Student Loans are a Racket

Originally published on November 27, 2019.

Navient (as in the student loan company) has asked me if I want to share my “success story” with them.

I’m 49 years old. I graduated from college in 1994, when I was 24 years old. When I graduated, the loans were around $26-27,000. When Sallie Mae was transitioned to Navient in 2002, the loans were… over $27,000. Today, TWENTY FIVE YEARS AFTER GRADUATION… they’re down to a little over $18k. I pay 6.625% interest, which means out of every monthly payment ($670, split into $335 and paid twice a month), $95-$105 goes to interest, and does not reduce the balance of the loan at all.

It has only been in the last year that I’ve been able to pay it down at all. The last four payments of 2017 were interest only. In fact, every 2017 payment were interest only or under $20 off the principle. Two payments in 2016 reduced the principle by more than $30. And we’ve been solidly upper-middle class. That’s defined as two-thirds to double the national median after incomes were adjusted for household size. We’re upper class now. I’m grateful for the opportunities I’ve been able to get, but it’s not like I was working for minimum wage before.

And even if I was, shouldn’t we be enabling minimum wage earners to go to college, if they want, anyway?

Student loans are a racket, and don’t let anyone tell you any different.

They’re designed to keep you paying for decades, while salaries haven’t even kept up with the cost of living, and job opportunities have dropped.

Don’t @ me about how I was “foolish” with my money, or my priorities weren’t straight. I wasn’t foolish with my money, not even before I married Laura , and she’s far more economically minded than I am. We simply choose to eat and not freeze to death before paying back predatory loan companies.

I’d LOVE to tell my Navient “success story”. But they’re sure as heck not going to want to listen.