[ CYPHER CODE #526 ]
Paying does not mean progress.

[ CYPHER CODE #527 ]
Interest is designed to outrun you.

[ CYPHER CODE #528 ]
Debt that can’t shrink isn’t debt. It’s a trap.

BRIEFING

Grant here. Student loans have become a thorn in pretty much every millennial’s and Generation Z’s side. But a complete lack of understanding of loan interest is causing these loan payments to feel like a never-ending revolving door, where monthly payments are made but the balance hardly ever decreases. Let’s break it down.

A viral post circulating on X lays out a simple student loan timeline. A young American takes out a loan for $8,645. Over the years, he pays back roughly $7,450. So after all those payments, you’d think his remaining balance would be smaller. But no, it’s higher, and he now owes $8,750.

Nothing out of the norm is happening here. There are no missed payments. No default. Just an 8 percent interest rate doing exactly what it was designed to do over time. Payments get absorbed by interest first, while the principal barely moves. Thus payment “progress” becomes a complete illusion.

SOURCE

An American takes out a student loan for $8,645.

After years of payments, he’s paid $7,450.

His current balance? $8,750.

He pays $7,450 — and somehow owes MORE than the original loan.

This isn’t “education financing” — it’s usury, and it should be illegal nationwide. pic.twitter.com/L9ULEqMSnE

— MatrixMysteries (@MatrixMysteries) November 29, 2025

Now, if these kids had even a basic understanding of interest and how making the minimum payment keeps them perpetually in the red, then maybe the case above wouldn’t feel so familiar.

But even after a $60,000 degree, universities don’t seem particularly interested in teaching students how loan interest actually works. And maybe that isn’t an accident.

A 2018 study found that only 28% of undergraduates could correctly answer three basic financial literacy questions covering inflation, interest, and risk diversification. That’s compared to 53% of the general U.S. adult population.

SOURCE

Students had room for improvement across the board, but some groups scored lower than others. Financial knowledge was lower among students who were younger, in earlier years of college, of underrepresented racial/ethnic minority groups, or from lower socio-economic backgrounds. For example, students with the lowest financial security, as indicated by their reported ability to come up with $2,000 in the next month, were 40 percent less likely to answer the financial literacy items correctly, compared to students who were certain they could come up with that amount. In general, our results show disparities in financial literacy that are similar to disparities found on other dimensions using standardized tests like the ACT/SAT, where students from higher socio-economic backgrounds outperform those who are disadvantaged.

However, our findings related to student loan knowledge were less anticipated. NPSAS:16 asked students whether they knew about the consequences of student loan default and whether they were aware of income-driven repayment (IDR) plans. IDR protects borrowers when they’re unable to pay the standard monthly payment on their student loans by capping the payment at a percentage of disposable income. Most students understood that default could be harmful to their credit scores (71 percent), and that the government could collect what is owed on a defaulted student loan by garnishing their wages (53 percent) or withholding their tax refunds (63 percent). Yet, only 32 percent of students said they were aware of IDR.

DEBRIEFING

We’re not here to try and simply call out irresponsibility or bad choices. At the end of the day, these “borrowers” oftentimes start off as kids straight out of high school, and yet they’re expected to navigate compound interest, amortization schedules, and repayment structures they were never taught to understand, while the institutions profit from that confusion big time.

When fewer than one in three undergraduates understands basic financial concepts, student debt stops being a risk people knowingly accept. It becomes a contract entered into under ignorance, and ignorance, in this case, isn’t purely accidental. Universities charge luxury prices while offering zilch in financial literacy.

And that’s the loop. Schools are paid upfront, lenders accrue interest over time, and the borrower carries risk indefinitely.

NOW YOU KNOW

Paying isn’t the exit. It’s the engine.