You are so missing the point.
FAFSA only generates $4,500 of subsidized loans for incoming freshman, regardless of tuition. ($5,500 for sophomores, $6,500 for juniors and seniors in a higher education program.
The rest of it is student grants, un-subsidized loans and parental contributions. Let's just say your family contribution is $4,000. That means an incoming freshman gets a Stafford Loan for $4,500, parental contribution for $4,000 and the rest is outstanding debt.
A student gets a job for the rest. Let's say a part time job, usually at minimum wage at McDonald's (here $7.80) for 10-15 hrs a week.
Let's do the math, $7.80 x 10 hrs a week is $78.00 minus taxes. Still not enough to make a dent into anything, let alone living expenses.
Again, tell me how poverty stricken young adults afford to go to college to NOT continue working a minimum wage job.
Well, first off, I, nor anyone here, said anything about any student not working while they are in college. In fact, both Linkat and I have talked extensively about how she, I, and her kids all worked during college, and summers.
For my first degree, I always worked one or 2 jobs year round, while getting the degree. Went to school year round so I could take one less class and make up in summer
For the degree I was working on, but stopped, I worked full time. I may have even picked up weekend work as extra. Wouldn't surprise me if I did.
I think every student if they can should work while they are in college.
So subsidized loans over 4 years of $23,000 (that's considered outstanding debt too, isn't it? I mean it has to get paid back)
I don't see where you put what the unsubsidized loans are? Can you give me a figure? Just for the hell of it, I'm going to double the $23,000 and call and entire loan debt of $46,000. Tell me if that not fair. I really don't know.
Don't students start paying off loans when they graduate? Like they don't make payments while they're in school.
Just looked it up, they have a 6 months grace period until after graduation. So they have that time to get employment. I hope they do.
No one is asking the student to make any dent in their loan while they are in school.
So when you say "I am so missing the point" it seems you are somehow putting the student in the position the full time employee will be. I mean, I know/guess students can pay off loans early, but this one shouldn't.
It feel like you are holding 2 distinct, separate things in your mind, and are trying to merge them.
I am taking the stance that the debt issue starts after graduation, not during school.
Isn't the point of all this is that why people are paying these loans for so long, for so much, when if they are willing to put even modest extra amounts in, it wouldn't be nearly as painful?
If the parent is giving them 4K a year, and the student is netting $72 a week after taxes (social security 7.65%. They won't be paying state or federal taxes at such low earnings).
So 50 weeks pay would be $3600, plus parents $4000 is $7600, divided by 52 weeks is $146 weekly cash flow. $630 a month (or more, see below). Not really clear what that's going for. Food and housing? I gotta plead ignorance on what someone can get by with paying as a roommate. At least they're getting a couple of meals free at Micky D's a week. Lots of beans and rice, very healthy.
Anyway, why is this student only working 10 hours a week? I know you said 10-15, but you're only giving him 10 hours worth of pay. If he does work the 15 hours, he'll have an extra $144 a month, so $874.
Why isn't this student taking one less class, and going to school year round? Doesn't this college offer summer classes? Where I went did. One less class equals more hours to work.
Finally, we're assuming all this student can find is minimum wage for the entire length of his school career. In my city, even fast food workers start at $13 an hour. Damn, even if he could land a job at $10 or $11 and dump the minimum wage job, he'd be in better shape.
So, going back let's say a $46,000 loan. Unless you correct my figures.....oh what the hell, let's round it up to an even $50k
All right! Whew.
Looked it up and "The rates for the upcoming 2019-2020 award year are 4.53% for undergraduate students"
So the payments on a 50k loan at 4.53% for 20 years is $317 a month.
That about $73 a week. Can this person do anything to even make part of that back? Again, this is maybe a strange concept to some or many people, but picking up extra work is just not the end of the world. In fact, I think it makes the spare time you do have that much more enjoyable.
The free time is going to be that much sweeter.
Poverty is hard.
Getting an even halfway decent job after graduation must be mind blowing. Investing a little of your time for that little bit extra to pay off your debt without dipping into your regular wages must be beyond reality.
Paying off that debt earlier would be heaven.
If the person manages to send an extra $20 a month, 22 months are shaved off the length of the loan (1.8 years) and a total of $2682 is saved.
Ok, this next part I am totally spitballing. Let's say every time the person gets a raise, he increases his extra money paid by $5 a month. He does this every year, for 10 years, so at the 10th year his extra contribution total $65/month. Then he decides to just leave it at an extra 65. Because life/kids....The average of these increases is about $42.
So with your permission, can we call it that he will end up on the average contributing $42 extra a month?
Well, in my personal opinion, the results kinda suck, because he ends of shaving 4.3 years off the 20 year loan, and saving a little more than $6200 in interest.
That sucks because he still paid almost $20K in interest on a $50K loan.
In Chai Teas's world...I would increase those extra payments by $10 a months each raise (**** it would be a lot more, but gonna go with that), making the average extra payments $85 a month.
With that, the loan would be paid off 5.9 years early, and the savings would be about $8500. Total interest paid, $17,600 approx.