Millennials are watching monthly student loan payments skyrocket from $500 to $5000 under Trump: This will ‘crash the economy’
Millennials are watching monthly student loan payments skyrocket from $500 to $5000 under Trump: This will ‘crash the economy’
This will 'crash the economy,’ one borrower has warned.
Paywall removed https://archive.is/cHSpA
I'm so glad that I got a surprise letter in January of 2024 stating that the Biden SAVE program had forgiven my entire $320,000 worth of student loans. I had originally borrowed $150k.
Wait, was that all fucking interest???
Also for 150k you better be a fucking doctor, mate.
This isn't uncommon, there are deferral programs for student loans but these typically come with compounding interest (basically, your payments are covered each month by an additional loan which gets added to the principle).
Crashing the stock market may be the plan here. Follow me on this ...
Crashing the market and removing 20 to 30 percent of value.
Then at the low point invest heavily into the DOW.
Now support the market and get it back to previous levels.
Fucking rich fucks just made 30% in 1 to 2 years on that investment.
Hey now you're forgetting that they're also going short on everything and making money on the fucking way down too!
Crashing the economy is the point, isn't it. Every crash the richest few scoop up the assets and the peasants (most of Americans) settle for working for whatever scraps they can manage.
I'd replace collecting food stamps for collecting heads.
What is the economy and the stock market except a perpetual bubble built on debt, as we lower rates and do QE to encourage people to borrow, in order to derive consumption via the wealth effect created by the cantillon effect?
The last crisis the housing bubble was created because housing was useful as a liquidity sponge, as we can gatekeep an inelastic good behind a wall of debt to create a wealth effect so people consumed more.
This all seems to me by design, inherent in the system, which project 2025 seemed to be fighting against. For instance they want a cap on money creation of something like 3%, which means a lot smaller bubble. Maybe they do want less froth before they flip that switch, assuming it is their plan.
this story is actually insane.
I am reminded again of how we need to organized. A few people here or there defaulting on loans or refusing to pay won't make a difference. A lot of people not paying, but not talking to each other, is kind of a wild card. But if you and fifty thousand of your closest friends went to DC together to tell your reps this is unacceptable, and if they want to sleep at night it will change, maybe we'd see change.
But organizing is really hard and I don't know how to go about it effectively.
Don't pay. Debt strike.
An rendition of Trump's Greater Depression:
My only hope is that America slingshots back to Roosevelt era policies. Wild that this exact shit happened and what saved us? Oh social programs and high tax rates on the wealthy.
Just don't pay. Debt-strikes are far more damaging than a work-stoppage.
This works great up until the point where a collection agency comes for your property and/or credit rating. I'm not saying don't strike, but do it with full knowledge there may be repercussions.
It’s most likely that people won’t have a choice. Many people, anyway, from what I understand of USian wages and cost of living.
I'm not talking about rent, I'm talking about the massive credit card and loan debt that has propped up millions of folks trying to live a lifestyle they can't really afford. In the US, it's incredibly common for folks to just take on debt for stupid shit, like a jacked up truck they only ever use to drive to the grocery store.
Why was this blocked by an instance filter?
Am I getting censored here now too? This is getting really exhausting.
Because .world is biased and has their own agenda.
Quick numbers for those reading:
- Overall debt grew by $93 billion in the last three months of 2024 -- and about half of that increase was new credit card debt.
- Americans' total credit card balances now stand at a record-high $1.21 trillion.
- Americans hold nearly $1.7 trillion in auto loan debt.
- Americans' total household debt is $18.04 trillion -- including credit cards, mortgages, auto loans and student loans
STUDENT DEBT:
- Americans hold $1.62 trillion in student debt.
- Missed federal student loan payments were not reported to credit bureaus between 2020Q2 and 2024Q3.
- Consequently, less than % of aggregate student debt was reported 90+ days delinquent or in default in 2024Q4.
- Missed federal student loan payments will likely begin appearing on reports beginning in 2025Q1.
Here’s the report: House Hold Debt and Credit: Q4 2024 (published 2025 by Federal Reserve Bank of New York)
With no DOE employees to process defaults?
Nobody should be paying a red cent.
If your choice is draining your entire bank account to the point you can't afford to live or suffering a credit score penalty, then the credit score should be sacrificed.
"but they can..."
Stop. Nothing they can do is worse than starving. Don't pay them. Use your money for your own needs.
Try getting an apartment or renewing a lease with a truly shit credit score.
