That's right. The "ten year" plan is a gamble. You are paying back in progressive (future dollars) dollars estimated across those years. You seriously think you should get a loan today and pay back "today's" amount ten years into the future? What would be the purpose of the loaning party? Take it in the shorts and at a loss?
If you are shocked by this, I can only imagine your chagrin at your mortgage agreement...
I was shocked because I did not understand how the interest was compounded.
My only real experience was with my car loan; I borrowed $6,000 at 4.79% for five years. At the end of the five years, the interest amounts to about $600.00, or about 10% of what I borrowed. Seems reasonable.
I am not complaining, hope you don’t think I was. I made the mistake of not fully knowing what I was doing. When I did, you can believe I told my daughter that doing that for three more years was out of the question. She has since returned home and is attending school in state where we can pay as she goes.
I don’t begrudge the bank the interest. I know that’s how the system works. I just didn’t know the full scope of what I was getting into. My mistake I know and I will be paying it off as quickly as possible.
All I meant was that people need to know everything, and they need to EDUCATE themselves. That’s all. Know what you are doing and don’t assume that these loans are cheap sources of education funding.
Believe me, I already know about my mortgage which was paid off several years ago after thirty years. We paid over $125,000 over that time for a house we bought for $35,900, which is about what it is worth now, lol.
The mortgage is a little different. Even though we paid so much, I realize that we would have paid much more in rent over the years and we own our home. In the end, we have a tangible asset and a place to live even if we hit some hard financial times.
With some education, it is a gamble since not all degrees are an assurance of the “big bucks” in one’s career.