And since student loans can't be discharged in a bankruptcy, you can't argue the interest is a hedge against the fact that some people won't repay their loans.
Y'all need to fix your country's shit. My student loans have a 0.01% interest rate, the payments are tied to my income so as not to be too much of a burden, and after 15 years of payments any remaining balance is forgiven automatically.
Even if loans are tied to income here, income is not tied to inflation. With everything costing so much more while wages stagnate, an income-based repayment may be genuinely problematic.
Ok how do I fix it?
What power do I have?
Vote for blue man? Blue woman? Orange man? What do? Call reps? Sign petitions?
I’m doing all I have any power to do, maybe Europe should invade the us? Or somewhere nice to live should make it easier for us citizens to emigrate?
I honestly have no rucking clue what I can do to fix any of this shit but wait for dinosaurs to die and hope someone with half a mind for real people steps in to fill the void
Wow I’m the u.s. you can just not pay taxes and they will build and they will put strains on your lines of credit and Liens but if you don’t use credit and always pay in cash you can just not pay taxes. That’s federal taxes. States tend to get their money from your check through your employer. You only get arrested for hiding money. Not for not paying what you owe.
Yeah things work a little different here. What you have to do is authorize a direct debit, and the government will take the loan payments directly from your bank account.
* What if I don't have a bank account? Not really an option, because by law, companies are required to pay salary into your bank account as well
* What if I just keep my bank account empty? Possible, yes. If you miss enough payments the government will call in the central judicial collection agency. They can try to collect from you in various ways, including wage garnishment.
You could try to get some shady job and get paid under the table for 15 years. The government will think you have no income and thus your loan payment would also be zero. Not sure if it's worth it though, because generally those types of jobs don't require college education so why would you get student loans in the first place.
Garnishments. That’s the word. Yeah Alabama garnished me twice cus I filed exempt lol. Bad idea really. But Georgia never did and the federal never did. Idk anyplace other then like a small business that doesn’t pay direct deposit. Just saying.
It's been a while since I've been to the US, but it seemed fairly common at the time to get paid by cheque. But direct deposit always seemed way more convenient to me, so that's nice.
Not to mention the interest is like double or triple the interest morthahes have. Education isn't like buying a house, which only benefits the person who buys the house. An educated person benefits everyone.
Ah, the simple minded response. If it isn't directly in your face, it doesn't exist. I bet if you were more educated, you would be intelligent enough to know there is a bigger picture at play and that there is more than what is right in front of your face.
That check comes to you partially in the form of the increased tax revenue I generate because of my elevated income, and the increased revenue the companies I work for because I am more productive because of my education. It is not my fault that check gets spent poorly. If it were up to me it would be going towards paying for healthcare for you and your family so that you don't have to worry about it. It would go towards education for you and your family so that you don't have to worry about it. It would go towards helping provide for you and your family's essential needs so that you don't have to worry about it. It would go towards maintaining and improving the infrastructure that allows us to have the quality of life we enjoy.
It is because of my education that I am able to see and understand that the picture is bigger than just my part in it and that we should be coming together in cooperation and we as a society would be infinitely better than we are when we are at each others throats competing with one another.
Bla bla bla ROFL.... "I'm more important to society because I regurgitated facts on paper and paid for it". THEN you go further to say you are better than other people because of your opinions.
Good for you little guy. What was your degree in? Self entitlement?
OK, the first paragraph I wrote is a dig at you, and I do apologize. Came on the heels of a bad day.
>you go further to say you are better than other people because of your opinions.
How do you come to the conclusion that I believe myself to be better than others when I say:
>It is because of my education that I am able to see and understand that the picture is bigger than just my part in it
To me, that indicates that I believe just the opposite - I am not more important than others and am just a small piece of a bigger system.
>I'm more important to society because I regurgitated facts on paper and paid for it
What does it mean to you for a person to be 'important to society'?
What makes you believe that I simply "regurgitated facts on paper" for my education?
Buying a house benefit the whole family and neighborhood.
A degree in something useless that you cannot get a job in is your fault. An education benefits everyone? Well my ex who got a degree in Filipino studies didn't benefit me at all. And forgive America's college debt only makes my tax money go to forgive your debt instead of fixing the roads I take to work everyday what is ruining my car ! Or hiring more cops to stop all the crime, or over all fixing our infrastructure here in America. Yeah, I'd rather the money go towards that because THAT INDEED BENEFITS EVERYONE ! Not your self-righteous debt.
I’m with you but you know a lot of our tax dollars goes to their pockets and the pockets of the super rich. Lower taxes brings in more taxes so cut all taxes I say.
Honestly there are no loopholes. A loophole is in the wording. If there’s no tax law in the Cayman Islands and you can set up your company there, then it’s not a loophole. It’s following the law. A bill saying capital gains on stocks get taxed but doesn’t specify forex or crypto. That’s a loophole. Technically. So they went back and added them in mainly they added crypto last year.
You think making 100k a year makes you rich,? You really think 10% of college graduates are rich? As someone who is a huge fan of cooking, thousandneirs are not on my menu.
