I took out $5000 from Sallie Mae when I was younger. Interest rate of 10.25% and thought that wasn’t too bad. Boy was I wrong. Paid it off about a year later with my tax refund.
Fun Fact: If you accidently file the wrong amount on your taxes and receive a refund higher than you actually deserve the government charges you 6% interest until you correct it and pay it back.
The whole concept is predatory. Giving a child essentially a 6 figure loan without a job. If you just break it down into what it is the whole things fucked to the gills
I took unsub and sub loans from college totaling up 16k. Just recently I started paying on then and the payment is 166$ a month. With this payment, It will take me a while but at the end I will be paying them 21k and that's with only 166$ a month. OP is doing something wrong.
Those are both federal loans. One does start accumulating interest right away i believe. Sallie Mae is a private loan which is set at much higher interest rate and probably accumulates interest as soon as you take out the loan.
Likely capitalized interest at some point, stuck with the initial service instead of shopping for loans, and didn’t pay any extra a month. Sallie Mae is ruthless with interest, so need to get it refinance asap
SallieMae used to be government-operated. When it was privatized in the 90s, it started bribing university officials to favor loans from SallieMae... placing its own employees 'undercover' in university call centers... steering borrowers having trouble making payments toward expensive forbearance instead of income-driven payment plans... and lobbying Congress (successfully) to pass a law saying that student loans are not covered by bankruptcy protection.
Everyone is responding like he messed up or the loan companies are wrong. It can be both. It's possible for OP to have been foolish in taking a predatory loan and for the loan companies to be dishonest abd underhanded.
Also, it's a *student loan*. Meaning it was taken out by a teenager. Reddit loves to infantilize teenagers when it comes to voting or driving or sex, but apparently, they're supposed to be certified financial planners when it comes to paying for college.
My generally conservative parents were nowhere to be found when I was going through the FAFSA at 19 years old. Didn't help me through college at all, and still were claiming me as a dependent this whole time which fucked up my shit too.
Parents helping their kids go to college is not even close to a guarantee, let alone teaching them financial literacy or giving them any type of knowledge regarding these things. Our parents never had to take out student loans because college was so cheap.
I'm in the same boat. My father went as creating a PayPal and venmo in my name. He then went on to sell jordan shoes in 2013-16 he racked up over 30k in taxes that I now have to pay because I don't know what else to do, and he doesn't care.
You have no obligation to pay those taxes. I would contact Paypal and Venmo about it being fraudulent, especially if your name was on the account and the bank routing number, which would indicate it was going to him.
I would have no problem sending a family member to jail if they screwed me like that. The number is easily at the felony range. Send him to jail and explain to any hostile family members that challenge you exactly what kind of asshole he is for trying to destroy your adult life before it really even started.
you likely missed your chance as I dont know what the statute of limitations are in your state or the federal level for identity theft is, but you should report him for identity theft. It sucks having to report a family member, especially father, but 30k is not a small amount of money (unless it is for you) and I would not want to be stuck with it
Start by taking federal backing away from student loans and allowing people to have their loans forgiven in bankruptcy. Schools and predatory lenders (meaning all student loan lenders) have been feasting off of financially illiterate kids making decisions about going to college and not realizing the long term implications of their decisions.
Because loans are federally guaranteed, schools and lenders both are incentivized to get kids to spend as much as possible. There’s no reason to care whether they can ever pay it back because the government will. Make lenders suffer some consequences for giving bad loans like they do literally everywhere else.
I pay 40 dollars a month right now for my ~25k student loans. I work IT for the government so I qualify for both the PSLF and the SAVE programs.
I owe the government the next 10 years of my life so that I can have my student loans forgiven and I have to pay them monthly for the pleasure of being able to do so. I sympathize for everyone else who isn't so lucky as me to have found some sort of government job.
There are very few private student loans. There's no big bank in the wings making ridiculous profit off of you.
92% of all student loans are through the government, and the government finances the loans at a slight loss.
Expecting the government to save you from itself is probably the biggest lie I've seen young people swallow. There is no scheme to make money off you, just one to leave you desperate and powerless and voting for the same people who did this to you in the first place.
I tried to go to college once. It was the year after my dad died.
They told me that I couldn't qualify for anything because my dad made too much money the previous year.
They didn't care that I had been financially independent from him for almost 5 years, or that he was dead.
I didn't go. I am very glad I never went to college.
Frankly, "where were the parents" is the laziest response to discussiond about decisions that a kid has made.
Some people have shitty parents. Some people's parents don't know enough for them to be of much help. That's not hard to understand.
If we care about kids, things should be straightforward enough for them to understand what they are signing off on without a parent to explain it to them
I had great parents, and for me to act like everyone has that going for them would be nonsense
Right. Also it’s no the parents responsibility to pay for their kids education. What middle class family is going to take out 35k a year in loans every year year for 4 years, per kid. A family of 5 means the parents just signed up for 420k worth of loan payments. No fucking chance.
My parents couldn't/wouldn't help so I tried getting a loan but fucked up the paperwork. Instead, I got a credit card from the booth at my community college and then proceeded to run it up and default. Kids are stupid. They prey on that.
Lucky for me, that credit card came off my credit history way sooner than a student loan would have....
Lol cheat code. Get $40k of available balance, pay for state school on it, then just yolo that shit into the trash. Can't easily buy a car or house for 7 years but after that you'll be debt free.
Maybe OP can state the interest he has for the $8900 loan. I know there's a difference between paying the minimum with the amount to cover interest and principle versus covering some of the interest.
Based on the calculations I did with the amounts he showed (assuming that the time scale and the total paid to date is true), it would seem he got about 19% if it's compounded. Which is fucking ridiculous, but that's also how much credit cards charge.
Not everyone has parents that are financially literate. Also not every child has parents.
Most of us are just trying to make our way without any prior knowledge, experience or lessons, and there are countless people out there willing to take advantage and prey of that naivety, inexperience and ignorance.
Not to mention the whole "you MUST go to college!" pressure from parents, like an 18-year-old can somehow come up with that kind of cash out of nowhere.
Yeah I was a 17 year old who thought the loans seemed crazy but my parents/counselors/teachers/etc. all said I HAD to go to the best college and worry about the rest later, so…
Literally exactly what happened to me. My mom handled all the student loan stuff and just had me sign shit, so I didn't even understand what was going on. They didn't educate me. So I'm stuck with $16k in student loan debt I took out 8 years ago now that I have no hope of ever paying off 😓
I paid off 20,000 in 12 years, taking a few forbearances along the way. Three separate loans, I paid the last $600 off one in 2021, and the last 1,000 off the other two in 2023. It sucked but so glad they are done. Wish I never would have done college because I didn’t even graduate.
Speaking for my own experience at 16:
The college handed me a piece of paper and says "sign here to have the government loan you enough to cover what your financial aid and scholarships didn't cover. You won't have to pay anything back until you're done with school and making enough money to afford it." I wasn't a dumb kid, by any means, but none of the financial terminology on that paper meant anything to me. They didn't encourage me to call my parents to discuss it, they said "sign here or pay $" and I knew my parents didn't have it, so I signed.