Oops, you don't qualify anymore, anywhere, your options are now homelessness, much more expensive hopping between motels every 3 weeks, or live in your car, hope you're still making those payments.
Fairly difficult to cost-effectively cook and store food when you're in any of those situations.
well that isnt true. my last apartment was 0 credit checks. just pay and live.
I used to have apparently atrocious credit due to delaying payments on my student loans for years. But with proof of income it didn't stop me from getting apartments in NYC. In the last place I asked the broker what my credit score was and while he wasn't at liberty to tell me he did say "Not good. But it's all student debt related which we don't consider relevant". Still seems weird to me today but I guess landlords often don't consider student debt to be a reflection of a tenant's ability to pay rent. Probably because most people prioritize paying for shelter over paying for the classes in their past.
If this happens to too many people the economy will suffer. Eventually they'll have to start ignoring credit scores. We're rapidly reaching a point where the system can no longer compensate for the incompetencies and inequality and stuff will start breaking mechanically in ways that can't be easily fixed or routed around
I've been neglecting my payments for a long time since I literally just can't afford it. I've been meaning to get around to doing an income-based plan or whatever but the more I see the less it seems worth my time to bother since not only will nothing happen good but they might not even be governed employees too make the bad things happen either. I've basically given up on having anything in my name financially but if the United States federal government disappears then I'm home free to start fresh and whatever new system comes after, hopefully we choose something good like anarchist communism
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?
Most people are relying on income-driven repayment due to high interest rates and inflated tuition costs. IDR reduces your monthly payment to a fixed percentage of your income, but it does not scale the interest generated on the principle. The new SAVE plan was intended to scale the interest along with the monthly payment so your debt wouldn't keep piling up due to being on IDR.
Trump is removing all forms of IDR and blocking applications to renew existing plans, which means everyone will be forced to pay their full monthly amount (which is based on a 10 yr payoff plan). A lot of newer student loans are close to ~$100K or more, so imagine trying to pay that off in 10 yrs in the current job market.
Prepare for mass defaults on loans. This is absolutely going to crash the economy, and will very likely be worse than the housing market crash in ~2009.
Thanks for the details - it sounds like you're saying reduced payments under IDR are basically partial payments, which I assume would be applied only to the interest, thus making the debt last forever. Sounds like a plan bankers would come up with to create perpetual interest revenue. SAVE makes a lot more sense in terms of actually helping people - so no wonder Bonespurs & Company would block it. Can't have Big Gubmint interfering with the freedom to indenture people.
This is absolutely going to crash the economy
That's going to be offset by the coming war in Central America, ostensibly against the cartels that he is claiming are running the region.
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.
This right here.
My partner graduated with a Master's degree and about 40k in loans. After paying on an income driven plan for 10 years, they now only owe 45k!
Good time to point out that only about 30% of PSLF applications are accepted (so working for public sector for shit pay for 10 years has about a 30% chance of working) and (last I checked) only 37 (not %, but total) IDR plans have been forgiven.
You have been sold a lie about college. A degree will not get you a job. It will not get you 60k starting and double it in 4 years. Your field will not be hiring, and if it is, they'll want a doctorate and 10 years experience for barely a livable wage. Cancel student debt. Raise minimum wage, cap maximum compensation, implement a progressive tax rate, and establish social services so people can retire and turn over their jobs and roles to the next generation.
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.
Your average American isn’t very financially literat, or lives in the land of denial, which makes them easy to take advantage of.
I think everything that's happened over the last century to desensitize and decondition the public's survival instincts and common sense, has created a fertile, open field for con artists and hucksters to harvest. And now they've convinced America to put them in charge. What could go wrong?
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.
$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.
You are post world war germany. Namely 1933. Wake up.
My partner was eligible for ~$750 per month repayments under a Biden era plan that Trump scrapped. They now have to pay ~$4300 per month. The headline isn't far off.
My university costs increased over the years to almost double of what I paid on the first years, I wasn't on debt, the cost of monthly payments just increased every semester.
Could you explain to non-Americans what is the appeal of student loans if they can do this? Why shouldn't people go to cheaper schools to get their degrees instead? I mean no disrespect, if you are rich go to Yale or whatever, by all means.
