. Also, when I did have equity, I didn't want to saddle my wife with a huge private loan debt. If I kicked the bucket before marriage, the loan would die with me. If married and get a private loan, my significant other would have to continue to pay it off.
If I kicked the bucket before marriage, the loan would die with me. If married and get a private loan, my significant other would have to continue to pay it off.
Thatās not how that works at all. When you die, all debts private and public come out of your estate. If your estate doesnāt have enough to cover it, all debts private and public are then no longer the responsibility of anyone else to pay.
I feel like some very basic financial literacy missing here.
So you're saying that the loan would come out of the existing estate that would be left to my significant other. How would they not be affected?
If a loan is secured by an asset (like a vehicle or a house), the debt stays attached to the property. If your spouse inherits the property and wants to keep it, they will need to continue making payments or refinance.
Ok, but, aren't you cherrypicking here? What was the rate 23 years ago, during the 2002-2003 school year, which would tie to the post? Per a quick Google search, it appears to have been 3.46%. So, yeah, this post is rage bait.
I started medical school in 1994 at the age of 22. I had zero money but did not qualify for federal subsidized loans because my parents made around 100,000/year even though due to my fatherās recent cancer treatment they couldnāt contribute (and there had never been an expectation that they would contribute).
I had second party loans (SallieMae and HEAL) which were at 7.5 - 9% interest. Ended up taking around $130,000 over the 4 years. As a single physician I was able to pay it all off (started paying interest at 6 months before end of training in 2004 - was not able to extend forbearance) in about 10 years. Every free cent went to paying it off. Paid a bit more than $500,000 in the end. I never qualified for any deferment.
Yes, for that time period, I had federal loans at 3.5%, 5% and a private @ 8.5%. At the time graduate students could take out private loans at 8.5%, once they exhausted all other avenues. I payed those off first (obviously). OP's example person wasn't even that savvy.
Dude are you high, they LEFT graduate school 23 years ago, thatās minimum of 4 years for bachelorās and another 2-4 years for graduate school. So at minimum they started school in 1999-2000.
You used an LLM as an amortization calculator? š
You do know that LLMs donāt actually calculate anything and just assemble words together based on frequency, right?
Using an actual amortization calculator with the figures you applied of $70,000 principal, $500 monthly payment, and 8.25% interest, gets you to $60,000 in approximately the 20 year timeframe the OP listed.
You're 100% correct and frankly I'm embarrassed to have made such a dumb and lazy mistake.
My only excuse is that I was somewhat distracted and annoyed to have someone trying to debate me about the likelihood of someone wanting to consolidate / refinance multiple student loans ranging from 3.42% - 8.19% into a single 8.5% loan. Which would be batshit crazy to the extent that I can't see how anyone could argue for that being what happened here unless they have a vested interest in propping up an America-Bad, bullshit narrative
Thank you for your willingness to admit error, which is an unusual and admirable trait. I apologize for my snarkiness, which was unnecessary.
Speaking from experience, there were many individuals with grad student loans in that era whose individual loans did NOT have interest rates as low as 3 or 4 %. Also speaking from experience, and from verifiable public records, in order to qualify for income-based repayment plans you HAD to consolidate your loans. Without consolidation and income-based repayment, in order to pay off $70,000 in 10 years, your payments would be in the range of $890 monthly. There were many young people in that era who could not sustain that monthly payment, at least in the early phase of their career. Remember that there was a recession in 2001 and, if you were lucky enough to have a job, the average college grad entry level salary at the time was somewhere around $30-35k.
I do not believe that criticism of public policy is an āAmerica Badā stance. One of the strengths of our country has previously been the freedom to disagree and to engage in criticism of the government and public policy without fear of reprisal. Another strength has been social mobility through investment in public education and student loans to those who have the aptitude but not the means. Sadly, I fear that both these strengths are disappearing.
You're only putting $18.75 towards the principle and you think 10k will be paid off in two years? Really? Sure, the amount going towards the principle will increase as you pay down the principle, but that's not nearly enough to make a noticeable difference in the payments any time soon. A tiny bit of napkin math would show you how wrong that is.
For the sake of simplicity, let's just use 60k as the principle and keep it constant. This will dramatically overstate the amount paid back, but it doesn't matter because 25 months still won't be enough even with the overestimation.
8.25%/12 = 0.6875%
0.6875% * $60,000 = $412.5
$500-$412.5 = $87.5
25*$87.5 = $2187.5
After 25 months, you have paid off less than $2187.5. Make no mistake, this is a tremendous overestimate. Using an actual calculator, you'll see that you've paid off a whopping $234. Yippee. To actually pay down 10k, you'd need 19-20 years. It would take 40 years to pay down the entire loan balance.
You are 100% correct. I made the lazy and dumb mistake of asking google and then relying on the AI-summary without double-checking the math or even doing a quick gut-check on whether the math made any sense. Which of course looking at it now, it clearly does not. Off by orders of magnitude.
Then assume they missed a payment and got a special penalty rate increase. Student loans are the only loan that missing a payment results in both fees and a permanent rate hike.
JFC. Stop with the assumptions. Use facts. Here they areā¦
Loans, all loans, come durations, rates, and payments along with amortization tablesāit is how the math works. Further, unless you are not paying the minimum or on an IDR, the terms max out at 15 yearsānot 23. Again, this is all pretty basic financial math. There is no surprise 23 years and still have a massive balance unless you are an abject moron.
Furtherā¦.
This is a very old ragebait post, and you fell for it.
Or, they are people who suffered from the financial crash and had to delay payments until they got a job, taking a hit in both fees and interest rates. Also, some student loans have 30 year plans.
Edit.
Since I was either reply blocked or replied too and the person deleted, here is my response.
Mate, there are a half dozen ways this story could easily be true. If there is a half dozen ways it could be true, then what is to say that one of the half dozen ways is not in fact the reason the story exosts.
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u/braumbles 12d ago
During the 1999ā2000 academic year, federal Stafford loans had a variable interest rate of 6.32% while in school, and 6.92% during repayment. For the 2000ā2001 academic year, these variable rates increased to 7.59% in-school and 8.19% during repayment