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Americans, how would you feel about making student loans completely illegal? (lemmy.world)

submitted 11 months ago by [email protected] to c/[email protected]

134 comments fedilink hide all child comments

This would save young Americans from going into crippling debt, but it would also make a university degree completely unaffordable for most. However, in the age of the Internet, that doesn't mean they couldn't get an education.

Consider the long term impact of this. There are a lot of different ways such a situation could go, for better and for worse.

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[–] [email protected] 5 points 11 months ago (2 children)

Why make it illegal? Why not offer only federal loans?

How about:

20 year loan, 4.125% fixed rate 30 year loan, 4.375% fixed rate

No early repayment penalties and maybe interest returned incentives for full repayment return before term at certain benchmarks.

The average debt for a 4-year Bachelor's degree is $34,700. At the end of 20 years the total repayment amount would be $36,131.375, 30 years would be $36,218.125.

Looks good to me.

[–] [email protected] 7 points 11 months ago (1 children)

Why not make it free? At the end of the education cycle the student will get a job and start paying taxes. Isn't that what society needs? Having educated people to do various jobs. Why putting that behind a crazy paywall?

[–] [email protected] 1 points 11 months ago

I’d be in favor of that too. My point was to highlight that it’s not the loans themselves that are the problem.

[–] [email protected] 4 points 11 months ago (1 children)

Maybe my understanding of the wording is wrong, but I think you assume a total return of investment of 4.125% and 4.375%. Hence, your total payments correspond to fixed rates of less than 0.5% per year.

For a fixed rate of 4.125% (per year), I calculate a total repayment of $51,016.80, over 20 years.

[–] [email protected] 2 points 11 months ago

Sorry, I wasn’t clear. Those aren’t APRs, they are the fixed loan rates. Whatever amount is borrowed is repaid plus 4.125% or 4.375% interest depending on the term selected.

It’s like a reverse bond. The government has established that those rates are a fair return on money they “borrow” from citizens in bonds, it seems fair to give the same terms in the other direction.