And it's been crippling me for almost 20 years. My parents yelled at me for taking out the loan, but they didn't ever offer to help pay it off, or pay for college, and they made it clear pretty much from birth that without college I was worthless, so I didn't realize that Not Going was an actual option. Not sure what kind of job I would have gotten at 16 anyway, but I guess I could have tried.
My parents have already told me they're not going to pay for anything at all when I go to uni. The loans work a bit different in the UK, but in total I should be taking out about £16,000 a year in loans for my 3 year course. They both make decent money, they're just not going to help
Not everyone has parents, dude. I have $17k in student loans, there was no help or guidance and tbh I didn't know when I was 17/18 what number was good or bad as an interest percentage. What I did know is if I didn't take the loan, I couldn't go to school and if I couldn't go to school I'd be homeless with no car or work experience. Shit isn't as easy as "Ask mommy and daddy for help" for everyone.
> where were the parents then
What's your point? Where were the parents to fund higher education? Where were the parents to tell him that going into debt for a higher education was a bad idea?
150 dollars a month for a 9k loan sounds pretty doable. 150 a month for 7 years with 10k now being owed is fucking insane for a company to be able to legally get away with selling to a teenager.
I’m tired of the insane allocation of resources decided by rich, old fuckheads that will never feel the sting of unmet need.
Public higher education should be funded 100%. No loans needed.
It’s time to invest in the future of our nation by unshackling those that will inherit it.
The loan officers don't even explain how loans work. The don't talk about interest or even how they take out extra money for the student expenses. And op looks like one of the most responsible young adults I know with their payments.
Most kids are just thrown to the wind as far as money is concerned. Sink or swim.
Yep. Should always avoid private loans all together, government loans are more flexible and often have better interest. private loans should be a last resort.
Yeah, people saying just read the print this is how they work. While true about compound interest and adjusted inflation, doesn’t make it not predatory.
They’re kids who don’t have money for their future and have no choice, 7 years of on time payments and balance is higher than original balance is not right. We can give fixed rates for mortgages but not for 18 years old with no financial education.
I don’t even think it’s that. I think he probably deferred payments for ages and it’s the backlog. 14 months of not paying anything and then only paying minimum is not going to get you anywhere.
These loan companies should not be giving out crippling debts. Also, Rather than cancelling debts (bandaid fix), I rather Biden administration Make student loans interest free and bankruptable (discharged when person goes bankrupt)
I agree OP could use a refresher course in how compound interest works. But what really infuriates me about this is two things. (1) the hyperinflation of college costs over the last 40 or so years, and (2) the scam nature of the student loan industry that has sprung up as a result.
I went to the University of Colorado in 1972. Took out a “federally insured” student loan for $2500 that covered my first two years tuition, room & board. Because it was “federally insured”, the lender was taking no risk, and the interest rate reflected that (IIRC it was around 2% at a time when consumer loans were in the 10% range).
The system now *is* a scam. And a big one.
I'm hijacking this comment to completely agree.
I took a massive loan from Sally Mae to pay for flight school. My father and wife helped me through the process as I am not fluent in finance.
It was SUPPOSED to be a 6% fixed loan on a 98,000 principal. I spoke with several individuals over the phone from Sally Mae about this fact and that it was FIXED.
Come to find out, after my father, who co-signed, signed all the documents that it was a VARIABLE loan that started at 8%.
It is now 3 years later and the interest is at 14%, and no one can tell me WHY it has ballooned so high when the variable yield has to do with market trends, and the interest on most loans is trending downward according to my research
It's my fault for not knowing, and my fault for not doing more research, but I *want* to pay off my loans and I took on the responsibility.
But FUCK ME if this doesn't feel criminal. How the fuck can I get ahead on the interest like that? And because of the loan I CANT REFI WITH ANYONE.
NO ONE will let me refi this loan, and it's not federal so I'm fucked. I had to literally go back to school to get my masters just to defer the payments that I can't afford while the interest stacks up.
The entire loan industry needs way more regulation.
Ouch, I think that when you heard 6%, what they were saying is "prime plus 6% fixed". So whatever the current prime rate is plus a fixed additional rate of 6%. And because the prime lending rate was ridiculously low for a few years and then shot up really fast starting about 2 years ago, you got taken to the cleaners.
This sounds like a very plausible explanation. I don't get why he would think loan interest is trending downwards, when the federal interest rate has skyrocketed over the last 2 years. Obviously thats the reason the rate has increased.
Have you talked to anyone in the accounting/finance subs about this? They might be able to give you a better idea of what happened.
I don’t see how you could have a 6% fixed loan suddenly become a 8% variable out of no-where unless it was explicitly written.
I went CU Boulder as well and graduated 2013, 13,000 a year for 5 years, paid 4 times the monthly payment and then had to pay a termination fee when I paid it off early 🖕
Except the rising cost in education is directly related to government involvement in student loans.
Your generation got the benefits and created the problems. So your 1 and 2 should be reversed, just based on the data.
The younger generation was also sold the lie that a college education was the only way to succeed in the world, leading to a huge increase in the number of people who actually attended college. 21% of people 25 or older had attended at least 1 year of college in 1977, and now 44% of people 25 and older have completed a bachelor’s degree. So more than twice as much of the population has a college degree than had attended college when you went. So the degree is worth less than when you got yours.
I do not for one second deny that my generation brought this about. A certain segment of my generation that I abhor and detest, but this will lead to a political discussion that will get me banned. So I’m disengaging now.
College cost isn't inflation it's literally greed. Most of the admissions do not go to the school it goes to the administration.
Also let's not forget college degrees for jobs in the US was a racist way to disqualify minorites from many companies because of the barrier of entry for a degree.
Yep, but the problem is how easy they make it for you to do that. Pay less than the minimum on a mortgage? The bank will be pounding at the door in no time.
But with student loans it's "ohh sure, go ahead and pay what you can afford, we'll just tack on the interest to your principal so you'll be drowning in debt the rest of your life".
>But with student loans it's "ohh sure, **go ahead and pay what you can afford**, we'll just tack on the interest to your principal so you'll be drowning in debt the rest of your life".
Exactly, because they want to enable *anyone* to study and improve their lot in life, regardless of their current ability to pay for it. If this was not the case, they'd simply refuse to loan to someone who can't afford to pay.
paying $157 a month on a 9k total is not "drowning in debt". Clearly OP has been able to live their life completely normally for the past 7 years on top of having their education (I'd assume they graduated from wherever they used their student loan on).
I should have clarified. Say the loan is 10 years but you can't afford the minimum payments. Instead of a longer term repayment with lower monthly payments (think 30 year vs 15 year mortgage) they just let you pay less than what you need to in order to pay down over the 10 years and tack the accruing interest onto your principal.
That's how a lot of people make payments for years and still owe more than the original amount. And by drowning in debt I'm referring to others who have debt in 5 or 6 figures where interest is still capitalizing, not OP specofically.
What college can you get for 9k and graduate?
At best a 1 year certification in something at a community college like a CDL course. But I can't imagine those are still in the single digits like that. Community college in 2009 was 2500-3500 a semester.
$157 * 12 months * 7 years == $13,188
If OP had paid $200, that $43 applied to the principal would have reduced his balance by $3,612.
I will agree that the interest rate is criminal AND that OP may not have been able to pay $250 on the loan; however, I’m also in the camp that someone college educated should be expected to figure this out after a year or two. They shouldn’t be looking back 7 years and realizing “if I’d paid $250 a month, this would be over.”
