Perspectives of Student Loan Debt
Financial Management

Perspectives of Student Loan Debt

had this old picture spreading amongst my social media circle recently with the hashtag #occupystudentdebt. As you can see, it shows a lady who writes down that she initially borrowed $26,400 for school. Over the past twenty three years, she has paid back $32,700 as the interest rates on the loan has still left her with a debt of $45,276.63.

At first glance it would seem pretty ridiculous as to me it’s almost like people are being setup to become slaves to their debt. Sure enough, that’s the majority of the reactions I saw. There were then skeptics who raised the point on how this lady probably just paid the minimum each year where as a result she deserves the debt for such poor financial decisions. Thinking about the math, if she paid $32,700 in twenty three years that means each year she was paying $1421.74 a year or about $118.48 a month towards her student loan. That doesn’t sound too good effort wise when you look at it that way.

I don’t know the exact interest rate numbers for this person or if it is even real, but I personally feel these situations come down to financial literacy in many ways. It feels like many people are sold on the idea that a student loan is similar to how many credit card companies sell the idea of credit to consumers. Basically, there is no urgency to pay that item back right away, but it will get you what you want now. Next thing you know, people are paying the minimums where the new balance is higher than the original cost.

Of course there are a lot of factors such as maybe one can’t find a job after graduation. I think everyone needs to realize though that there are usually no guarantees of financial security after school where it’s probably wiser to chip away that debt while you are in school at the same time. Or like what others do, they work a job to get the money first and then go to school. It’s an option of course, but either way you shouldn’t ever be paying just the minimums if you borrow money. That’s how a lot of organizations make money off of you.

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