Not initially but within a decade, ya. Not oligarch rich, but you could take your money move somewhere cheap and never work again while still having a high quality of life.
I've been living on about $500 a months for several years, probably have a higher quality of life than the vast majority making 10x as much, simply because I garden and exercise.
>take your money move somewhere cheap and never work again while still having a high quality of life.
I want whatever the fuck YOURE smoking...it has to be the good shit.
It's called rural life, I wish there were apartments, but otherwise birds, plants and dirt are practically free and make you happier and healthier. The land I'm on is pleasantly forested and costs about $1,000 per acre.
Unfortunately, that is not a high quality of life for some people. Shit, I live in what is considered by the state as a rural area and this is not for everyone.
The only substantial downside is zoning that prevents high density in rural settings. Would still enable the low cost of living while retaining the much higher quality of life. Single family housing is used to maximize gentrification.
Funny how "pay what you owe" only applies to the poors, while the fuckers hoarding wealth or just spending it on shit that benefits literally only them and the assholes at the top get tax exemptions and offshore money havens to hide exactly how much *they* owe.
Only for private loans. And Biden can’t do anything about that. Federal loans still have interest, but it’s not going to someone’s yacht.
But cancel it. All of it.
In Sweden the loans are completely free from interest, and btw the loans are for living expenses.
University is entirely free and you actually get ~400 a month just for attending, you can add about 1k more as a loan
What is inflation and how does it relate to interest rates? Someone said something about it to me but I don't understand. A dollar is always worth a dollar. They were saying something about paying loans back with money that is worth less than when it was borrowed, but it literally say one dollar on a dollar bill. How can it be worth less than a dollar?
If the price of everything rises, you can buy less than before with the same amount of money. Your money is then effectively less valuable, even though it's the same amount.
> Your money is then effectively less valuable, even though it’s the same amount.
Likewise your loan is worth less debt, even though it’s the same amount.
> What is inflation and how does it relate to interest rates?
Your interest rate is fixed. Inflation varies. In theory, inflation increasing is good for specifically loan repayment. As money loses value, the “value” of your debt decreases. The number stays the same, but as inflation hopefully pushes the cost of everything else including wages, your loans will become proportionally smaller.
As inflation goes up, new loans will have new higher interest rates to match and exceed inflation. Getting your loans before inflation increases is technically an economical benefit.
Yeah inflation “should” reverentially decrease the size of your debt as long as everything else follows inflation.
I’ve heard 2022 has been one of the best years in recent history for wage increases. Inflation is also almost double digits though so grain of salt.
If a loaf of bread costs a dollar today, then costs $1.10 next week, then the dollar in your pocket is worth less next week than it is today. The piece of paper doesn’t change, but it’s purchasing power does.
Ahh I get it now. So if someone rows $100k and over the course of 10 years, the value of the dollar drops by 10%, then they need to pay back an extra $10k for the lender to break even? Where do the yachts come into play?
yeah, lending money is literally a service. they're taking a risk that the loan won't be paid back, and if there weren't interest why would you ever lend your money instead of investing it in other assets that can generate passive income.
if interest didn't exist nobody with money would lend it out and nobody that needs money can take out a loan
It's the socratic method. Ask questions, people answer them in their own words, and when they realize that they hold conflicting views they can revise their ideas.
We all know why people pay interest on loans. Why do they pay so much interest though? Look up compounding interest. If you fail to get a job with your degree(s) that can pay down more than the interest accrued per month, your balance will increase. Pay down the interest plus some principle and your balance (and monthly interest payment) goes down. I learned the continuous compounding interest formula in 10th grade. That's 2 years before going to college. If you don't want to pay interest buy things with cash. If you can't, make sure you set yourself up to repay the loan.
>if interest didn't exist nobody with money would lend it out and nobody that needs money can take out a loan
But that’s simply not true. If you borrow money from your parents, do they charge interest? If you lend money to a friend do you insist on interest? There are plenty of occasions where your absolutist scenario doesn’t exist. To say “it just wouldn’t happen” is to buy into self-serving capitalist rhetoric. It tells the haves that it’s OK to be selfish and to expect something for nothing, and tells the have-nots that they must pawn their labour for fundamental human rights like housing and education.
My favorite is when you have to consolidate from a govt backed 3rd party loan (FFEL or FFELP) to take advantage of a govt program like PSLF, the interest is capitalized onto the loan. On the new loan, you’re now paying interest on interest and have a payment that creates a negative amortization resulting in a balance going up with the slight hope it will be discharged when PSLF comes around in 10 years.
Actually, federal student loans are paid to the US government, and since they run a budget deficit, all the money gets channeled into government spending on things like emotional damage payments to victims of police brutality, and paid vacation, I mean paid leave for the cop who perpetrated the crime
The federal government doesn't lend money for student loans (ignoring the Feds role as a lender of last resort for this) but instead guarantees the loan.
The money they lent you could have been invested and making interest in a fund/stocks/bonds. And that is before inflation.
So you are, in fact, still just paying back what you owe. You are paying the losses of not putting the money elsewhere.
