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
There’s no collateral that can be repossessed if a student loan isn’t payed back, so it’s going to carry a higher interest rate.
If you don’t make big enough payments, the interest can build up faster than you’re paying it off.
People have the same issue with credit card debt: they make minimum payments and interest accrues faster than the debt can be payed off.
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