Thursday, July 7, 2022

The logic behind making student loan payments

The general consensus among recent college graduates is that it is stupid to pay-down student loans because Biden is going to forgive them.

My thoughts take a different track.

First of all, I don't know that Biden has the authority to "forgive" student loans. I believe that would trigger government counter-party agreements that would force the government to make the loaners "whole". That strikes me as a budget issue which is supposed to come from Congress.

The other aspect is that I hear $10k as the amount Biden proposes forgiving. If the average loan for a recent graduate is roughly $30k, then that still leaves $20k to pay down.

If the graduate waits for the interest and mandatory payments to kick in, then at 6% the $30k generates $150 a month and a typical, $200/month payment only only sends $50 to pay-down the principal.

IF the graduate could find an investment that guaranteed more than a 6% return then they could park the money there, but absent that, it makes sense to 

A.) Not carry a credit card balance

B.) Make the monthly student loan payment even if they believe Biden will deliver on the $10k forgiveness.


  1. "First of all, I don't know that Biden has the authority to "forgive" student loans"
    Government doesn't have the authority to steal a Presidential election either.....
    Because they can't doesn't mean they won't

  2. "Avoid all evil". Like dishonesty? Like not keeping ones word? I think the primary reason to pay back a loan is to keep ones word. But what do I know, I'm just a racist straight honest white male.

    1. I found out I was on the hook for about $20k because it was not clear that "Parent Plus" loans meant they were in my name.

      I cashed out $20k out of my 401-k and reduced the amount bequeathed to that child by a like amount.

      I have no faith in any politician "forgiving" student debt. I look at them and see "Dick-teases".

  3. Paid a huge amount on my kids student loans-wife's entire salary. Where's my refund if they do this?

  4. This consensus sounds like propaganda since the election season is in and the news sites show it. Democrats think $10,000 is just shameless vote buying from what I have read. $10,000 isn't going dent student loans. Ex: Tuition to Houston Community College is around $4,000, not including books, living expenses, etc; but after two years of that, and another two years at a four year institution; assuming you are a full-time student, its still going to come out to around $60,000+. If you are having to work, manage kids, and juggle your classes, expect a 4yr to take 6+ years and more money. Campuses are built like resorts to get people to stay longer and spend more; it's a business and all they sell is a piece of paper and the "college experience"; the knowledge is free on

    Part of the issue is that everything has become hyper polarized that people have to fully support the left or the right and no other; rather than what makes sense. This topic comes up countless times and I've pretty much exhausted myself with providing my solution to the student debt crisis but I'll give it a summarized go.

    First, these loans need to be legislated out of existence by congress, counter-party / securities blocked, and any future "college loans" should be flat fee / "Kosher" loans. There are a lot of people that have already paid back their loans several times over but still owe more than they ever borrowed. People that can show documentation that they have paid back the principle should have their loans wiped out. Wiped out means we DO NOT print more FIAT nor stick it to the tax payers, and since the banks already got their money back; the remaining interest is canceled.

    For those that haven't paid the principle back, freeze the usury interest and so the borrowers can pay the principle loan back, wipe out the interest. People need to repay their debts and the banks also need to be slapped down and reminded that abusing the People of the United States won't be tolerated. A nation of debt slaves is a national security risk and detrimental to the country's health. People might actually start having kids again. Usury and rent seeking behavior was illegal in the ancient world for good reasons; likewise, we were warned against accepting a central bank.

    Half the country doesn't want universal college access like several of the European models but that same half of the country can't fall over themselves fast enough to pay for my education, all because I ran around with a rifle in a country I had no business being in the first place. It's so expensive now that even the GI bill has to be extended and supplemented for 4-6 year programs.

    Another facet is that we have too many different peoples and cultures in this country and it would be a lot more palatable if the host people knew their resources were going to the benefit of their own and not a dozen others. Yes, I'm racist and tribal, it's natural to humans and I'm tired of pretending that it's a bad thing. I didn't want a universal college system until I thought of it as benefiting MY people; but we need to stop the invasion before that can happen. The current systems are utterly broken and it's insanity to keep using something that isn't working while hoping the outcome will be different.

    A note on taxes and singlepayer: You already pay for them in the United States but don't get to enjoy them. The federal gov squanders our blood and treasure on regime change, foreign aid, and contractors; rather than beautiful infrastructure, broadband access, enforcement of law and order, and healthcare. They would rather give your labor to illegals than to your own people. Don't take this as anti-military, we have peace through violent force and need a strong military but it shouldn't be regime changing the world; protecting the shipping lanes and strategic allies is enough.

    This and related topics could have books written on them but this summery will have to do.
    Ten percent for the big guy.

  5. I believe that the suspension right now includes freezing the interest. So not paying it while they defer it for you means you aren't incurring additional interest. My son is holding on to his cash until either he has to pay it or it's forgiven. There's a whole lot of crazy that's going to happen between now and November so you never know. Either way he's put aside almost all of what he owes.


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