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>Purdue, for example, caps total payments at 2.5 times what a student borrowed, so the most successful don’t feel gouged. That would be a 15 year loan at 15% AP

>Purdue, for example, caps total payments at 2.5 times what a student borrowed, so the most successful don’t feel gouged. That would be a 15 year loan at 15% APR. That IS gouging. 15% APR isn't gouging. That's a typical APR for an unsecured personal loan, which this is. Well, it's actually worse than an unsecured loan for the lender since payment is tied to employment. So, not egregious. It's also not 15 years. The term maxes out at less than 10 years for English majors. The person being interviewed is on the hook for 8 and a half years. EDIT: Where did you even get the 15% APR from? 2.5 times what the student borrowed does not work out to 15%, unless the debt is paid off in under 7 years. A 15% APR over 15 years would be over 8 times the original loan amount.

maccard 8y ago
> 15% APR isn't gouging. That's a typical APR for an unsecured personal loan, which this is. My credit card is 15%. An unsecured personal loan is more like 4-9%.
- econ101fail 8y ago
  Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? I'll even give you a pass on the requirements of the loan payback being subject to employment or a minimum income, a payment cap or a term limit. Adding to the above, as noted the edit to my previous comment, even the 15% APR number is wrong in general. An English major would have to earn over $500,000 in 7 years to hit that APR.
  - maccard 8y ago
    > Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? Every high street bank in the UK offers a student overdraft facility, e.g. HSBC[0] offers a guaranteed £1000 0% overdraft, with up to £3000 depending on how long you've had it. Other banks offer credit cards with 0% interest for students too. Finally, student's aren't the same category as > an unemployed person with uncertain future prospects and neither a work history nor any assets While that is a technically true statement, it's ignoring the fact that <4% of recent graduates are unemployed. While that makes them higher risk than an engineer in SV making 6 figures, it absolutely doesn't have students in the same risk category as an unemployed disabled veteran. [0] https://www.hsbc.co.uk/current-accounts/products/student/ https://www.hsbc.co.uk/current-accounts/products/student/
    - econ102fail 8y ago
      (1) You cannot use a UK high street bank to finance a US student loan (2) 1000 GBP or even 3000 GBP is not nearly enough to pay for college Students which are likely to use this type of financing are very much in the same category as an unemployed person with uncertain future prospects and neither a work history nor any assets. They don't have any assets or income, otherwise they would not borrow on these terms. They are unemployed and will not be employed for an undetermined period, possibly years. They are more likely than not to be too young to have any real work history. Obviously they are different from the long term unemployed, disabled or veterans, but neither was I claiming that.
    - tracker1 8y ago
      How much does a year of tuition and expenses cost, does your 1k-3k line of credit cover that?
michaelt 8y ago
Where did you even get the 15% APR from? A $10,000 loan with a total repayable of $25,000 over 15 years would have an APR of 15% and a monthly payment of $140 [1] It's also not 15 years. The term maxes out at less than 10 years for English majors. If your total repayable is 250%, having the term be shorter means the APR is higher †. 22.3% APR for 10 years, in fact [2] Paying back 250% over 8.5 years? That'll be a 26.2% APR [3] So that 250% payback limit only kicks in if you've got a pretty raw deal. [1] https://www.wolframalpha.com/input/?i=$10000+loan+over+15+years+apr+15%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+15+ye... [2] https://www.wolframalpha.com/input/?i=$10000+loan+over+10+years+apr+22.3%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+10+ye... [3] https://www.wolframalpha.com/input/?i=$10000+loan+over+8.5+years+apr+26.2%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+8.5+y... † Of course, one could argue APR is a poor measure for precisely this reason.

maccard 8y ago

> 15% APR isn't gouging. That's a typical APR for an unsecured personal loan, which this is. My credit card is 15%. An unsecured personal loan is more like 4-9%.

econ101fail 8y ago
Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? I'll even give you a pass on the requirements of the loan payback being subject to employment or a minimum income, a payment cap or a term limit. Adding to the above, as noted the edit to my previous comment, even the 15% APR number is wrong in general. An English major would have to earn over $500,000 in 7 years to hit that APR.
- maccard 8y ago
  > Please show me where an unemployed person with uncertain future prospects and neither a work history nor any assets can get an unsecured personal loan for 4-9%? Every high street bank in the UK offers a student overdraft facility, e.g. HSBC[0] offers a guaranteed £1000 0% overdraft, with up to £3000 depending on how long you've had it. Other banks offer credit cards with 0% interest for students too. Finally, student's aren't the same category as > an unemployed person with uncertain future prospects and neither a work history nor any assets While that is a technically true statement, it's ignoring the fact that <4% of recent graduates are unemployed. While that makes them higher risk than an engineer in SV making 6 figures, it absolutely doesn't have students in the same risk category as an unemployed disabled veteran. [0] https://www.hsbc.co.uk/current-accounts/products/student/ https://www.hsbc.co.uk/current-accounts/products/student/
  - econ102fail 8y ago
    (1) You cannot use a UK high street bank to finance a US student loan (2) 1000 GBP or even 3000 GBP is not nearly enough to pay for college Students which are likely to use this type of financing are very much in the same category as an unemployed person with uncertain future prospects and neither a work history nor any assets. They don't have any assets or income, otherwise they would not borrow on these terms. They are unemployed and will not be employed for an undetermined period, possibly years. They are more likely than not to be too young to have any real work history. Obviously they are different from the long term unemployed, disabled or veterans, but neither was I claiming that.
  - tracker1 8y ago
    How much does a year of tuition and expenses cost, does your 1k-3k line of credit cover that?

michaelt 8y ago

Where did you even get the 15% APR from? A $10,000 loan with a total repayable of $25,000 over 15 years would have an APR of 15% and a monthly payment of $140 [1] It's also not 15 years. The term maxes out at less than 10 years for English majors. If your total repayable is 250%, having the term be shorter means the APR is higher †. 22.3% APR for 10 years, in fact [2] Paying back 250% over 8.5 years? That'll be a 26.2% APR [3] So that 250% payback limit only kicks in if you've got a pretty raw deal. [1] https://www.wolframalpha.com/input/?i=$10000+loan+over+15+years+apr+15%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+15+ye... [2] https://www.wolframalpha.com/input/?i=$10000+loan+over+10+years+apr+22.3%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+10+ye... [3] https://www.wolframalpha.com/input/?i=$10000+loan+over+8.5+years+apr+26.2%25 https://www.wolframalpha.com/input/?i=$10000+loan+over+8.5+y... † Of course, one could argue APR is a poor measure for precisely this reason.