In a recent viral video, a mother named Stacy unveiled the staggering cost of college education for her daughter.
Stacy’s revelation was about the principal amount borrowed and the exorbitant interest rates attached to it.
Questionable Interest Rate
She shared her disbelief upon discovering that a loan of $28,355 from Sallie Mae came with a 16% interest rate. This meant that by the time the loan was repaid, the total amount would be $127,777.11.
Stacy expressed her dismay, stating,
“So my daughter is going into her second year of college. The first year I took the loan out for her, it was a private loan [and] the rates weren’t bad. This year to be a cosigner for Sallie Mae to borrow $28,355 at 16 percent, the finance charge is $99,422.11.”
The Predatory Nature of Student Loans
Stacy’s story highlights the predatory nature of some student loans. She described the situation as “sickening” and even said that such practices “shouldn’t even be legal.”
The math was simple yet horrifying: borrowing $28,000 would eventually cost them $100,000 in interest alone.
Stacy lamented,
“I feel so bad for other college kids that have to deal with this.”
The Cumulative Cost of a Bachelor’s Degree
If Stacy continued with this loan structure, her daughter’s college education would cost around $380,000 for the remaining three years.
Including the loan from her freshman year, the total cost for a standard bachelor’s degree would be an astounding $400,000. Stacy voiced her concerns, saying,
“I don’t know what we’re going to do, but I’m not taking this. I’m not allowing my daughter to take this. She will end up having to work and give you all of her money for probably her entire life. Things have to change.”
Public Outcry on Student Loan Interest Rates
The video resonated with many, garnering thousands of comments from fellow TikTokers who shared Stacy’s outrage.
Many pointed out the absurdity of the current student loan interest rates.
One user commented,
“I’ve been saying, instead of canceling student loans, regulate the interest rates!”
While another remarked,
“16 percent? You might as well put it all on a credit card!”
The consensus was clear: there is a pressing need to regulate interest rates on student loans. Several users believed that interest rates should be fixed, with one suggesting a cap at 7%.
Another user stated,
“College should be 0 percent interest loans.”
A Generational Gap in College Costs
The generational gap in college costs has been a topic of significant concern in recent years.
A report from CNBC[1] highlighted that today’s college costs, including tuition, room and board, and other expenses, can range from $27,330 for public in-state university students to $55,800 for private nonprofit college students.
This is a stark contrast to the past when college was more affordable.
The report further emphasizes that while the need for postsecondary education has become more essential today, its cost has also surged.
From 1980 to 2019, college costs have risen by a staggering 169%, while earnings for young workers aged 22 to 27 have seen a mere increase of 19% source. AARP[2] also highlights this issue, stating that college costs have dramatically risen over the past decades.
The average prices of four-year schools today are more than two-and-a-half times what they were in 1964, even after adjusting for inflation. This rise in costs and stagnant incomes have made higher education increasingly inaccessible for many.
Consequently, students and families have resorted to borrowing, leading to a surge in student loan debt from $455 billion in 2004 to $1.5 trillion in 2018 source.
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Sources
- cnbc.com/2021/11/02/the-gap-in-college-costs-and-earnings-for-young-workers-since-1980.html
- aarp.org/pri/topics/work-finances-retirement/economics-aging/a-look-at-college-costs-across-generations.html
This article was produced and syndicated by Viral Chatter. It was inspired by this video:
@stacyann370 I am sick to my stomach after reviewing this, i dont know how she will attend college this year but we cannot acceot these loan agreements #collegeloans #struggle #singlemom ♬ original sound – Stacy
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Martha A. Lavallie
Martha is a journalist with close to a decade of experience in uncovering and reporting on the most compelling stories of our time. Passionate about staying ahead of the curve, she specializes in shedding light on trending topics and captivating global narratives. Her insightful articles have garnered acclaim, making her a trusted voice in today's dynamic media landscape.