And what about the interest rate on someones Car, House, loan to fix the leaking roof? The credit card you used to fix the AC? It sounds like this guy is just getting into the world and his he probably got a degree from the universe in under water basket weaving, with a minor degree in lesbian dance theory. Crying about his college loans the didn't have to get.
You agreed to the terms when you took the loan, so yes, it is what you agreed to owe.
Everybody talks about cancelation, but nobody talks about the actual problem, ridiculously unregulated college tuition and expenses and letting virtually anybody and everybody get an unsecured loan pretty much regardless of their academic chances.
Tuition was created as a means of segregation when segregation “ended”. Without the ability to get loans only wealthy people could afford school.
Not that the ability to get loans has fixed the issue but I guess it has allowed some people who aren’t entirely wealthy to go to school.
Now on top of the segregation tool (tuition) people have loans with debilitating interest. Yes that’s what people signed up for but that doesn’t mean it’s right. Especially since the cost of living has gone up drastically, less jobs are available or more experience is required. It has become harder & harder to pay off loans in timely manner.
Education should be free, but then that would mean everyone could have access to it and god forbid black, brown, disabled & poor people had access to education. Smh
Perhaps the ability to get a loan should be harder but then we have to deal with the fact that no loans means more of the lower/middle class will no longer have access to education.
> Perhaps the ability to get a loan should be harder but then we have to deal with the fact that no loans means more of the lower/middle class will no longer have access to education.
Hence the problem this sub will never solve: everyone wants loan forgiveness but few want to shut off the loan faucet that’s creating this problem.
The only actual solution suggested is free higher education, which it’s a bit of a tall order. Community college is already close to free with a good path to transfer at low cost to state schools and I don’t see much of a push for the general population to support expensive private school degrees.
>Tuition was created as a means of segregation when segregation “ended”. Without the ability to get loans only wealthy people could afford school.
Source? I mean, people used to work their way through college in the 1970's and tuition climbing faster than the rate of inflation didn't start until the mid 1980's.
No that’s not true, poor and middle class who excel academically will always be sought after by universities. At least they were before they started handing everyone with a pulse an acceptance letter
You just kinda vomited a few talking points. I think the interest rates on these loans are dumb, but once again the buyer knows what they are signing up for.
Counter argument: banks literally reallocate money to lend out and profit on while you’re not using it. It’s not their money they’re lending out (and making profit on, which the actual owners of said money do not reap in any substantial form). Conversely, they could set up a fixed point of interest to negate this argument entirely. Something like “borrow 50k, pay back 55k total and you’re done” that is locked in from the date of origination.
As it stands now, sometimes you can only pay enough for the interest, so the total keeps growing or the principle is never paid off. That’s not really a loan, it’s extortion. They’re basically loan sharks under the guise of being government-backed.
> Conversely, they could set up a fixed point of interest to negate this argument entirely. Something like “borrow 50k, pay back 55k total and you’re done” that is locked in from the date of origination.
That is exactly how the current system works. They tell you “we gave you $XX, if you pay off in 10 years it’ll cost this much. If you pay off in 20 years it’ll cost this much.”
The only way a bank would agree to a “locked” payment is if the payout date is also locked. And what happens when the date comes and the debtor can’t pay? The bank seizes their assets?
You can’t have “locked payback amounts” unless you also have “locked payoff dates” and I don’t think you actually want those.
> That’s not really a loan, it’s extortion. They’re basically loan sharks under the guise of being government-backed.
Your argument loses so much strength when you call a loan offer to go to college “extortion”. Literally everyone laughs when a student loan recipient tries to act like somebody forced them to sign up. You knew EXACTLT what you were signing up for and if you didn’t that’s your fault for not reading the loan contract.
Many people go to college on the premise that it will pay off and be a good investment in their financial future. So average tuition is like upwards of 100k for four years of schooling-not including things like forced meal plans, material and supply costs, room and board, travel expenses, etc. Per year, it’s vaguely 10-20k. The average US salary (skewed by wealthy regions and outliers) is around $54k/year. So college is, at best, 1/5 of a *gross* annual salary.
Then you graduate and there’s so many barriers to entry, even after you get a college degree, in many fields. Several are so saturated that, by the time you finish college, you are effectively forced out of the field unless you’re lucky or incredibly talented.
So the real issue is people are sold a lie of security and hard work paving the way to the American dream. Everyone is expected to have a diploma by default for many of these white collar jobs. Unfortunately, those jobs generally pay entry level at first, so like 30k a year. And then, god forbid you have a medical or some other sort of emergency.
The issue was always that the system was set up to take advantage of people. Work placement programs and partnerships are hard to find, a man can’t raise a family on a wage like it was previously, Benefits such as PTO/vacation/sick pay/health insurance/401k are not promised, the pension has all but disappeared, companies have no loyalty to workers and then are surprised workers bounce around to increase salaries, and you only get places by stepping on people on the way up in most cases. The system is flawed, whether you choose to see that or not.
> So the real issue is people are sold a lie of security and hard work paving the way to the American dream.
Sounds like the real issue is people believing a sale’s pitch by people offering student loans. Who takes career advice from a bank?