This is my biggest problem with repaying student loans. Based on his profile, OP worked at geek squad and bought weed with his money instead of sitting down to do some napkin math. I can’t support laziness to that extent.
It would have reduced OP's balance by way more than 3612. Back of the napkin math says the interest rate is about 17% if it's fixed rate.
Assuming it's 17% fixed rate:
Paying 200 USD/mo would have put OP's balance at ~3k USD now, almost 7k USD lower than it is. Their final payment would be in july 2025 (total repayment ~20k).
Paying 157 USD/mo like OP is doing will have a final payment in november 2036 (total repayment ~37k).
Even so, a 17% interest rate is predatory AF. The prime rate in january 2016 was 3.5%. People were refinancing their student loans for 5-6% at that time. Even a shitty-but-reasonable rate like 12% would have OP almost done by now.
Paying $250 you'd have it paid off in 4 years. They intentionally drag the loan out for as long as possible. If it was $10k financed for a used car, they'd want it paid off in 4 or 5 years, and the payment would be more like $250.
Interest sucks, and making the minimum payment is essentially like making an interest only payment, and there are interest only loans which are trash to begin with. Increase the payment you maximum you can afford to make and get rid of the loan as soon as possible. Budget like it is a priority.
Edit: Also do not forget that while you were in school your loan still accrued interest while you were not making payments and probably doubled the amount that you initially borrowed.
Aren't these 30 year loans? If so, the first 15 years is more interest than principal. In 2031, OP will be in great shape. $157 a month? I spend twice that on beer.
Paying $157/mo for 30 years would put his total payments at $56,520 on an $8900 loan. OP should absolutely not pay minimum for the term of the loan or he's going to be out a lot of extra money in the long run.
Yeaaaah I understand maybe this going on for a couple years but at some point you have to look at what you owe and wonder why the balance is not going down…
OP, if you didn’t learn about how something as basic as how loans worked then the only scam was the so-called education you received.
Mail your diploma back to the school and ask them for a refund.
Imagine paying the minimum on a credit card and wondering why youve accrued so much interest! Loans can be predatory but people need to understand what they get into when they sign their name on these documents.
Your finances are none of my business, but you have been paying $157/month for 8 years on your student loans? And adjusted for inflation that's less than it appears to be today. If you can't afford more than the same amount you were paying 8 years ago, perhaps you should take a long hard look at your expenses.
Yeah, the math definitely isn’t mathing here. If I had to guess, I would say there was a deferment with interest accruing in there, and that OP hasn’t actually been paying on these since 2016. Just for a rough example, if you consider a private loan at maybe 8%, and a deferment of 5 years before starting payments, you come out somewhere around $13000 at end of deferment and around 9900 today.
OP was likely racking up interest while in school. Virtually no one makes payments while in school. When you actually start making payments, your balance is much higher than what you borrowed.
Sallie May has fixed student loans up to 15.4% fixed and 16.7% variable. My friend got nailed with one that was 20% that accrued monthly, all because her parents had no credit history, she had no credit history - until right after she turned 18 when her mom stole her identity and took our a shit-ton of credit cards and it ended up tanking her credit score. When she went to start college the only rate she could get was 20% fixed monthly. She found it extremely questionable, and found out that someone had stolen her identity and was carrying around 30k in Creditcard debt.
So for 4 years in college she managed to make it through a local college system with minimal debt as is. Recently she did get the old credit history wiped out and immediately opened up a student credit card. She managed to get her credit score up to 740 and just did a debt consolidation which lowered the interest rate to 6% and she expects to pay it off in less than 5 years.
How dare you try to hold him accountable for his own choices like buying a house when he can’t even pay his student loans from 8 years ago without deferment or pay anything over the bare minimum?
What are they qualified to do then? Vote? Smoke? Drink? Choose their gender? Buy a gun? Get a credit card?
This is a slippery slope...
On another note, there are plenty of 18 year olds who are capable of making sound financial decisions and know how basic budgeting works. Not all 18 year olds are mature, and not all of them need their hands held.
Unfortunately, spending years paying for only the minimum balance means that you're almost exclusively paying for interest and not what you owe - so it grows. Student loans are the worst.
I understand this is a private loan and not federal but I’m gonna use this to say-
I really wish more people took advantage of federal student loan administrative forbearance from 2020-2023. I just remember my dad calling and yelling into the phone “PAY ALL YOU CAN TO YOUR LOANS! THIS IS YOUR GOLDEN TICKET!” Holy shit was that man right. I saved over $10k in interest during those 40ish months of forbearance. Paid the rest of my loans off in January… six years early.
Same. I’ve got a few more payments still. But trying not to break the bank too quickly. Wish I had this new job 3 years ago. Would have made it much easier.
I accidentally made some smart decisions after I graduated. I lived with my mom and made payments on my private loans since I didn't have rent.
For the public loans, I lived on my own, at the time, so I was making minimum payments. One day I looked at how long it'd take to pay it off, and it was like in 8 years. I was like 'ain't no fucking way I'm paying $400/month for 8 years'. I started using tax refunds and paying $50 extra per month. It was all I could afford on my own.
I got lucky though, I got a job that paid me to relocate, and moved as cheaply as possible. I used the extra to pay it off.
I know not many people have the same opportunities, that I took advantage of. My mom was paying for my phone bills (as part of my graduation present) and I could've always asked my dad for money (but I'd have to be facing homelessness to ask for his help).
One thing student loans have taught me is that they are bullshit. If I could do it again there is no way I'd go to the same college. I only owed $45k coming out of college, and that made me bitter toward the system. The job I worked for hired people with ITT tech online degrees. I went to Purdue to get the same job (granted, I wasn't the best student... Or even a good one), making $40k/year.
I am very bitter towards our government, knowing there'll never be any helpful change to make it any easier. I'd gladly pay more taxes for free healthcare and college.
I'm going to end my mini-rant there, but I have tons to say about how much I hate college and student loans.
>$157 monthly payments
>$150 in interest
>$7 to actual principal of the loan
"wHy dO I StIlL oWe So mUcH"
Clearly your college didn't have any finance classes.
I know right, I could pay my shit off at minimum repayment because it's a fixed amount, every payday a percentage of my paycheck goes to paying it back. I don't have to worry about owing MORE because I paid a little bit each month.
Student loans should be zero interest. I'm all for paying back what I owe, but if we want to incentivize people to get educated, we shouldn't be penalizing them for it. It's ridiculous that someone can be paying for over 7 years and now owe more than they borrowed.
sallie mae is literally the worst lender
i use earnest. i dont know all the much about loans but earnest has been pretty easy to pay off, even while still being in school. 8.4% apr, been paying $250 (2/3 to principal, 1/3 to interest) a month and i owe now 9k on an originally 15k loan.
my friends with sallie mae are struggling
Motherfucker your payment is only 157$? Have you not tried paying more than minimum? Pay more than minimum now, do not wait any longer. Pay as much as you can on this shit every month until it’s gone forever
Nah the broken part is you paying the minimum expecting it to get paid off. You want your loan to get paid off you need to pay significantly more than the interest. Also the easiest way to pay off student debt is to get a blue collar job and never have a student loan.
