Probably should have studied math in addition to social studies.
Given the government is holding the loans, it could change the rule so that any extra payments are always deemed to be against principal and the loan amounts recalculated on the remaining term of the loan. But every fixed loan works this way.
Same with mortgages. Sure, 3.5% or whatever sounds like a low rate, but if you look at the payment schedule carefully, the fucking thing is severely frontloaded in the bank’s favor. Add in the fact that few people live in a house for 30 years (let alone say, 15) and you can more clearly see yet another way that usurious, rent-seeking vultures are eviscerating the U.S. middle-class.
it’s almost like racking up $82k majoring in a low-paying field wasn’t a good idea. but it’s what he wanted to do, so that should be all that matters.
Yep. I bought a house for $155,000. Paid my mortgage every month for 10 years- A grand total of around $135,000. How much have I paid off? $20,000. Roughly 85% of what I’ve paid has gone just to interest. Were I to pay for the full 30 year term, I’d have paid around $450,000 total on that $155,000 property.
There’s a reason the Bible and Koran tried to teach people about usury. Pity it never got the fanatical attention given to blasphemy or sodomy.
He should have gone onto law school…
Yes. So 3.5% or whatever the original rate (supposedly) was ends up being around . . . 300%! If that’s not false advertising. . .
There’s no false advertising here. This is just how interest rates and amortization schedules work. If you don’t like it, you can always pay more than the minimum payment. Or ask for a 10 or 15 year payment schedule.
It’s severely frontloaded so that – with a fixed payment plotted out 30 years into the future, regardless of inflation, if any – you are paying the agreed-upon interest on the amount you still owe. Crazy, that.
I understand college is more expensive than when I was in - but quickly googling, a 4 year degree from that university should only be ~$32,000. Why is it over 2.5x as much?
I still have loans. I had them put off for waaaaaayyyyy too fucking long. But my interest is very low. I even got in trouble and am in the middle of fixing it. What kind of interest rate are we talking here? Is he a victim of some weird private bank scheme?
Mexico? Really? Again, I think we need to re-look at the way we do college, but some of his problems seems to stem from Life Choices, IMHO.
As a teacher in government service (or at a non-profit) he gets the 10 year payoff if he remains a teacher and makes 120 on time loan payments. So, why is he complaining? It doesn’t matter if he never pays off one dollar of the principle, he will get the whole thing forgiven in 9 years.
Not false advertising at all. 3.5% per year. For 30 years. It adds up.
I suspect that is true, unless there is a pre-payment penalty that is the way normal loans work. Look at it this way, if you put in just an extra $60 per month, you can be paying down your principle twice as quickly.
I’m sorry, but people are actually going to believe a Bill Boogeyman story printed during Halloween week? Has anybody fact checked this??
From the source article:
Could I afford a little higher payment if I cut out some social outings, canceled next summer’s travel plans, and scratched my monthly subscriptions to HBO and the WWE Network? Yeah, probably. But I enjoy those things, and I don’t want to sacrifice the quality of life that I enjoy today just so I can pay my loans off by the time I’m 48 as opposed to 52.
I was going to put a snarky comment here, but on reflection, I really don’t think it’s in the least necessary.
He’s not the best example of a good student loan borrower. Here are a couple other quotes from his article:
“Full disclosure: I am making minimum payments.”
" I don’t want to sacrifice the quality of life that I enjoy today just so I can pay my loans off by the time I’m 48 as opposed to 52"
So, he doing the minimum possible, and is unwilling to cut out his HBO and WWE subscriptions. He’s a taker. He expects to get what he wants without sacrifice. For those of us that did cut out HBO and Starbucks to help pay our student loans, I say “tough luck.” Grow a backbone.
His payment plan sucks and he should be making a few sacrifices in order to pay it off faster. No trip next summer - so what, go camping. Many people have it worse, as he rightly points out. No cable? Seriously, who has cable anymore? Pay off your debt and quit whingeing.
That said, you Americans have insane tuition rates and a post-secondary system that has shifted from a primary goal of higher education to a primary goal of profit maximization. This is not good.
Students are by definition still learning. One of the hardest lessons for all of us is how to manage money, and yet we set these kids up with massive debt (which cannot be extinguished) long before they have the skills to assess what they are doing to themselves.
I couldn’t afford the higher monthly payment of a 10 or 15 year mortgage. I understand how compound interest works, and made that choice because it was approximately the same price as rents in this area.
But it was still a choice made because there were no good options. Yes, this is how the system works, but that system exploits the poor for the benefit of the rich. Just because you’re forced to choose the lesser of two evils doesn’t mean you’re no longer able to recognize it as evil.
Man fails to comprehend how loans work, hilarity ensues
You won’t believe this man’s confusion over loan interest
One simple trick to get mad about interest front loaded lending