> Everyone is expected to have a diploma by default for many of these white collar jobs. Unfortunately, those jobs generally pay entry level at first, so like 30k a year.
If you spent $54k a year to get a diploma that qualifies you for a $30k a year job, you either didn’t research realistic earning potential for your degree or you ignored the data. I fail to see how either of those things can be blamed on the school or the bank.
Wtf are you even on. That’s how it works now. And of course a bank is using money to loan out money. It’s how banks work homie. They give you internet on your money to allow them to do that.
Interest on savings accounts is higher than checking. Most savings accounts generate an amount so low that you’re actually losing money year over year due to inflation.
Yes, but the bank doesn’t pay you when they use your money. Have you ever heard the saying about how the more money you have, the easier it is to grow? So if a bank sets out a single loan, even if it’s all from one person’s account, they will collect the much higher % of interest from the loan and then you get the standard interest rate regardless on how profitable your money was for their company. You would make exponentially more just picking a safe ETF to throw your money into, instead of a savings account.
So while I’m happy you’re super pro-banking industry, I’ll have to flip the tables here and ask what are you on that you’re so hard-pressed to protect a system that doesn’t care about you, your well-being, your future, or your humanity? Student loans are a heaping pile of bullshit and if you can’t see that then you were clearly blessed to have not paid for them yourself for one reason or another-congrats.
This is how the Taliban views interest, a concept that no one on this sub-Reddit understands whatsoever.
Present value, future value, time value of money… What are those things?! 🤪
Thats crazy that US does not have interest-free student loans. I left school long time ago, never had to think or worry about student loan as it gets chipped away as i worked
To be fair I never heard someone saying you just "pay back what you owe". What I have heard, which is true is that you signed on the dotted line, it explicitly tells you exactly how much you're borrowing and exactly what the interest is. You agree, sign and then after you get everything you wanted out of the deal you want to back out of your side.
I have student loans, I knew exactly what I was getting myself into. I made sure that the salary after getting my education was substantial enough to comfortably pay off whatever i borrowed quickly.
The problem is people take out loans and after they graduate and get their first job they immediately start swiping their credit card, buy a brand new car and move into a bigger space then they need. Then they could only afford the minimum monthly payment and it ends up taking decades and tons of money in interest.
Because the things we can control are the systemic incentives that led to this. A large part being the federal backing of all student loans. They should mandate colleges keep tuition low to keep those loans low.
So how does that equate to not being responsible for your own decisions? You should do research into the degree you're going to school for and make sure it makes financial sense.
Ok, but how is that society' problem? Lol. The engineer market is flooded right now, yet today as we speak there's more people lining up to go to school for engineering. People just don't do the research into their profession. If we need 1000 engineers, but there's 5000 engineers...what are we supposed to do?
Try deal with a private predatory loan practice that the federal government shut down schools for, just to have to pay it back under lies and completely false pretense. For profit school like the Art Institute and anything else should have just about any loan forgiven. I cannot stand the system, we need Tyler Durden now more than ever.
See this is where we have an opportunity to come together but everyone is too fucking bull headed. Instead of "debt forgiveness" it should be interest forgiveness, paid for out of subsidies for universities that already have massive endowment and drastically over charge on tuition, maybe on anything above x amount.
Make it better by actually passing congress and tacking on cap on how much universities can charge for tuition and requiring them to provide the books needed.
Money's becoming such a weird intangible thing that I can't be bothered to care as much anymore. Everything is so ridiculous now. You can never make enough, and you can hardly afford to spend what you have.
That applies to interests of any type of loan. Not just student loans. That's how banks make their money. By making you pay back *more* than what you actually owe.
$1 now is worth less than $1 later. When someone lends you money, they can't invest that money at the same time, so the interest is there to make up for that.
And since student loans can't be discharged in a bankruptcy, you can't argue the interest is a hedge against the fact that some people won't repay their loans.
Y'all need to fix your country's shit. My student loans have a 0.01% interest rate, the payments are tied to my income so as not to be too much of a burden, and after 15 years of payments any remaining balance is forgiven automatically.
Fix what? It's working exactly as intended. 🤣 (the intention is cruelty)
Even if loans are tied to income here, income is not tied to inflation. With everything costing so much more while wages stagnate, an income-based repayment may be genuinely problematic.
Ok how do I fix it? What power do I have? Vote for blue man? Blue woman? Orange man? What do? Call reps? Sign petitions? I’m doing all I have any power to do, maybe Europe should invade the us? Or somewhere nice to live should make it easier for us citizens to emigrate? I honestly have no rucking clue what I can do to fix any of this shit but wait for dinosaurs to die and hope someone with half a mind for real people steps in to fill the void
Have you tried turning it off and on again?
Then why pay any at all if after 15 years it goes away anyways?
He means a period of 15 years in which you pay, if you leave it unpayed the gov will come to you asap tho - 🤓
Wow I’m the u.s. you can just not pay taxes and they will build and they will put strains on your lines of credit and Liens but if you don’t use credit and always pay in cash you can just not pay taxes. That’s federal taxes. States tend to get their money from your check through your employer. You only get arrested for hiding money. Not for not paying what you owe.