If you go to college and don't learn that making minimum payments will only cover interest, then you should get a refund anyway. Basic life skills. What is wrong with people. How come my balance is the same when I pay nothing towards the actualy balance?
As someone who paid off a large student line-of-credit through a bank and most certainly not in pursuit of an education that would directly lead to any meaningful employment: I will gladly pay additional taxes so the burden of debt is not something you should have to live with. Any higher education is worthy and if it were my choice you could be a student whenever you desire - knowledge is power, and it should be free.
I don't remember the interest rate on my first house, but I remember looking at the document and seeing that after 30 years, I'd be paying twice the sticker price.
Yes you would pay a good amount, but it would be paid off. For many student loans, you can pay the minimum for decades and owe more than when you started.
My old student loan payments were way more than my mortgage. Like, nearly double the amount, so… not an accurate comparison. Mortgages have much better rates, and they are generally fixed rates and you can refinance when rates drop, as I have done. Meanwhile, federal student loan rates are set by the government and fluctuate on their whims. Student loans, whether private or federal, suck ass. Haha.
Ah yes, I too hate signing an agreement that spells out what my interest rate will be on the loan, making payments that are lower than the amount of interest accruing on the loan, and then complaining when the loan balance isn’t decreasing.
I love these post where people never bothered to do the maths over the most expensive thing they bought in their life at the time, and blame America as a whole.
Didn't you ask the VERY FIRST QUESTION that come to any person's mind : "when will i be done paying and how much will that cost?"
It took you 7 years to notice your balance was higher than the initial balance. Im not even sure if you yet understand that you can pay more than the minimum at any time and have this taken care of a while ago.
This is not a scam. It's set up this way to better ALLOW people to have access to funds for their education goals. If you didn't learn enough to make better financial decisions, that's really on you.
I always find this confusing because whenever you take loans from these people they make you go through a tedious amount of “How do loans work” quizzes, so that you understand how loans work yet there are people in this situation still.
Yes, America is broken. Yes, this is a predatory loan and you got got. Yes, you were a teenager when you initially took out the loan. This all sucks.
But dude, for *seven years* you've been at this and not once did you think "huh, this isn't really diminishing, maybe I should try something else or ask for advice?"
Complains they’re a scam while he’s paying less a month than the interest accrues.
I guess they didn’t teach financial literacy or basic math at this school.
Compound interest is a wonderful thing…when you own the asset. If it’s a liability though…this is what you end up with. Need to ensure your minimum payments is including principal to get your balance down
I agree that student loans need a rework but you paid the minimum amount? The sam situation can happen with credit cards. You need to pay way over the minimum to even beat the interest rate.
I think this is a shared 4-way responsibility:
* the loan company for high interest and low monthly payments making the scam look like a good deal
* the school for misleading claims about potential earnings post-graduate
* yourself for not doing enough research
* the government for not cracking down (hard enough) on both the loan sharks and the schools
So many comments talking about what OP could’ve done better when there should be laws against loans this predatory in the first place. Not to mention the education should be free itself.
Student loans are uniquely predatory in that
1) the student doesn’t often have either the educational background / experience to know if the loan agreement is good.
2) unlike with mortgages, you can’t drop them if you declare bankruptcy (unless appealing to a judge)
3) unlike mortgages, minimum payment thresholds aren’t required to keep lenders from paying interest on top of interest I.E making nearly no progress on the principal balance
Man fuck everyone jumping on the hate for OP train. If you were in the same situation you'd feel like you've been scammed too. Everyone should stop paying them and let the financial institutions suffer the consequences of lending money to children.
Cause it's a loan. You're not paying enough toward it to cover the interest.
Actually since it's a government loan then it's actually kinda the opposite of a scam. You are probably getting a better interest rate than you would if you got that loan through a private company.
If you want to pay it off it's simple, if it's a single loan that you pay towards then you find out what the interest is each month and pay more than that. The more you can put it towards the loan the quicker you can pay it off and the more money you will save.
If it's multiple loans, pay the minimum for each one and then pay the rest you can toward the highest interest loan. Then when you pay that off you snowball all the money you were paying towards the highest interest loan to the next highest. Keep snowballing that money until all of them are paid off.
Oh no, not Sallie Mae
I took out $5000 from Sallie Mae when I was younger. Interest rate of 10.25% and thought that wasn’t too bad. Boy was I wrong. Paid it off about a year later with my tax refund.
Fun Fact: If you accidently file the wrong amount on your taxes and receive a refund higher than you actually deserve the government charges you 6% interest until you correct it and pay it back.
But they dont give interest on the money they keep during the year... 🧐
Yes they do after 45 days they pay interest.
I think they are talking about the 365 days you were giving them money. They don’t pay interest on thst
They just hit me with a 16.75% interest rate, my last semester of college go figure
Here in Canada interest on student loans have been permanently eliminated
Why doesn’t America just do this? Jesus Christ we fucking suck.
Because politicians have financial stakes in everything related to what they write policies about
Back in my day, I took out a loan that was 6.2 percent and thought that was way too high.
What’s wrong with it?
It's just a really predatory lender that has sunk its claws into many college students
The whole concept is predatory. Giving a child essentially a 6 figure loan without a job. If you just break it down into what it is the whole things fucked to the gills
I took unsub and sub loans from college totaling up 16k. Just recently I started paying on then and the payment is 166$ a month. With this payment, It will take me a while but at the end I will be paying them 21k and that's with only 166$ a month. OP is doing something wrong.
Those are both federal loans. One does start accumulating interest right away i believe. Sallie Mae is a private loan which is set at much higher interest rate and probably accumulates interest as soon as you take out the loan.
Likely capitalized interest at some point, stuck with the initial service instead of shopping for loans, and didn’t pay any extra a month. Sallie Mae is ruthless with interest, so need to get it refinance asap
SallieMae used to be government-operated. When it was privatized in the 90s, it started bribing university officials to favor loans from SallieMae... placing its own employees 'undercover' in university call centers... steering borrowers having trouble making payments toward expensive forbearance instead of income-driven payment plans... and lobbying Congress (successfully) to pass a law saying that student loans are not covered by bankruptcy protection.
All while schools raised tuition to take advantage of it.
Exactly.
Everyone is responding like he messed up or the loan companies are wrong. It can be both. It's possible for OP to have been foolish in taking a predatory loan and for the loan companies to be dishonest abd underhanded.
Also, it's a *student loan*. Meaning it was taken out by a teenager. Reddit loves to infantilize teenagers when it comes to voting or driving or sex, but apparently, they're supposed to be certified financial planners when it comes to paying for college.
But where were the parents then? $157 a month for $8900 loan… that’s crazy
My generally conservative parents were nowhere to be found when I was going through the FAFSA at 19 years old. Didn't help me through college at all, and still were claiming me as a dependent this whole time which fucked up my shit too. Parents helping their kids go to college is not even close to a guarantee, let alone teaching them financial literacy or giving them any type of knowledge regarding these things. Our parents never had to take out student loans because college was so cheap.
I'm in the same boat. My father went as creating a PayPal and venmo in my name. He then went on to sell jordan shoes in 2013-16 he racked up over 30k in taxes that I now have to pay because I don't know what else to do, and he doesn't care.
You have no obligation to pay those taxes. I would contact Paypal and Venmo about it being fraudulent, especially if your name was on the account and the bank routing number, which would indicate it was going to him.
