How can people make payments for 20 years on school loans and barely make a dent in the principal? How are those loans different than a mortgage?
In: Economics
> How are these loans different than a mortgage?
Because they are often deferred. Lose your job? Get a deferral. Have to take a shitty job? Take income-based for a while.
*If* you make your full payment every single month, yeah, it’s pretty much just like every other loan. But they give you lots of excuses to “pause” your loan which doesn’t pause interest. You can be mightily fucked.
A second reason why it’s so hard to pay them off is traditionally, their interest rates have been much higher than a mortgage’s. For me personally, my student loans are around 7.25%. My mortgage is about half that. (For a new borrower right now, this isn’t true. But for a lot of people with old loans like me, it can be)
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