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this post was submitted on 01 May 2024
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A Boring Dystopia
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It’s not the original loan amount. The trap in student loans is the initial deferment when they gain interest while you aren’t paying and taking classes for 4-6 years. One of my loans was 14k and when I graduated had more than doubled. By the time it was paid off in my 30s the total sum I had paid in to interest was over 100k. And I was paying on an accelerated cycle for the last 5 or so years to kill it faster.
I had discovered with one of my servicers that they were applying my overpayment only to interest as well so the principal would not go down and keep generating new interest. This is actually illegal now thankfully
Wow Americans start accruing interest on student loans while you're still in school?? That's crazy.
Yeah. There are two kinds of loan as part of the federal loan program. Subsidized and unsubsidized. You get granted a pool of loans from both kinds when you apply for aid. The unsubsidized loans accrue interest the whole time. The subsidized loans are equally horrifying mostly because the interest is accruing, it’s just being paid for by the taxpayers on your behalf. Neither public loan actually accrues no interest while you are in school
The insidious part is this is all sold to you at 16-18 by your own student advisors and the university as “financial aid”