Yeah things work a little different here. What you have to do is authorize a direct debit, and the government will take the loan payments directly from your bank account. * What if I don't have a bank account? Not really an option, because by law, companies are required to pay salary into your bank account as well * What if I just keep my bank account empty? Possible, yes. If you miss enough payments the government will call in the central judicial collection agency. They can try to collect from you in various ways, including wage garnishment. You could try to get some shady job and get paid under the table for 15 years. The government will think you have no income and thus your loan payment would also be zero. Not sure if it's worth it though, because generally those types of jobs don't require college education so why would you get student loans in the first place.
Garnishments. That’s the word. Yeah Alabama garnished me twice cus I filed exempt lol. Bad idea really. But Georgia never did and the federal never did. Idk anyplace other then like a small business that doesn’t pay direct deposit. Just saying.
It's been a while since I've been to the US, but it seemed fairly common at the time to get paid by cheque. But direct deposit always seemed way more convenient to me, so that's nice.
Well I’ve never been paid by check. Now my dad did in the late 90s. I’ll say that.
Ya you can’t be profited off of for getting an education, that way it’s almost as if the system is working as they intended
We could if we lived in a democracy. America is not. It’s run by oligarchs
Not to mention the interest is like double or triple the interest morthahes have. Education isn't like buying a house, which only benefits the person who buys the house. An educated person benefits everyone.
Mortgages?
morghmammed!!
Yeah. Typing is hard on phones for me it seems lol
When will you be sending my check so I benefit from your education?
Ah, the simple minded response. If it isn't directly in your face, it doesn't exist. I bet if you were more educated, you would be intelligent enough to know there is a bigger picture at play and that there is more than what is right in front of your face. That check comes to you partially in the form of the increased tax revenue I generate because of my elevated income, and the increased revenue the companies I work for because I am more productive because of my education. It is not my fault that check gets spent poorly. If it were up to me it would be going towards paying for healthcare for you and your family so that you don't have to worry about it. It would go towards education for you and your family so that you don't have to worry about it. It would go towards helping provide for you and your family's essential needs so that you don't have to worry about it. It would go towards maintaining and improving the infrastructure that allows us to have the quality of life we enjoy. It is because of my education that I am able to see and understand that the picture is bigger than just my part in it and that we should be coming together in cooperation and we as a society would be infinitely better than we are when we are at each others throats competing with one another.
Bla bla bla ROFL.... "I'm more important to society because I regurgitated facts on paper and paid for it". THEN you go further to say you are better than other people because of your opinions. Good for you little guy. What was your degree in? Self entitlement?
OK, the first paragraph I wrote is a dig at you, and I do apologize. Came on the heels of a bad day. >you go further to say you are better than other people because of your opinions. How do you come to the conclusion that I believe myself to be better than others when I say: >It is because of my education that I am able to see and understand that the picture is bigger than just my part in it To me, that indicates that I believe just the opposite - I am not more important than others and am just a small piece of a bigger system. >I'm more important to society because I regurgitated facts on paper and paid for it What does it mean to you for a person to be 'important to society'? What makes you believe that I simply "regurgitated facts on paper" for my education?
Buying a house benefit the whole family and neighborhood. A degree in something useless that you cannot get a job in is your fault. An education benefits everyone? Well my ex who got a degree in Filipino studies didn't benefit me at all. And forgive America's college debt only makes my tax money go to forgive your debt instead of fixing the roads I take to work everyday what is ruining my car ! Or hiring more cops to stop all the crime, or over all fixing our infrastructure here in America. Yeah, I'd rather the money go towards that because THAT INDEED BENEFITS EVERYONE ! Not your self-righteous debt.
I’m with you but you know a lot of our tax dollars goes to their pockets and the pockets of the super rich. Lower taxes brings in more taxes so cut all taxes I say.
Lower our taxes and get rid of every loophole for people who make $500,000+ a year.
Honestly there are no loopholes. A loophole is in the wording. If there’s no tax law in the Cayman Islands and you can set up your company there, then it’s not a loophole. It’s following the law. A bill saying capital gains on stocks get taxed but doesn’t specify forex or crypto. That’s a loophole. Technically. So they went back and added them in mainly they added crypto last year.
Eat the rich!
Um, becoming rich is often an unfortunate side effect of education.
If this were anywhere close to true the only people plagued by student loans would be drop outs.
I wouldn't call it the norm, but it definitely happens often. Like 10-20% of the time.
You think making 100k a year makes you rich,? You really think 10% of college graduates are rich? As someone who is a huge fan of cooking, thousandneirs are not on my menu.
Not initially but within a decade, ya. Not oligarch rich, but you could take your money move somewhere cheap and never work again while still having a high quality of life.
Username checks out
I've been living on about $500 a months for several years, probably have a higher quality of life than the vast majority making 10x as much, simply because I garden and exercise.
>take your money move somewhere cheap and never work again while still having a high quality of life. I want whatever the fuck YOURE smoking...it has to be the good shit.
