The interest all together doesn’t stop accruing but I think the parent commenter was trying to say that the interest will no longer accrue for the portion you’ve paid off. (The same as any other loan) So, if you continue to make your payments, you’re not getting extra screwed because of these shenanigans. No more than you’ve already been screwed at least.
Or is there something unique about this that is preventing people from making payments?
Most of these loans are interest paying first. Which means the principle (which the interest is being calculated from) doesn’t go down. No other major loan is this fucked.
You get a car loan or mortgage, it’s set up so that you pay it off in X number years.
Good luck finding a student loan that you could do that with, especially when 75+% of your income goes to rent.
Isn’t that how all loans work though? It’s just that the lenders insist I pay enough to cover the interest and some principal, otherwise I’ll never pay it off. If I made a payment for a car loan and it wasn’t enough to cover the interest, my principal would never go down (in fact it’d go up if I didn’t cover the interest). I can actually get an interest only home loan (or at least you used to be able to) but I think those are insane. The difference with car and house loans is if you miss enough payments they’ll come take whatever collateral you have. School loans are a bit different in that there’s no collateral for them to collect
I’m not arguing that the situation isn’t fucked. It is. School is way too expensive for the value you get. People who haven’t been paying these loans for the last decade also probably owe way more than they originally took out and you can’t default on them… but the fact that they’re earning interest isn’t any different than any other loan.
The biggest differences are that the interest rate is so jacked up, there’s no actual end date for the loan, and there’s little regard to the person’s ability to pay the loan back when getting it.
They’re more akin to sub prime mortgages than regular mortgages or auto loans in that last respect which were insanely predatory
Yeah I remember getting calls for my student loans asking me to consolidate my federally backed loans and claiming I was going to save a bunch of money. In reality they were lowering my monthly payment but at a higher rate and with a longer term, which would have caused me to spend a significant amount more in the long term . Bunch of scams that should have never been legal. Looking at the source, it looks like consolidated loans for folks who owe more than when they started are covered as part of the forgiveness. Hopefully that goes through someday.
The federally backed ones I remember having good to reasonable interest rates (looking at historicals they were pretty low most years) and being much lower than I could get anywhere else.
I’d love to see higher education being affordable for everyone. (If not free)
I’ve been paying on it for 12 years. I have paid over $20,000 to remove roughly $5,000 in principle. Most of the progress I made was from the 0% interest freeze during COVID. I will be in debt for the rest of my life unless we have some reform or I get a lucky windfall. Most student loan borrowers are in a similar, if not worse situation.
People who are against student loan reform have absolutely no idea how predatory and broken the system currently is.
If you pay down the debt you took, it will stop acrewing interest.
The interest doesn’t stop accruing (that’s how it’s spelled) just because you make payments. Go gargle Trump’s balls some more.
The interest all together doesn’t stop accruing but I think the parent commenter was trying to say that the interest will no longer accrue for the portion you’ve paid off. (The same as any other loan) So, if you continue to make your payments, you’re not getting extra screwed because of these shenanigans. No more than you’ve already been screwed at least.
Or is there something unique about this that is preventing people from making payments?
Most of these loans are interest paying first. Which means the principle (which the interest is being calculated from) doesn’t go down. No other major loan is this fucked.
You get a car loan or mortgage, it’s set up so that you pay it off in X number years.
Good luck finding a student loan that you could do that with, especially when 75+% of your income goes to rent.
Isn’t that how all loans work though? It’s just that the lenders insist I pay enough to cover the interest and some principal, otherwise I’ll never pay it off. If I made a payment for a car loan and it wasn’t enough to cover the interest, my principal would never go down (in fact it’d go up if I didn’t cover the interest). I can actually get an interest only home loan (or at least you used to be able to) but I think those are insane. The difference with car and house loans is if you miss enough payments they’ll come take whatever collateral you have. School loans are a bit different in that there’s no collateral for them to collect
I’m not arguing that the situation isn’t fucked. It is. School is way too expensive for the value you get. People who haven’t been paying these loans for the last decade also probably owe way more than they originally took out and you can’t default on them… but the fact that they’re earning interest isn’t any different than any other loan.
The biggest differences are that the interest rate is so jacked up, there’s no actual end date for the loan, and there’s little regard to the person’s ability to pay the loan back when getting it.
They’re more akin to sub prime mortgages than regular mortgages or auto loans in that last respect which were insanely predatory
Yeah I remember getting calls for my student loans asking me to consolidate my federally backed loans and claiming I was going to save a bunch of money. In reality they were lowering my monthly payment but at a higher rate and with a longer term, which would have caused me to spend a significant amount more in the long term . Bunch of scams that should have never been legal. Looking at the source, it looks like consolidated loans for folks who owe more than when they started are covered as part of the forgiveness. Hopefully that goes through someday.
The federally backed ones I remember having good to reasonable interest rates (looking at historicals they were pretty low most years) and being much lower than I could get anywhere else.
I’d love to see higher education being affordable for everyone. (If not free)
I’ve been paying on it for 12 years. I have paid over $20,000 to remove roughly $5,000 in principle. Most of the progress I made was from the 0% interest freeze during COVID. I will be in debt for the rest of my life unless we have some reform or I get a lucky windfall. Most student loan borrowers are in a similar, if not worse situation.
People who are against student loan reform have absolutely no idea how predatory and broken the system currently is.
I’m 44 and still have one student loan left. Wife and 2 kids, and yet.
$20,000 over 12 years - you’re paying an average of $140/mo?
$300-500 on average. There’s been a couple of pauses for returning to school, the COVID pause, and IDR fluctuations