Freedomain Radio - Stefan Molyneux - How to Get Out of Student Loans
Aired: 2025-05-01
Duration: 06:53


=== Max Required Payments (05:55) ===

[00:00:00]  Interesting.
[00:00:03]  Blindluck posted, it baffles my mind that after 42 months of interest-free extensions, 5.3 million people are in default on their student loans.
[00:00:12]  Yeah.
[00:00:15]  A woman named Emily Logan Stedman wrote this.
[00:00:20]  She said, I borrowed $128,606.84.
[00:00:25]  I've paid...
[00:00:27]  $97,858.26.
[00:00:29]  I still owe $100,482.57.
[00:00:36]  She says, I wouldn't trade in my law degree.
[00:00:38]  I left law school.
[00:00:39]  I'm fortunate to have almost always had a job that allows me to make the max required payment.
[00:00:44]  Clerking did not allow that.
[00:00:45]  But still, come on!
[00:00:47]  Those numbers are really kind of shocking for me.
[00:00:55]  That you can pay almost $100,000 on $128,000 and still owe $100,000.
[00:01:04]  Holy crap.
[00:01:09]  Why pay off?
[00:01:14]  I don't know.
[00:01:15]  I think it's very cool.
[00:01:16]  I'm still quite fascinated by AI. Bye.
[00:01:18]  Bye. Bye.
[00:01:20]  *lots of music* Thank you.
[00:01:24]  Interest accrual outpacing principal reduction.
[00:01:26]  Yeah.
[00:01:28]  Yeah.
[00:01:30]  6% interest rate.
[00:01:32]  At 6%, the annual interest on 128,000 is 7,700.
[00:01:37]  Yeah.
[00:01:39]  Yeah.
[00:01:44]  So about 28,000 of our payments have gone towards the principal.
[00:01:48]  the remaining almost 70,000 have gone towards interest.
[00:01:55]  yeah.
[00:01:56]  Federal student loans can take 10 to 25 years to pay off.
[00:02:00]  A standard 10-year plan for Emily's loan at 6% interest would require monthly payments of about $1,400.
[00:02:08]  Over 10 years, she'd pay about $171,000 with $42,000 and change going to interest.
[00:02:13]  Yeah.
[00:02:22]  Yeah, it's wild.
[00:02:24]  I'm a big fan.
[00:02:28]  If you're in debt, it's not financial advice to you.
[00:02:31]  I'm just saying, if I'm in debt, when I've been in debt, I will sell a kidney to put more down on the principal.
[00:02:39]  Because it's magic.
[00:02:41]  Absolute magic.
[00:02:44]  Absolute magic.
[00:02:49]  Now, if that's the max required payment, then she's not allowed to put down more money on the principal.
[00:02:56]  I assume that's what she's saying, right?
[00:02:57]  that there's a maximum payment that you can do?
[00:03:07]  But yeah, that's some pretty wild stuff.
[00:03:24]  So, initial loan amount, $128,600.
[00:03:28]  Total payments made, $97,858.
[00:03:30]  Remaining balance, $100,000.
[00:03:32]  Payments are monthly fixed.
[00:03:33]  There are no extra payments or changes in terms.
[00:03:36]  Yeah, like there's some mortgages that let you pay 13 months in a year.
[00:03:40]  The extra month goes straight on the principal.
[00:03:42]  Huge difference, right?
[00:03:44]  Paying down the principal is economic superpower.
[00:03:47]  It's wild how much it saves you.
[00:03:50]  Hmm. Okay.
[00:04:00]  Wow, some pretty intense math going on here.
[00:04:04]  Come on, I grok me Amadeus.
[00:04:10]  Oof.
[00:04:12]  So, I think what she said, so the grok worked it out.
[00:04:16]  Initial loan amount, 128,606.
[00:04:19]  Interest rate, 6.7% annual.
[00:04:20]  Monthly payments, 906.
[00:04:24]  Payments made, 108 months or 9 years.
[00:04:26]  Total term, 282 months or 23.5 years.
[00:04:31]  Yeah.
[00:04:34]  And I assume that that's the maximum.
[00:04:36]  So she's been paying for nine years.
[00:04:38]  It's about 14 and a half years left.
[00:04:40]  The 6.7% rate is consistent with federal graduate loan rates from the early 2010s.
[00:04:45]  Rate could vary slightly.
[00:04:47]  Yikes.
[00:04:49]  That's kind of terrifying.
[00:04:51]  Now, of course, putting women in particular, men too, right?
[00:04:56]  But putting women in particular...
[00:05:00]  Getting into debt is a great way of killing the birthright.
[00:05:08]  It's a fantastic way to kill the birthright.
[00:05:09]  You can't quit!
[00:05:14]  You can't quit.
[00:05:16]  Or if you do have kids, you've got to hand them over to the daycare, the state, whoever, right?
[00:05:26]  That's really something.
[00:05:32]  Crush your monthly expenses.
[00:05:35]  James says, I paid off my student loans early when I could.
[00:05:37]  Not sure what she means with a maximum payment.
[00:05:40]  I don't know.
[00:05:42]  But I mean, I think we know what she means by a maximum payment.
[00:05:44]  It means that you're on this treadmill forever.
[00:05:49]  I mean, when I was dating, I avoided women with debt.

=== Avoiding Debt Burdens (00:58) ===

[00:05:55]  I mean, I don't know if that's even possible anymore.
[00:05:58]  But I would avoid...
[00:06:02]  I would avoid women in debt.
[00:06:03]  I just did not want that burden.
[00:06:11]  I did not want that burden.
[00:06:12]  And it's one thing to be in debt for something that's going to grow in value.
[00:06:16]  You know, if you go in debt for maybe a house or whatever, right?
[00:06:18]  Something that's going to hopefully gain in value, go in debt to buy Bitcoin if that's what you did.
[00:06:24]  But...
[00:06:26]  Yeah, James, can you look that up if there are some loans that you have a maximum payment and you just can't pay more?
[00:06:30]  Like, you can.
[00:06:31]  Like, they're designed to lock you in for a quarter century.
[00:06:34]  That's rough, man.
[00:06:35]  That's brutal.
[00:06:37]  Oh, and please don't forget, speaking of finances, freedomain.com slash donate.
[00:06:42]  I really would appreciate your help.
[00:06:43]  freedomain.com slash donate.
[00:06:45]  I am committed to doing better shows.
[00:06:47]  I apologize for the last couple of weeks.
[00:06:49]  I am returning to my native roots.
[00:06:52]  We'll get there.