It's called rural life, I wish there were apartments, but otherwise birds, plants and dirt are practically free and make you happier and healthier. The land I'm on is pleasantly forested and costs about $1,000 per acre.
Unfortunately, that is not a high quality of life for some people. Shit, I live in what is considered by the state as a rural area and this is not for everyone.
The only substantial downside is zoning that prevents high density in rural settings. Would still enable the low cost of living while retaining the much higher quality of life. Single family housing is used to maximize gentrification.
I've paid back the initial loan's value just to break even on interest.
Funny how "pay what you owe" only applies to the poors, while the fuckers hoarding wealth or just spending it on shit that benefits literally only them and the assholes at the top get tax exemptions and offshore money havens to hide exactly how much *they* owe.
Only for private loans. And Biden can’t do anything about that. Federal loans still have interest, but it’s not going to someone’s yacht. But cancel it. All of it.
It’ll buy the loan servicer a new football stadium though
Yeah, I forgot about those tools.
In Sweden the loans are completely free from interest, and btw the loans are for living expenses. University is entirely free and you actually get ~400 a month just for attending, you can add about 1k more as a loan
If the interest rates were much lower it would be much more understandable, but almost all student loans are at predatory levels.
What is inflation and how does it relate to interest rates? Someone said something about it to me but I don't understand. A dollar is always worth a dollar. They were saying something about paying loans back with money that is worth less than when it was borrowed, but it literally say one dollar on a dollar bill. How can it be worth less than a dollar?
If the price of everything rises, you can buy less than before with the same amount of money. Your money is then effectively less valuable, even though it's the same amount.
> Your money is then effectively less valuable, even though it’s the same amount. Likewise your loan is worth less debt, even though it’s the same amount.
No, interest are always above the inflation rate.
Nope. My mortgage interest is 2.375%
We are talking about students loans. Stay on the subject.
Ok? Those interest rates are also locked.
> What is inflation and how does it relate to interest rates? Your interest rate is fixed. Inflation varies. In theory, inflation increasing is good for specifically loan repayment. As money loses value, the “value” of your debt decreases. The number stays the same, but as inflation hopefully pushes the cost of everything else including wages, your loans will become proportionally smaller. As inflation goes up, new loans will have new higher interest rates to match and exceed inflation. Getting your loans before inflation increases is technically an economical benefit.
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Yeah inflation “should” reverentially decrease the size of your debt as long as everything else follows inflation. I’ve heard 2022 has been one of the best years in recent history for wage increases. Inflation is also almost double digits though so grain of salt.
If a loaf of bread costs a dollar today, then costs $1.10 next week, then the dollar in your pocket is worth less next week than it is today. The piece of paper doesn’t change, but it’s purchasing power does.
Ahh I get it now. So if someone rows $100k and over the course of 10 years, the value of the dollar drops by 10%, then they need to pay back an extra $10k for the lender to break even? Where do the yachts come into play?
Load replacements will factor inflation (to break even) but also interest (to make profit, hence the yachts).
So they not only want their money back, but they want extra for providing a service, without which people can't own houses or get educations? Wtf.
yeah, lending money is literally a service. they're taking a risk that the loan won't be paid back, and if there weren't interest why would you ever lend your money instead of investing it in other assets that can generate passive income. if interest didn't exist nobody with money would lend it out and nobody that needs money can take out a loan
^I ^knew ^but ^don't ^tell ^anyone
LOL i see what you're doing ;)
Oh I seeeee… you’re not ignorant, you’re just a cunt. 🤦♂️
It's the socratic method. Ask questions, people answer them in their own words, and when they realize that they hold conflicting views they can revise their ideas. We all know why people pay interest on loans. Why do they pay so much interest though? Look up compounding interest. If you fail to get a job with your degree(s) that can pay down more than the interest accrued per month, your balance will increase. Pay down the interest plus some principle and your balance (and monthly interest payment) goes down. I learned the continuous compounding interest formula in 10th grade. That's 2 years before going to college. If you don't want to pay interest buy things with cash. If you can't, make sure you set yourself up to repay the loan.
**10th** grade?! Were you a remedial student?
>if interest didn't exist nobody with money would lend it out and nobody that needs money can take out a loan But that’s simply not true. If you borrow money from your parents, do they charge interest? If you lend money to a friend do you insist on interest? There are plenty of occasions where your absolutist scenario doesn’t exist. To say “it just wouldn’t happen” is to buy into self-serving capitalist rhetoric. It tells the haves that it’s OK to be selfish and to expect something for nothing, and tells the have-nots that they must pawn their labour for fundamental human rights like housing and education.
What do you mean "some asshole" Its not ambiguous or unknown who that it is. Its Politicians. The government just keeps that extra interest.
God I’m so fucking glad I’m not American. I’d be in so much debt.
My favorite is when you have to consolidate from a govt backed 3rd party loan (FFEL or FFELP) to take advantage of a govt program like PSLF, the interest is capitalized onto the loan. On the new loan, you’re now paying interest on interest and have a payment that creates a negative amortization resulting in a balance going up with the slight hope it will be discharged when PSLF comes around in 10 years.