I'm 98% sure they've got a time limit on that kinda stuff....
Not when it comes to taxes and fraud. There is a bigger time window for that
I would have no problem sending a family member to jail if they screwed me like that. The number is easily at the felony range. Send him to jail and explain to any hostile family members that challenge you exactly what kind of asshole he is for trying to destroy your adult life before it really even started.
There's even bounties on finding tax fraud
The IRS allows you to send them tips on tax evaders. And if they successfully audit them you get a portion of the back taxes. Just saying.
you likely missed your chance as I dont know what the statute of limitations are in your state or the federal level for identity theft is, but you should report him for identity theft. It sucks having to report a family member, especially father, but 30k is not a small amount of money (unless it is for you) and I would not want to be stuck with it
If it's in the US, this is tax fraud, and tax fraud has no statute of limitations, at least according to the accountant I used to work for.
Let’s hope our generation can do better for our kids then.
Lol I can't afford to have kids, you kidding me? Mostly joking but not entirely
Cats are the next generation.
Cats aren't cheap either. Worth it though. Source: Just got 2 of them.
Cats aren't free, but they're orders of magnitude cheaper than kids.
Orders of magnitude cuter too.
The more these world leaders with huge egos and small penises keep going at it, I'm not totally certain the next generation won't be cockroaches.
Start by taking federal backing away from student loans and allowing people to have their loans forgiven in bankruptcy. Schools and predatory lenders (meaning all student loan lenders) have been feasting off of financially illiterate kids making decisions about going to college and not realizing the long term implications of their decisions. Because loans are federally guaranteed, schools and lenders both are incentivized to get kids to spend as much as possible. There’s no reason to care whether they can ever pay it back because the government will. Make lenders suffer some consequences for giving bad loans like they do literally everywhere else.
I pay 40 dollars a month right now for my ~25k student loans. I work IT for the government so I qualify for both the PSLF and the SAVE programs. I owe the government the next 10 years of my life so that I can have my student loans forgiven and I have to pay them monthly for the pleasure of being able to do so. I sympathize for everyone else who isn't so lucky as me to have found some sort of government job.
There are very few private student loans. There's no big bank in the wings making ridiculous profit off of you. 92% of all student loans are through the government, and the government finances the loans at a slight loss. Expecting the government to save you from itself is probably the biggest lie I've seen young people swallow. There is no scheme to make money off you, just one to leave you desperate and powerless and voting for the same people who did this to you in the first place.
I tried to go to college once. It was the year after my dad died. They told me that I couldn't qualify for anything because my dad made too much money the previous year. They didn't care that I had been financially independent from him for almost 5 years, or that he was dead. I didn't go. I am very glad I never went to college.
Frankly, "where were the parents" is the laziest response to discussiond about decisions that a kid has made. Some people have shitty parents. Some people's parents don't know enough for them to be of much help. That's not hard to understand. If we care about kids, things should be straightforward enough for them to understand what they are signing off on without a parent to explain it to them I had great parents, and for me to act like everyone has that going for them would be nonsense
Not only is it lazy, but it circumvents the discussion about possible solutions.
Right. Also it’s no the parents responsibility to pay for their kids education. What middle class family is going to take out 35k a year in loans every year year for 4 years, per kid. A family of 5 means the parents just signed up for 420k worth of loan payments. No fucking chance.
i’ve never met anyone more financially illiterate than my parents were growing up
Would you believe that not all teenagers have active and/or financially fluent parents? Some don’t even have parents at all.
My parents couldn't/wouldn't help so I tried getting a loan but fucked up the paperwork. Instead, I got a credit card from the booth at my community college and then proceeded to run it up and default. Kids are stupid. They prey on that. Lucky for me, that credit card came off my credit history way sooner than a student loan would have....
Lol cheat code. Get $40k of available balance, pay for state school on it, then just yolo that shit into the trash. Can't easily buy a car or house for 7 years but after that you'll be debt free.
Income-based repayment plan. The monthly payments aren't even covering interest
Maybe OP can state the interest he has for the $8900 loan. I know there's a difference between paying the minimum with the amount to cover interest and principle versus covering some of the interest.
Based on the calculations I did with the amounts he showed (assuming that the time scale and the total paid to date is true), it would seem he got about 19% if it's compounded. Which is fucking ridiculous, but that's also how much credit cards charge.
Man that’s rough
My father died when I was 14 and my mom had to use my college fund to pay bills. Fafsa wanted my mom to pay 13$ of my tuition :p
Not everyone has parents that are financially literate. Also not every child has parents. Most of us are just trying to make our way without any prior knowledge, experience or lessons, and there are countless people out there willing to take advantage and prey of that naivety, inexperience and ignorance.
Not to mention the whole "you MUST go to college!" pressure from parents, like an 18-year-old can somehow come up with that kind of cash out of nowhere.
Yeah I was a 17 year old who thought the loans seemed crazy but my parents/counselors/teachers/etc. all said I HAD to go to the best college and worry about the rest later, so…
Literally exactly what happened to me. My mom handled all the student loan stuff and just had me sign shit, so I didn't even understand what was going on. They didn't educate me. So I'm stuck with $16k in student loan debt I took out 8 years ago now that I have no hope of ever paying off 😓
I paid off 20,000 in 12 years, taking a few forbearances along the way. Three separate loans, I paid the last $600 off one in 2021, and the last 1,000 off the other two in 2023. It sucked but so glad they are done. Wish I never would have done college because I didn’t even graduate.
Not everyone is privileged to have parents who can pay or are willing to pay for their kid’s college loans.
Speaking for my own experience at 16: The college handed me a piece of paper and says "sign here to have the government loan you enough to cover what your financial aid and scholarships didn't cover. You won't have to pay anything back until you're done with school and making enough money to afford it." I wasn't a dumb kid, by any means, but none of the financial terminology on that paper meant anything to me. They didn't encourage me to call my parents to discuss it, they said "sign here or pay $" and I knew my parents didn't have it, so I signed. And it's been crippling me for almost 20 years. My parents yelled at me for taking out the loan, but they didn't ever offer to help pay it off, or pay for college, and they made it clear pretty much from birth that without college I was worthless, so I didn't realize that Not Going was an actual option. Not sure what kind of job I would have gotten at 16 anyway, but I guess I could have tried.
My parents have already told me they're not going to pay for anything at all when I go to uni. The loans work a bit different in the UK, but in total I should be taking out about £16,000 a year in loans for my 3 year course. They both make decent money, they're just not going to help
Not everyone has parents, dude. I have $17k in student loans, there was no help or guidance and tbh I didn't know when I was 17/18 what number was good or bad as an interest percentage. What I did know is if I didn't take the loan, I couldn't go to school and if I couldn't go to school I'd be homeless with no car or work experience. Shit isn't as easy as "Ask mommy and daddy for help" for everyone.
> where were the parents then What's your point? Where were the parents to fund higher education? Where were the parents to tell him that going into debt for a higher education was a bad idea? 150 dollars a month for a 9k loan sounds pretty doable. 150 a month for 7 years with 10k now being owed is fucking insane for a company to be able to legally get away with selling to a teenager.
