I've Paid $18,000 to a $24,000 Student Loan, and I Still Owe $24,000
Hacker News has a pretty well educated community, so it&#x27;s not surprising that the general response seems to be that this was an obvious outcome. But this story is not unique to this woman. There are a huge number of people that seem to be in the same situation, and it&#x27;s dismissive to just say that people should be more educated.<p>People aren&#x27;t rational agents. They suck at making decisions about their long term well being. They&#x27;re told that the best way to support their future is to go to university, so they take out a loan under the assumption that once they&#x27;re finished, they&#x27;ll earn so much that paying it off won&#x27;t be an issue. And if you&#x27;re not particularly financially literate, you might assume that this is fine since everyone else seems to be doing it. And you might also assume that they wouldn&#x27;t lend you money that you couldn&#x27;t repay.<p>The reality is there&#x27;s an information asymmetry in favour of lenders. They know better than you how likely you are to repay your debt. And their incentives are structured to maximise their return, not clear your debt. So if the best way for them to make money is for you to not be able to pay off your debt, that&#x27;s what they&#x27;ll try to do. The harder it is for you to understand what you&#x27;re getting into, the better for them. The less financial literacy you possess, the better for them.<p>I&#x27;m not arguing that the author shouldn&#x27;t bear responsibility for her decisions. Of course people should understand the things that they agree to and meet their obligations. But there is a calibration problem when the pursuit of an education can lead to three decades of financial hardship.