There are no such thing as cheaper schools. They got rid of that because they were angry college students protested the Vietnam War. So now getting an education means doing business with the worst loan shark you've ever heard of, legally protected from bankruptcy. The thing you have to understand about America is that everything is a scam. Like healthcare or housing or a child care and a bunch of other things I'm not even thinking about
There are no cheaper schools. There are expensive ones and more expensive ones. There is literally no option for the non-rich except to go into debt or learn to be a plumber.
Lots of trade schools are charging 10-20k/year and expecting 2 years of you…trades are great but we’re using student loans for them too depending on where you are*
*large cities tend to have better cheaper options like community college and there at least was some small federal schools that didn’t require loans. But not all areas have equal coverage here and you often get price gouged if you aren’t from that very specific city/town the community college is in. Tl;dr hopefully you live in an area with good resources which is not even remotely guaranteed.
Three things going on:
- Schools are expensive because the amount of public funding to universities has been slowly shrinking over the past 60 years. College in the US back in th 1960s was very cheap.
- Student loan amounts due did not change, but income based repayment options did which means people's minimum payments went up
- Students in the US were told college is the only career path for the past 40-50 years. This obviously isn't true and is why we have trades shortages. In many cases, that's also all the advice people received. There was no coaching for what kind of degree to pursue or what field to angle for, so a number of people got expensive degrees that didn't have good career prospects. To be completely honest, I lucked into choosing engineering because of my interests and the interests of my friends
Children are told that they MUST go to college to get a stable and high paying job. This is so prevalent that college degrees are just seen as “the next step after high school” and nobody questions it. These colleges have figured out they can charge almost anything because they are seen as the gate keepers to high paying and stable jobs. So banking on future earnings, bearly emancipated teenagers, with the absolute minimum of a financial education, make life decisions that will put them in debt for the next 20-30 years.
The problem with the whole system is there doesn’t appear to be enough high paying and stable jobs.
As far as going to a cheaper college, I think you identified the issue in your very own comment. Schools have different prestige levels. Yale, for example, is a high prestige school and not only are you paying for an education, you are also paying to connect to rich people. These connections can be worth a lot of money if they are used correctly. So going to a cheaper college also means less valuable connections.
The problem is that employers are allowed to demand a college degree without having to shoulder any of the costs associated, so they are the real consumers of the degrees and the students are just the middle men who bear the cost. They get entitled especially during the sessions too demand degrees for jobs that don't require them really and then that shifts education priorities for the whole country. If we regulated educational and certification requirements for jobs we can make this problem go away
UBI is a much better policy that "subsidizing loans just for college". It helps all young people more than old, letting them choose a future that is best for them, while stiill making college an affordable choice. It makes college pricing more competitive, instead of trapping people too young and foolish into a path they can't know enough to be a trap.
That's one of only good things about Florida. The colleges on average are significantly cheaper than anywhere else, and Florida is still ranked number 1 on US News for college education when looking at every single college combined.
So basically get a good affordable education and then move the fuck out of Florida.
So, basically, as a regular (not rich) young person, you are aiming for a higher chance to connect with rich people in order to get a job/business that will probably get you enough money to cash on the "investment" made by getting an otherwise potentially for-life debt? Huh, rings a bell here. Thank you.
I went to a really cheap school. My master’s was 40k.
Same as in the UK I imagine. No university is affordable. Unless you are rich, you can't go without a loan.
I didn't go. Would have been the first year paying the 3x rates. Everyone was telling us how it won't cost much. I couldn't help but think what if the terms change and in 25 years that threshold won't be worth very much.
there are no cheap schools in the US.
See my response to another comment about wgu
Oh, see - due to the lack of investment in education, the normalization of ever-increasing tuition rates, and the social/economic stratification of U.S. society there isn’t really a thing such as a ‘cheaper’ school.
My local commuter college wanted $25k a year for their masters program over a decade ago - and that’s after obtaining a 4 year degree. (Which I obtained through a combination of community college and undergrad classes at the same university, but not without incurring about $20k worth of debt for the previous 4 years.)
Add to that, the U.S. doesn’t have the economy or social supports. You either earn a living wage, find something workable through familial support, or go hungry. The U.S., mandates that companies pay less than half of what is needed to support one’s self.
This isn’t like, poor planning, or governmental stupidity. This is actually on purpose by conservatives in the U.S. government. (Sorry, that site is kinda weird, but it has the quote I was looking for.)