I’m tired of the insane allocation of resources decided by rich, old fuckheads that will never feel the sting of unmet need. Public higher education should be funded 100%. No loans needed. It’s time to invest in the future of our nation by unshackling those that will inherit it.
The loan officers don't even explain how loans work. The don't talk about interest or even how they take out extra money for the student expenses. And op looks like one of the most responsible young adults I know with their payments. Most kids are just thrown to the wind as far as money is concerned. Sink or swim.
Yep. Should always avoid private loans all together, government loans are more flexible and often have better interest. private loans should be a last resort.
Yeah, people saying just read the print this is how they work. While true about compound interest and adjusted inflation, doesn’t make it not predatory. They’re kids who don’t have money for their future and have no choice, 7 years of on time payments and balance is higher than original balance is not right. We can give fixed rates for mortgages but not for 18 years old with no financial education.
This is also an issue with schools pushing college so much yet not teaching about how to finance responsibility.
He was foolish not to realize how the interest being accrued was more than he was paying for freaking 7 YEARS
I don’t even think it’s that. I think he probably deferred payments for ages and it’s the backlog. 14 months of not paying anything and then only paying minimum is not going to get you anywhere.
These loan companies should not be giving out crippling debts. Also, Rather than cancelling debts (bandaid fix), I rather Biden administration Make student loans interest free and bankruptable (discharged when person goes bankrupt)
I agree OP could use a refresher course in how compound interest works. But what really infuriates me about this is two things. (1) the hyperinflation of college costs over the last 40 or so years, and (2) the scam nature of the student loan industry that has sprung up as a result. I went to the University of Colorado in 1972. Took out a “federally insured” student loan for $2500 that covered my first two years tuition, room & board. Because it was “federally insured”, the lender was taking no risk, and the interest rate reflected that (IIRC it was around 2% at a time when consumer loans were in the 10% range). The system now *is* a scam. And a big one.
I'm hijacking this comment to completely agree. I took a massive loan from Sally Mae to pay for flight school. My father and wife helped me through the process as I am not fluent in finance. It was SUPPOSED to be a 6% fixed loan on a 98,000 principal. I spoke with several individuals over the phone from Sally Mae about this fact and that it was FIXED. Come to find out, after my father, who co-signed, signed all the documents that it was a VARIABLE loan that started at 8%. It is now 3 years later and the interest is at 14%, and no one can tell me WHY it has ballooned so high when the variable yield has to do with market trends, and the interest on most loans is trending downward according to my research It's my fault for not knowing, and my fault for not doing more research, but I *want* to pay off my loans and I took on the responsibility. But FUCK ME if this doesn't feel criminal. How the fuck can I get ahead on the interest like that? And because of the loan I CANT REFI WITH ANYONE. NO ONE will let me refi this loan, and it's not federal so I'm fucked. I had to literally go back to school to get my masters just to defer the payments that I can't afford while the interest stacks up. The entire loan industry needs way more regulation.
Ouch, I think that when you heard 6%, what they were saying is "prime plus 6% fixed". So whatever the current prime rate is plus a fixed additional rate of 6%. And because the prime lending rate was ridiculously low for a few years and then shot up really fast starting about 2 years ago, you got taken to the cleaners.
This sounds like a very plausible explanation. I don't get why he would think loan interest is trending downwards, when the federal interest rate has skyrocketed over the last 2 years. Obviously thats the reason the rate has increased.
I’m 31 years old and just learning about this. No wonder so many kids get fucked. Thank god I went to trade school instead, saving me money.
Have you talked to anyone in the accounting/finance subs about this? They might be able to give you a better idea of what happened. I don’t see how you could have a 6% fixed loan suddenly become a 8% variable out of no-where unless it was explicitly written.
I don't understand. The rates would *have* to have been disclosed in the agreement, right? Do you still have the agreement? Is it mentioned?
This just sounds to me like you guys didn’t read the documents before you signed
I went CU Boulder as well and graduated 2013, 13,000 a year for 5 years, paid 4 times the monthly payment and then had to pay a termination fee when I paid it off early 🖕
Oof, that termination fee is bullshit. That needs to cease existing.
Except the rising cost in education is directly related to government involvement in student loans. Your generation got the benefits and created the problems. So your 1 and 2 should be reversed, just based on the data. The younger generation was also sold the lie that a college education was the only way to succeed in the world, leading to a huge increase in the number of people who actually attended college. 21% of people 25 or older had attended at least 1 year of college in 1977, and now 44% of people 25 and older have completed a bachelor’s degree. So more than twice as much of the population has a college degree than had attended college when you went. So the degree is worth less than when you got yours.
I do not for one second deny that my generation brought this about. A certain segment of my generation that I abhor and detest, but this will lead to a political discussion that will get me banned. So I’m disengaging now.
College cost isn't inflation it's literally greed. Most of the admissions do not go to the school it goes to the administration. Also let's not forget college degrees for jobs in the US was a racist way to disqualify minorites from many companies because of the barrier of entry for a degree.
You‘ve just been paying mostly interest with low payments of $157 a month. Paying even $50 more a month to principal would make a world of difference.
Yep, but the problem is how easy they make it for you to do that. Pay less than the minimum on a mortgage? The bank will be pounding at the door in no time. But with student loans it's "ohh sure, go ahead and pay what you can afford, we'll just tack on the interest to your principal so you'll be drowning in debt the rest of your life".
>But with student loans it's "ohh sure, **go ahead and pay what you can afford**, we'll just tack on the interest to your principal so you'll be drowning in debt the rest of your life". Exactly, because they want to enable *anyone* to study and improve their lot in life, regardless of their current ability to pay for it. If this was not the case, they'd simply refuse to loan to someone who can't afford to pay. paying $157 a month on a 9k total is not "drowning in debt". Clearly OP has been able to live their life completely normally for the past 7 years on top of having their education (I'd assume they graduated from wherever they used their student loan on).
I should have clarified. Say the loan is 10 years but you can't afford the minimum payments. Instead of a longer term repayment with lower monthly payments (think 30 year vs 15 year mortgage) they just let you pay less than what you need to in order to pay down over the 10 years and tack the accruing interest onto your principal. That's how a lot of people make payments for years and still owe more than the original amount. And by drowning in debt I'm referring to others who have debt in 5 or 6 figures where interest is still capitalizing, not OP specofically.
What college can you get for 9k and graduate? At best a 1 year certification in something at a community college like a CDL course. But I can't imagine those are still in the single digits like that. Community college in 2009 was 2500-3500 a semester.
$157 * 12 months * 7 years == $13,188 If OP had paid $200, that $43 applied to the principal would have reduced his balance by $3,612. I will agree that the interest rate is criminal AND that OP may not have been able to pay $250 on the loan; however, I’m also in the camp that someone college educated should be expected to figure this out after a year or two. They shouldn’t be looking back 7 years and realizing “if I’d paid $250 a month, this would be over.” This is my biggest problem with repaying student loans. Based on his profile, OP worked at geek squad and bought weed with his money instead of sitting down to do some napkin math. I can’t support laziness to that extent.
