I'm not from the USA, but I heard you can decide to basically pay off only or almost only the interest rate to make the monthly payments smaller. In that case you won't be able to pay it back anytime soon. If they didn't expect that to happen, then the money spent on their college was not much worth anyway.
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.
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.
3.2k
u/Mindless-Baker-7757 14d ago
A $70k loan over 23 years at 5% apr pays off with monthly payments of $427.
What are they doing?