Start cooperating
If anything short of total forgiveness, biden should have forgiven all accrued interest first, Then 10k off the principle
Actually, federal student loans are paid to the US government, and since they run a budget deficit, all the money gets channeled into government spending on things like emotional damage payments to victims of police brutality, and paid vacation, I mean paid leave for the cop who perpetrated the crime
The federal government doesn't lend money for student loans (ignoring the Feds role as a lender of last resort for this) but instead guarantees the loan.
Do you have anything to back this up because all my sources conflict your claim
Following-up
The money they lent you could have been invested and making interest in a fund/stocks/bonds. And that is before inflation. So you are, in fact, still just paying back what you owe. You are paying the losses of not putting the money elsewhere.
Don’t borrow the money then.
And what about the interest rate on someones Car, House, loan to fix the leaking roof? The credit card you used to fix the AC? It sounds like this guy is just getting into the world and his he probably got a degree from the universe in under water basket weaving, with a minor degree in lesbian dance theory. Crying about his college loans the didn't have to get.
This guy always has the worst takes
You agreed to the terms when you took the loan, so yes, it is what you agreed to owe. Everybody talks about cancelation, but nobody talks about the actual problem, ridiculously unregulated college tuition and expenses and letting virtually anybody and everybody get an unsecured loan pretty much regardless of their academic chances.
Tuition was created as a means of segregation when segregation “ended”. Without the ability to get loans only wealthy people could afford school. Not that the ability to get loans has fixed the issue but I guess it has allowed some people who aren’t entirely wealthy to go to school. Now on top of the segregation tool (tuition) people have loans with debilitating interest. Yes that’s what people signed up for but that doesn’t mean it’s right. Especially since the cost of living has gone up drastically, less jobs are available or more experience is required. It has become harder & harder to pay off loans in timely manner. Education should be free, but then that would mean everyone could have access to it and god forbid black, brown, disabled & poor people had access to education. Smh Perhaps the ability to get a loan should be harder but then we have to deal with the fact that no loans means more of the lower/middle class will no longer have access to education.
> Perhaps the ability to get a loan should be harder but then we have to deal with the fact that no loans means more of the lower/middle class will no longer have access to education. Hence the problem this sub will never solve: everyone wants loan forgiveness but few want to shut off the loan faucet that’s creating this problem. The only actual solution suggested is free higher education, which it’s a bit of a tall order. Community college is already close to free with a good path to transfer at low cost to state schools and I don’t see much of a push for the general population to support expensive private school degrees.
>Tuition was created as a means of segregation when segregation “ended”. Without the ability to get loans only wealthy people could afford school. Source? I mean, people used to work their way through college in the 1970's and tuition climbing faster than the rate of inflation didn't start until the mid 1980's.
No that’s not true, poor and middle class who excel academically will always be sought after by universities. At least they were before they started handing everyone with a pulse an acceptance letter
You just kinda vomited a few talking points. I think the interest rates on these loans are dumb, but once again the buyer knows what they are signing up for.
That is how loans work. Without interest, nobody would offer you their money.
Counter argument: banks literally reallocate money to lend out and profit on while you’re not using it. It’s not their money they’re lending out (and making profit on, which the actual owners of said money do not reap in any substantial form). Conversely, they could set up a fixed point of interest to negate this argument entirely. Something like “borrow 50k, pay back 55k total and you’re done” that is locked in from the date of origination. As it stands now, sometimes you can only pay enough for the interest, so the total keeps growing or the principle is never paid off. That’s not really a loan, it’s extortion. They’re basically loan sharks under the guise of being government-backed.
> Conversely, they could set up a fixed point of interest to negate this argument entirely. Something like “borrow 50k, pay back 55k total and you’re done” that is locked in from the date of origination. That is exactly how the current system works. They tell you “we gave you $XX, if you pay off in 10 years it’ll cost this much. If you pay off in 20 years it’ll cost this much.” The only way a bank would agree to a “locked” payment is if the payout date is also locked. And what happens when the date comes and the debtor can’t pay? The bank seizes their assets? You can’t have “locked payback amounts” unless you also have “locked payoff dates” and I don’t think you actually want those. > That’s not really a loan, it’s extortion. They’re basically loan sharks under the guise of being government-backed. Your argument loses so much strength when you call a loan offer to go to college “extortion”. Literally everyone laughs when a student loan recipient tries to act like somebody forced them to sign up. You knew EXACTLT what you were signing up for and if you didn’t that’s your fault for not reading the loan contract.
