a thoughtful web.
Share good ideas and conversation.   Login or Take a Tour!
comment by PTR
PTR  ·  799 days ago  ·  link  ·    ·  parent  ·  post: Student Loan Debt is Crushing Millennials

Source? I think your math's wrong. Or maybe mine is.

With 4% interest (closer to the subsidized rate for 2022 grads these days) and no payments towards principle or interest at all for 20 years, the loan doubles but interest accumulation per year is just shy of $3500 at year 20. Not easy to make on $15k/year, but no one's making it 20 years without intervention. Wage garnishments kick in about a year and a half after default notice and a collections referral (interest accumulation per year at around $1.6k, manageable). I have four friends in this situation right now.

A collections agency will take up to 15% of your income to pay down the debt. At minimum wage, that more than covers interest with a little to spare for principle, so it's paid down as long as the debtor works somewhere - APRs are just so low. And you'll live, just with roommates and side gigs mentioned above.

It's a slow bleed, not exsanguination. They need the debtor livestock to live.

ThurberMingus  ·  799 days ago  ·  link  ·  

Ouch yeah I was way off. I threw it in a spreadsheet and compounded monthly at the annual rate. Minimum payment is about 220, not 1200.