If you get stuck paying interest too, it gets out of hand quick. It only takes 3% interest on 40k over 20 years to eat all of full time minimum wage.But ya don't need a fancy corporate desk job to pay down $40k in 20 years. Garnished Starbucks paychecks will do just fine too.
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.
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.