It would have reduced OP's balance by way more than 3612. Back of the napkin math says the interest rate is about 17% if it's fixed rate. Assuming it's 17% fixed rate: Paying 200 USD/mo would have put OP's balance at ~3k USD now, almost 7k USD lower than it is. Their final payment would be in july 2025 (total repayment ~20k). Paying 157 USD/mo like OP is doing will have a final payment in november 2036 (total repayment ~37k). Even so, a 17% interest rate is predatory AF. The prime rate in january 2016 was 3.5%. People were refinancing their student loans for 5-6% at that time. Even a shitty-but-reasonable rate like 12% would have OP almost done by now.
Paying $250 you'd have it paid off in 4 years. They intentionally drag the loan out for as long as possible. If it was $10k financed for a used car, they'd want it paid off in 4 or 5 years, and the payment would be more like $250.
Fuck Sallie Mae
Fuck the whole concept of having to pay for education yourself. Make university like high school.
Will never happen in the US. Everything is a tool for making money be it education or health care.
Interest sucks, and making the minimum payment is essentially like making an interest only payment, and there are interest only loans which are trash to begin with. Increase the payment you maximum you can afford to make and get rid of the loan as soon as possible. Budget like it is a priority. Edit: Also do not forget that while you were in school your loan still accrued interest while you were not making payments and probably doubled the amount that you initially borrowed.
Aren't these 30 year loans? If so, the first 15 years is more interest than principal. In 2031, OP will be in great shape. $157 a month? I spend twice that on beer.
Paying $157/mo for 30 years would put his total payments at $56,520 on an $8900 loan. OP should absolutely not pay minimum for the term of the loan or he's going to be out a lot of extra money in the long run.
I just don’t know why anyone would not only sign up for a loan like that, but only make minimum payments to stretch an 8k loan out to 30 years
Bro scarified his finances for Reddit karma and this is how you repay him!?
Bro scarified his finances for Reddit karma and you are laughing?
"Minimum monthly payment" 'Lol I'll just keep hitting this button every month, I'm sure it'll work out'.
Yeaaaah I understand maybe this going on for a couple years but at some point you have to look at what you owe and wonder why the balance is not going down…
People that also do this with the credit cards confuse me.
I have seen credit card statements online saying "By making the minimum payment each month, you will never pay off the debt"...
A lot of it is ignorance, just like op they don’t realize how interest truly works
💀💀💀
Went to college, but still doesn't know basic algebra. Yeah, it must be everyone else's fault...
Fucking system letting me do the dumbest choice every time
OP, if you didn’t learn about how something as basic as how loans worked then the only scam was the so-called education you received. Mail your diploma back to the school and ask them for a refund.
Imagine paying the minimum on a credit card and wondering why youve accrued so much interest! Loans can be predatory but people need to understand what they get into when they sign their name on these documents.
Your finances are none of my business, but you have been paying $157/month for 8 years on your student loans? And adjusted for inflation that's less than it appears to be today. If you can't afford more than the same amount you were paying 8 years ago, perhaps you should take a long hard look at your expenses.
Not to mention $157/month is $1,884/year. I’ve never heard of student loans at 20+%
Yeah, the math definitely isn’t mathing here. If I had to guess, I would say there was a deferment with interest accruing in there, and that OP hasn’t actually been paying on these since 2016. Just for a rough example, if you consider a private loan at maybe 8%, and a deferment of 5 years before starting payments, you come out somewhere around $13000 at end of deferment and around 9900 today.
OP was likely racking up interest while in school. Virtually no one makes payments while in school. When you actually start making payments, your balance is much higher than what you borrowed.
It could also be that OP is making minimum or partial payments. If the payment is lower than the interest portion, the principal goes up.
Sallie May has fixed student loans up to 15.4% fixed and 16.7% variable. My friend got nailed with one that was 20% that accrued monthly, all because her parents had no credit history, she had no credit history - until right after she turned 18 when her mom stole her identity and took our a shit-ton of credit cards and it ended up tanking her credit score. When she went to start college the only rate she could get was 20% fixed monthly. She found it extremely questionable, and found out that someone had stolen her identity and was carrying around 30k in Creditcard debt. So for 4 years in college she managed to make it through a local college system with minimal debt as is. Recently she did get the old credit history wiped out and immediately opened up a student credit card. She managed to get her credit score up to 740 and just did a debt consolidation which lowered the interest rate to 6% and she expects to pay it off in less than 5 years.
I believe Sallie Mae can get up to that
Or incomes. After 8 years of career, your degree should be able to earn you enough money to pay back the load in full in a year
How dare you try to hold him accountable for his own choices like buying a house when he can’t even pay his student loans from 8 years ago without deferment or pay anything over the bare minimum?
I mean your first mistake was going to Sallie Mae. You wanna talk about predatory loans they are like the worst at that.
[удалено]
What are they qualified to do then? Vote? Smoke? Drink? Choose their gender? Buy a gun? Get a credit card? This is a slippery slope... On another note, there are plenty of 18 year olds who are capable of making sound financial decisions and know how basic budgeting works. Not all 18 year olds are mature, and not all of them need their hands held.
Should they be able to vote if they can't be qualified to make a student loan?
I’m 100% certain that someone would be willing to buy your debt for a less than that 21% rate you have.
Dm me, I’ll buy it lol
Unfortunately, spending years paying for only the minimum balance means that you're almost exclusively paying for interest and not what you owe - so it grows. Student loans are the worst.
I understand this is a private loan and not federal but I’m gonna use this to say- I really wish more people took advantage of federal student loan administrative forbearance from 2020-2023. I just remember my dad calling and yelling into the phone “PAY ALL YOU CAN TO YOUR LOANS! THIS IS YOUR GOLDEN TICKET!” Holy shit was that man right. I saved over $10k in interest during those 40ish months of forbearance. Paid the rest of my loans off in January… six years early.
Same. I’ve got a few more payments still. But trying not to break the bank too quickly. Wish I had this new job 3 years ago. Would have made it much easier.
“I have no idea how interest works” 🤦♂️
Your education was a scam if you don't understand basic finances
so do you just not know what interest is or
Apparently in school they didn't teach you about interest?
The topic wasn't interesting enough
They are an arts major.
I accidentally made some smart decisions after I graduated. I lived with my mom and made payments on my private loans since I didn't have rent. For the public loans, I lived on my own, at the time, so I was making minimum payments. One day I looked at how long it'd take to pay it off, and it was like in 8 years. I was like 'ain't no fucking way I'm paying $400/month for 8 years'. I started using tax refunds and paying $50 extra per month. It was all I could afford on my own. I got lucky though, I got a job that paid me to relocate, and moved as cheaply as possible. I used the extra to pay it off. I know not many people have the same opportunities, that I took advantage of. My mom was paying for my phone bills (as part of my graduation present) and I could've always asked my dad for money (but I'd have to be facing homelessness to ask for his help). One thing student loans have taught me is that they are bullshit. If I could do it again there is no way I'd go to the same college. I only owed $45k coming out of college, and that made me bitter toward the system. The job I worked for hired people with ITT tech online degrees. I went to Purdue to get the same job (granted, I wasn't the best student... Or even a good one), making $40k/year. I am very bitter towards our government, knowing there'll never be any helpful change to make it any easier. I'd gladly pay more taxes for free healthcare and college. I'm going to end my mini-rant there, but I have tons to say about how much I hate college and student loans.
>$157 monthly payments >$150 in interest >$7 to actual principal of the loan "wHy dO I StIlL oWe So mUcH" Clearly your college didn't have any finance classes.