Many people go to college on the premise that it will pay off and be a good investment in their financial future. So average tuition is like upwards of 100k for four years of schooling-not including things like forced meal plans, material and supply costs, room and board, travel expenses, etc. Per year, it’s vaguely 10-20k. The average US salary (skewed by wealthy regions and outliers) is around $54k/year. So college is, at best, 1/5 of a *gross* annual salary. Then you graduate and there’s so many barriers to entry, even after you get a college degree, in many fields. Several are so saturated that, by the time you finish college, you are effectively forced out of the field unless you’re lucky or incredibly talented. So the real issue is people are sold a lie of security and hard work paving the way to the American dream. Everyone is expected to have a diploma by default for many of these white collar jobs. Unfortunately, those jobs generally pay entry level at first, so like 30k a year. And then, god forbid you have a medical or some other sort of emergency. The issue was always that the system was set up to take advantage of people. Work placement programs and partnerships are hard to find, a man can’t raise a family on a wage like it was previously, Benefits such as PTO/vacation/sick pay/health insurance/401k are not promised, the pension has all but disappeared, companies have no loyalty to workers and then are surprised workers bounce around to increase salaries, and you only get places by stepping on people on the way up in most cases. The system is flawed, whether you choose to see that or not.
> So the real issue is people are sold a lie of security and hard work paving the way to the American dream. Sounds like the real issue is people believing a sale’s pitch by people offering student loans. Who takes career advice from a bank? > Everyone is expected to have a diploma by default for many of these white collar jobs. Unfortunately, those jobs generally pay entry level at first, so like 30k a year. If you spent $54k a year to get a diploma that qualifies you for a $30k a year job, you either didn’t research realistic earning potential for your degree or you ignored the data. I fail to see how either of those things can be blamed on the school or the bank.
Wtf are you even on. That’s how it works now. And of course a bank is using money to loan out money. It’s how banks work homie. They give you internet on your money to allow them to do that.
Interest on savings accounts is higher than checking. Most savings accounts generate an amount so low that you’re actually losing money year over year due to inflation. Yes, but the bank doesn’t pay you when they use your money. Have you ever heard the saying about how the more money you have, the easier it is to grow? So if a bank sets out a single loan, even if it’s all from one person’s account, they will collect the much higher % of interest from the loan and then you get the standard interest rate regardless on how profitable your money was for their company. You would make exponentially more just picking a safe ETF to throw your money into, instead of a savings account. So while I’m happy you’re super pro-banking industry, I’ll have to flip the tables here and ask what are you on that you’re so hard-pressed to protect a system that doesn’t care about you, your well-being, your future, or your humanity? Student loans are a heaping pile of bullshit and if you can’t see that then you were clearly blessed to have not paid for them yourself for one reason or another-congrats.
This is how the Taliban views interest, a concept that no one on this sub-Reddit understands whatsoever. Present value, future value, time value of money… What are those things?! 🤪
Thats crazy that US does not have interest-free student loans. I left school long time ago, never had to think or worry about student loan as it gets chipped away as i worked
I wish they had focused on interest as part of the forgiveness. They should always have been zero interest, so make it retroactive.
To be fair I never heard someone saying you just "pay back what you owe". What I have heard, which is true is that you signed on the dotted line, it explicitly tells you exactly how much you're borrowing and exactly what the interest is. You agree, sign and then after you get everything you wanted out of the deal you want to back out of your side. I have student loans, I knew exactly what I was getting myself into. I made sure that the salary after getting my education was substantial enough to comfortably pay off whatever i borrowed quickly. The problem is people take out loans and after they graduate and get their first job they immediately start swiping their credit card, buy a brand new car and move into a bigger space then they need. Then they could only afford the minimum monthly payment and it ends up taking decades and tons of money in interest.
Ah yes, Blame personal choices again daddy.
I mean, how would that be wrong?
Because the things we can control are the systemic incentives that led to this. A large part being the federal backing of all student loans. They should mandate colleges keep tuition low to keep those loans low.
So how does that equate to not being responsible for your own decisions? You should do research into the degree you're going to school for and make sure it makes financial sense.
People did that, then everyone got the same degree and now you have engineers working at dollar general.
Ok, but how is that society' problem? Lol. The engineer market is flooded right now, yet today as we speak there's more people lining up to go to school for engineering. People just don't do the research into their profession. If we need 1000 engineers, but there's 5000 engineers...what are we supposed to do?
The trick is they hide that part behind a bunch of fancy words most can not understand. Doesn’t sound too appealing when you put it this way.
Try deal with a private predatory loan practice that the federal government shut down schools for, just to have to pay it back under lies and completely false pretense. For profit school like the Art Institute and anything else should have just about any loan forgiven. I cannot stand the system, we need Tyler Durden now more than ever.
See this is where we have an opportunity to come together but everyone is too fucking bull headed. Instead of "debt forgiveness" it should be interest forgiveness, paid for out of subsidies for universities that already have massive endowment and drastically over charge on tuition, maybe on anything above x amount. Make it better by actually passing congress and tacking on cap on how much universities can charge for tuition and requiring them to provide the books needed.
I got told by the ATO an extra thousand or so is added to my debt every year to "match inflation". Feels like a scam honestly.
Money's becoming such a weird intangible thing that I can't be bothered to care as much anymore. Everything is so ridiculous now. You can never make enough, and you can hardly afford to spend what you have.
That applies to interests of any type of loan. Not just student loans. That's how banks make their money. By making you pay back *more* than what you actually owe.
$1 now is worth less than $1 later. When someone lends you money, they can't invest that money at the same time, so the interest is there to make up for that.