Nevermind that an educated populous is a matter of national defense/national security and having the brainpower to propel the country forward is one of the ways that the U.S. dominated on the world stage in the latter half of the last century. (In addition to timely and fortuitous control of a lot of resources, and a shitload of foreign meddling - lets be real here.) But whatevz, who needs that when the voters disagree with you? The people who set this in motion will be dead by the time the people that are going to be utterly fucked by that figure it out. (perhaps slowed in that realization by their faulty education. Hah.).The appeal is that you get to go to college. "Why not go to a cheaper school?" "Why don't you just get a job?" "Just buy a starter home." "Why don't they eat cake instead?'
SLABs will tank, someone's collateral gonna get busted
SLAB?
Student Loan Asset-Backed Securities
Basically, people can buy the rights to your loan payments. Maybe they get packaged together with many others' debts.
SLABSs are quite profitable, obviously. During COVID years there was a freeze on debt payments and holders of SLABS started to feel the squeeze. SLABSs are such a guaranteed return that people/banks/hedge funds can use them as collateral for loans and stuff. So during COVID, SLABSs became a liability. Or so it's been speculated
If people start defaulting on their debts, SLABSs could be centrally involved in a financial collapse, the first domino to start chain reaction of margin calls
Of course America has turned an education policy into a financial derivative.
Can't recall an education
I worked hard so I didn't have to take loans. I never had much pity for people who did take them. They were obviously predatory and the math never checked out. Any amount of cursory research on it would have shown that. They took those loans, didn't have a plan to pay them back and have begged politicians to spend my tax money on bailing them out.
Middle class America doesn't need to be bailing out someone who graduated from a four year degree. They're not any more deserving of the money just because they're gullible or ignorant at best.
spend my tax money
Oh I'm sure you put in more than you take out.
In glad you don't have loans. Some people are not able to get higher education without loans due to a variety of factors. I don't know why you're comfortable calling what are likely teenagers gullible or ignorant when the loans are predatory by nature, and are likely handling their very first "adult" purchase.
Education should not only be accessible to the wealthy. Middle class America has bailed out the banks, companies "too big" to fail, even other countries. Middle class America paid for PPP loans and forgiveness. We have bailed out billionaires over and over, but college is crossing the line?
I want my taxes to pay for education. And not just education that "makes sense." I want to pay for one kid's gender studies with a minor in dead languages, as well as the kid going for oncology. I don't want anyone to question getting an education because of the price. An educated society is an investment for everyone. The American people are deserving of the taxes that they pay into.
and not just education that makes sense.
this is a great way to put it. I grew up isolated from culture, from the world, and from the personality, curiosity and interests that kind of exposure can give - and now that I'm knee deep in adulting, I don't know how I would go about learning more about culture and humanity, especially since I'm stuck working full time to keep the lights on (and pay my student loans).
If I felt that I could do a bachelor's in gender studies or social sciences, I would. I wouldn't expect it to make me rich, and I'm already a network engineer and systems geek, so that pays the bills anyway - but I'd do it because I think that's something that would make me a more balanced person, and that would make my work better as a result.
I think we should go much further: Being educated should be a JOB. We pay the students, so that they focus on learning. Provided this grade-based income is less than a "real" job, they will naturally migrate into the workforce.
This will undoubtedly require a major rethinking on what an economy is, how it works, and why it should exist in the first place. But I think we are close to American Capitalism being milked dead, so we should start thinking of new approaches for whatever is to come after the fall.
There's also the fact that students fully know they're getting screwed but you don't have a choice in this country
An educated society is an investment for everyone.
And the insane thing is, that is proven in case after case and should be one of the core tenants of any society. It’s just that - if you make them dumb, squeeze them only a little at a time, and tell them it’s not your fault - you can get more profit for yourself. And we, as Americans, haven’t been squeezed enough to break free.
Paying off their loans for fix the cost of education crisis. It kicks it down the road for our children to fix. With added costs since we've set a precedent that it will be forgiven. Advocating for student debt forgiveness is advocating for throwing fuel on the fire.
Any payoff without a meaningful plan to fix the root cause is robbery of the middle and lower class by upper middle class and upper class children with a predisposition to high income.
OK boomer
such lazy bait.
Such lazy students.
4 days old.
Bye, foul water!
Congratulations you were the smartest 17 year old on earth here's a fucking cookie go masturbate or whatever
Show me the redacted screenshots of your bills being paid in cash and I’ll believe this bullshit. 🙄
btw account is 4 days old, might be a troll
How long ago was this? Which state? Which degree?
middle class america
You mean above the poverty line?