So We've got a Break from these Fucking Miserable Student Loans

COVID-19 changed everything. It shed light on the concept that the current capitalist system is a predatory one. Big banks get bailed out. Airlines get a free handout and next to zero percent loans. They buy back millions of stock shares. Meanwhile, I scroll horrifyingly through r/studentloans, Reddit’s support group for the indebted nation. Redditers try and help one another by suggesting effective ways to pay off loans. Should I use the snowball method or go with avalanche? Which one will help me become debt free faster? The real question we should be asking: Why do corporations with billions in cash get rates of 2% while we’re forced into massive debt with loans over 6 fucking percent?

WE’VE GOT TO DO SOMETHING.

Right now, federal loans from www.fedloan.gov are at 0% interest and payments have been suspended until October 2020. Whose idea was it to set our interest rates so high, especially with college graduates earning an average of under $50,000. Ah, yeah, it’s your first job out of school. Of course you’ve got to climb your way up, but when you earn a net income of under $3,200, your $500 monthly loan payment decimates any hope of savings and that’s if you have a job. Those of us who studied psychology likely ended up making under $40,000. I made about $36,000 out of college, but back then, my rent was less than $500 in a major city.

My debt really blew up in graduate school. Even with my 40% scholarship, my tuition was still $21,000 per year. My room and board was supported by blowing through my savings. Now, my loans are at a 5.9% interest rate. When I took them out at age 22, I thought I was going to pay back 5.9% of $45,000. That’s not how compounding interest works. I’ve seen horror stories of Reddit where people pay as high as 12% - 14%. A goddamn mortgage is 3% - 4% right now. It’s obvious a mortgage is good to have as you’re holding an investment meanwhile student loans distance you from that milestone. Instead of lifting you up, politicians are old and out of touch and they would rather keep you complacent in their familiar world order. I’ve paid $22,000 toward my $45,000 loans, and the principle balance is currently at $34,230.

I asked a constituent about his plans for paying back his student loans during the coronavirus outbreak. He planned to continue payments, but this is what he had to say. “Fucking Boomers. It was fucking sharecropping: You either have no upward mobility or go into exorbitant debt”.

Maybe your parents paid for your college and maybe even your graduate school. That’s great! You don’t have to deal with the burden of debt and I’m glad you were able to get a good education. That’s not the case for most Americans. The average college graduate has $34,000 in debt with an interest rate of 4.53% - 7.08%. Graduate loans rank out at 6.08%.

On my taxes this year, I received $400 back on $2,100 worth of interest. It’s like breaking something at the store and the friendly shopkeeper generously charges you 80% of the cost. You’re still fucked and you can say goodbye to owning a house anytime soon. Keep in mind that Congress is responsible for setting the interest rates each year for student loans and you voted or did not vote. Your elected officials have betrayed you from the start. As of 2019 – 2020, undergraduate loans vary from 4.53% - 7.08%. There are even private loans with interest rates double that for “high-risk” students.

I was so busy ranting there I forgot to include my own plan

Student loans are on hold at 0% interest until October. That means you don’t owe anything until 5 months from now. So, what should you do? If you’ve got private loans, disregard my advice, and contact your lender. All of mine are federal. Here’s what I’m going to do. I’m going to invest and pay off other debts. Since the quarantine began, I’ve been able to save a large portion of my salary with a side effect of boredom. I’m not a financial adviser in any way, so please do your research before investing. As much as I love my blog, it doesn’t make me much money! Financial literacy is a creative and lucrative hobby used to build passive income.

Once my bank account hit $10,000, I started moving money over into savings through an online savings account. With the rest of the money, I automatically invest in M1 Finance. M1 is one of the brokerage accounts I use. It allows you to design a “stock pie” complete with different funds, money market accounts, and fractional shares of large stocks. I started moving my money over to fairly safe ETFs ($VYM/$VYMI/$VOO). I love M1 Finance! But, you don’t want to have all of your money invested in the market. I also use Wealthsimple as a high interest savings account. In five months’ time, I’ll review my investments and savings. If it doesn’t look like student loans are going to be forgiven/reduced any time soon, I’ll make a lump sum payment. It’s not how much you make, but how much you spend.

LAMBAST YOUR LEADERS

King David is all in favor of eliminating student loans entirely and sending the Federal Government the tab, but that’s unlikely to happen. We’ve been thrown into modern day sharecropping. The only way to improve your education is to suffer in debt. American students have been convinced by the Boomer generation that they must go to college to have any success in life meanwhile racking up credit card debt while struggling to pay unforgiving monthly loan payments. Sometimes, I wonder if it’s even worth it. Shit, I’m surprised no one’s shot up the Fedloan building or tried to kill the fiend, Betsy DeVos, that donated $115,000 to Donald Trump and another 8.3 million toward the Republican party. She was appointed to Secretary of Education through her bribery and deemed, “Czar of Student Misery”.

Try voting for candidates that represent you and are willing to pass legislation to help alleviate your debt. A few senators, including Bernie Sanders and Elizabeth Warren have put forth plans to eliminate student debt. Former Vice President Joe Biden has suggested $10,000 of debt forgiveness for undergraduate loans while Kamala Harris has proposed $20,000. While we pray that karma shoves Betsy DeVos off a cliff and the rest of Congress comes to their senses, we’ll have to make do with the limited funds we’ve got. Save all you can.

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Sources:

https://www.debt.org/students/financial-aid-process/interest-rates/ 

https://www.rollingstone.com/politics/politics-features/betsy-devos-just-bought-herself-a-trump-cabinet-position-193072/

https://www.cnbc.com/2019/02/15/college-grads-expect-to-earn-60000-in-their-first-job----few-do.html

https://www.forbes.com/sites/zackfriedman/2020/04/09/student-loans-forgiveness-biden/#6473855f7e39

https://www.marketwatch.com/story/kamala-harris-proposes-cancelling-20000-in-student-debt-for-these-low-income-borrowers-unleashing-backlash-on-twitter-2019-07-29