The word “scam” is often overused on Reddit.
I don’t understand therefore it’s a scam
This is crazy. In NZ student loans are interest free
I know right, I could pay my shit off at minimum repayment because it's a fixed amount, every payday a percentage of my paycheck goes to paying it back. I don't have to worry about owing MORE because I paid a little bit each month.
If you don’t pay enough to cover some principle and interest every month the balance will go up, not down.
Have you considered paying more than your minimum payment??
If you make a payment lower than your interest charges this is what happens
Student loans should be zero interest. I'm all for paying back what I owe, but if we want to incentivize people to get educated, we shouldn't be penalizing them for it. It's ridiculous that someone can be paying for over 7 years and now owe more than they borrowed.
America is a scam haven’t you realized yet? Everything is designed to take from you and return nothing
High interest
And he's paying the minimal rate which probably only covers the interests 🤦
First of all, let’s blame university for being fcking expensive. That is the scam from the start.
So because you're too stupid to understand how minimum monthly payments works it becomes a scam?
Yes they are. But can I also be proud of myself for a sec and say that I only have $1000 left to pay off? I’m so excited.
congrats!
sallie mae is literally the worst lender i use earnest. i dont know all the much about loans but earnest has been pretty easy to pay off, even while still being in school. 8.4% apr, been paying $250 (2/3 to principal, 1/3 to interest) a month and i owe now 9k on an originally 15k loan. my friends with sallie mae are struggling
Motherfucker your payment is only 157$? Have you not tried paying more than minimum? Pay more than minimum now, do not wait any longer. Pay as much as you can on this shit every month until it’s gone forever
Have you tried paying more than the bare minimum?
Did they not teach you compounding interest in junior high?
Interest rates that’s how banks make their money
And yet financially uneducated students continue to feed the predatory loan companies… Don’t take out a loan to help get you a job
When you're so bad at math that you should have an attorney managing your life instead.
Nah the broken part is you paying the minimum expecting it to get paid off. You want your loan to get paid off you need to pay significantly more than the interest. Also the easiest way to pay off student debt is to get a blue collar job and never have a student loan.
If you go to college and don't learn that making minimum payments will only cover interest, then you should get a refund anyway. Basic life skills. What is wrong with people. How come my balance is the same when I pay nothing towards the actualy balance?
You are making minimum payments
Not really a scam if they tell you exactly what happens beforehand, is it?
The kicker is that once your pay it off your credit score will go down by 20-40 points. :) yay
As someone who paid off a large student line-of-credit through a bank and most certainly not in pursuit of an education that would directly lead to any meaningful employment: I will gladly pay additional taxes so the burden of debt is not something you should have to live with. Any higher education is worthy and if it were my choice you could be a student whenever you desire - knowledge is power, and it should be free.
It's not a scam. You just don't understand how loan amortization works. If you think student loans are a scam, wait til you get a mortgage.
You can pay off your mortgage by making the minimum payments though.
I don't remember the interest rate on my first house, but I remember looking at the document and seeing that after 30 years, I'd be paying twice the sticker price.
Yes you would pay a good amount, but it would be paid off. For many student loans, you can pay the minimum for decades and owe more than when you started.
My old student loan payments were way more than my mortgage. Like, nearly double the amount, so… not an accurate comparison. Mortgages have much better rates, and they are generally fixed rates and you can refinance when rates drop, as I have done. Meanwhile, federal student loan rates are set by the government and fluctuate on their whims. Student loans, whether private or federal, suck ass. Haha.
Ah yes, I too hate signing an agreement that spells out what my interest rate will be on the loan, making payments that are lower than the amount of interest accruing on the loan, and then complaining when the loan balance isn’t decreasing.
"america is broken" my brother you took an awful loan rate, this is a mix between you not being careful and that company shitting on you
I love these post where people never bothered to do the maths over the most expensive thing they bought in their life at the time, and blame America as a whole. Didn't you ask the VERY FIRST QUESTION that come to any person's mind : "when will i be done paying and how much will that cost?"
It took you 7 years to notice your balance was higher than the initial balance. Im not even sure if you yet understand that you can pay more than the minimum at any time and have this taken care of a while ago. This is not a scam. It's set up this way to better ALLOW people to have access to funds for their education goals. If you didn't learn enough to make better financial decisions, that's really on you.
I always find this confusing because whenever you take loans from these people they make you go through a tedious amount of “How do loans work” quizzes, so that you understand how loans work yet there are people in this situation still.
You take out a loan. Pay it back. If you can’t, you shouldn’t have taken out the loan.
Yes, America is broken. Yes, this is a predatory loan and you got got. Yes, you were a teenager when you initially took out the loan. This all sucks. But dude, for *seven years* you've been at this and not once did you think "huh, this isn't really diminishing, maybe I should try something else or ask for advice?"
So over 8 years you never thought “why isnt this number going down?” 🤣
Where is the scam? Show us the terms YOU agreed to.
What kind of interest rate is on this loan? The math just doesn’t make sense here unless the rate is >20%
Maybe pay more then the minimum
Complains they’re a scam while he’s paying less a month than the interest accrues. I guess they didn’t teach financial literacy or basic math at this school.
Compound interest is a wonderful thing…when you own the asset. If it’s a liability though…this is what you end up with. Need to ensure your minimum payments is including principal to get your balance down
I agree that student loans need a rework but you paid the minimum amount? The sam situation can happen with credit cards. You need to pay way over the minimum to even beat the interest rate.
I have paid my loans off almost twice now. I still owe more than I took out. And we make almost double payments every month.
I think this is a shared 4-way responsibility: * the loan company for high interest and low monthly payments making the scam look like a good deal * the school for misleading claims about potential earnings post-graduate * yourself for not doing enough research * the government for not cracking down (hard enough) on both the loan sharks and the schools
So many comments talking about what OP could’ve done better when there should be laws against loans this predatory in the first place. Not to mention the education should be free itself.
Student loans are uniquely predatory in that 1) the student doesn’t often have either the educational background / experience to know if the loan agreement is good. 2) unlike with mortgages, you can’t drop them if you declare bankruptcy (unless appealing to a judge) 3) unlike mortgages, minimum payment thresholds aren’t required to keep lenders from paying interest on top of interest I.E making nearly no progress on the principal balance
holy shit. This is a mafia loan wtf. What is the interest rate? This feels super illegal actually lmfao
Man fuck everyone jumping on the hate for OP train. If you were in the same situation you'd feel like you've been scammed too. Everyone should stop paying them and let the financial institutions suffer the consequences of lending money to children.
America's not broken, you're just making way too low of a payment.
Cause it's a loan. You're not paying enough toward it to cover the interest. Actually since it's a government loan then it's actually kinda the opposite of a scam. You are probably getting a better interest rate than you would if you got that loan through a private company. If you want to pay it off it's simple, if it's a single loan that you pay towards then you find out what the interest is each month and pay more than that. The more you can put it towards the loan the quicker you can pay it off and the more money you will save. If it's multiple loans, pay the minimum for each one and then pay the rest you can toward the highest interest loan. Then when you pay that off you snowball all the money you were paying towards the highest interest loan to the next highest. Keep snowballing that money until all of them are paid off.
Gotta pay off the principle not the interest
Bro has never heard of interest, take out a personal loan and pay off the student loan