Is it not like, really illegal to prevent people from paying back debt?
11111one11111@lemmy.world 2 days ago
Why arent you allowed tp start paying it off? Ive never heard of a student loan you couldnt at least make interest payments on while in school.
LodeMike@lemmy.today 2 days ago
Makhno@lemmy.world 2 days ago
When has legality ever stopped them fucking over regular people?
brian@programming.dev 23 hours ago
mortgage prepayment penalty fees are reasonably common and happen if you pay too much on it too early
HobbitFoot@thelemmy.club 2 days ago
Yeah. Or in the worst case, put the money in a savings account now and use the money to pay for part of tuition next semester.
11111one11111@lemmy.world 7 hours ago
Noone should ever be putting money into savings accounts. You lose the difference between 2% interest you collect on savings account and the inflation rate while money is in savings account. Your finacial buying power is decreasing by like 5% the entire time it sits in there.
IRAs should be the new “put your money in savings” response. They should look up the options like 529 plans or ESAs (rducation savings account, formerly known as educational IRA) with an advisor for their tax advantaged benifits like not paying capitail gains taxes on growth or interest accrued as long as its used for education or medical dispersments. People rarely understand how much money they make by taking advantage of tax free contributions and withdrawls options.
The average growth rate for IRAs in the US is 7%-10%. So instead of losing 5% buying power from the money you save in a savings account, you are now earning 7-10% ONTOP of the 15% you make by NOT PAYING CAPITAL GAINS TAX.
Got a kid? Start putting $20 direct deposit into ESA at conception. 52 weeks times $20 = $1,040 per year. Times 18 years = $18,720. Avg cost of 4 year tuition at non-private school in US span from $8,000 to $18,000.
You could even set it up so the 401k you contribute to, rolls the same amount your employer matches per paycheck from your 401k (or 403b) account into a ESA where you would be taxed on the roll over contributions, but because you are only moving the amount your employer matches, then technically your employer is covering the taxes paid contributing to you kids ESA. The total amount saved and used to pay for college is then 100% tax free to you.
Compare that to paying back a loan at time tuition is due and you are responsible for the taxes taken from each paycheck, the interest on the loan and all ontop of the loan itself. Its adds up to thousands of dollars you spend for not preparing ahead of time.
If your kid is dumb then go with shit like a 529 plan that can be used at any time for any amount as tax free distributions as long as it goes towards medical expenses, educational expenzes or i wanna say new home purchases. (Dont quote me on the last bit)
HobbitFoot@thelemmy.club 5 hours ago
If you’re going to be pulling out money in a few months to pay for something, the options you provided aren’t going to be liquid in time to do what is necessary.
FenrirIII@lemmy.world 2 days ago
The provider shows a $0 balance because it’s “Not available for repayment” which blocks me from making a payment. It’s a government loan, which may be why
helpImTrappedOnline@lemmy.world 1 day ago
It’s early enough in the semester that it may just not be fully processed yet. When I was in school I was able to dump what ever “loan refund” they gave me right into the principle.
I hate they call it a refund, it just means you took out a bigger loan than what the bill actually cost. Calling it a refund makes people think they got free money.
LifeInMultipleChoice@lemmy.world 1 day ago
Since when do they charge interest before you exist school on government loans? Is that new? I remember them starting to charge interest when you graduate/leave
KoalaUnknown@lemmy.world 1 day ago
There are “unsubsidized” and “subsidized” loans in the US. Every student gets a set amount of subsidized loans they can take out based on their FASFA. If that cannot cover the cost of tuition, you can take out additional unsubsidized loans. Unsubsidized loans build interest while you are still in school.
aarch64@programming.dev 1 day ago
That was my experience as well, USA. Graduated within the last 5 years from a state school and didn’t have interest on my federal loans until after I graduated. Might be worth called the loan servicer and asking about it, that could be a mistake.
chunes@lemmy.world 1 day ago
that sounds like a software bug, not a quality of the loan
AA5B@lemmy.world 1 day ago
Fwiw I’ve been telling my kids to reject the UNsubsidized loans (the ones where interest starts carrying immediately). But that only works because I’ve managed to save the money to pay that share in addition to the normal share