A Boring Dystopia

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Millennials are watching monthly student loan payments skyrocket from $500 to $5000 under Trump: This will ‘crash the economy’ (fortune.com)

submitted 3 days ago by return2ozma to c/aboringdystopia

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[–] LovableSidekick 16 points 3 days ago* (last edited 3 days ago) (5 children)

It says "Trump’s changes to income-driven repayment plans."

I don't get it - aren't student loans fixed amounts, with monthly payments calculated to pay off the loan after a certain amount of time? How can they just raise the payments?

Not much detail in the article but it does mention Biden's student debt forgiveness plan being blocked and Trump pausing applications for some income-dependent payment thing. Are we seeing people whose payments would have been reduced by either of those suddenly not having them available anymore?

[–] IMALlama 12 points 3 days ago (7 children)

My mom qualified for, and received, federal student loan forgiveness. Yes, she had to make payments and work in a qualifying job for 10 years but due to her low income the payment amount was adjusted down.

Unless you're in a position that qualifies for loan forgiveness, and you trust that forgiveness will be there when you qualify, income based payment rates are not a good idea. The total amount owed by my mom actually grew over the years because the amount she was paying was less than the amount of interest charged. For a bit when she was 8 years in she had a scare that she wouldn't qualify and was shocked to find this out, despite saying "I've paid thousands!!!".

Your average American isn't very financially literat, or lives in the land of denial, which makes them easy to take advantage of.

[–] [email protected] 6 points 2 days ago

They've basically removed all forgiveness options. Were you on year 9 of 10 working towards PSLF? Did you plan your life around it? Whelp. Enjoy the rug pull.

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[–] [email protected] 7 points 3 days ago

The US has income based repayment plans for all federally guaranteed loans. By removing or changing the limits in the formula, which is likely what Trump did, people that were paying $50/mo might have to pay market rates for their repayment which is unaffordable to pretty much everyone.

With ibr your interest tends to not increase despite having a much longer repayment time, allowing you to, you know, live and pay your student loans instead of having to choose in most cases.

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[–] El_Azulito 9 points 3 days ago (10 children)

$5000? …A month? A sudden rate increase 10 times the agreed amount? This smells like rage bait. We are not in post-World War I, Germany, yet.