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The Psychological Effects of Loan Debt

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Replies to: The Psychological Effects of Loan Debt

  • HankCTHankCT Registered User Posts: 169 Junior Member
    edited March 14
    @ucbalumnus
    How do they explain compound interest without even the most basic knowledge of exponential functions? Or do they teach exponential functions in that course?

    I'm not sure exponents are required? I explained compound interest to my youngest the other day just by saying:

    If you have $1000 and a 7 percent interest/return rate, you get 1000 + (1000 x 0.07) in year one.
    At that point you have 1070.
    Do the same thing again and you have $1145, and keep repeating each year.

    Although, I am sure that credit card debt can feel exponential! It did for me when I was younger.
  • ucbalumnusucbalumnus Registered User Posts: 74,420 Senior Member
    MmeZeeZee wrote:
    And my personal favorite, Michael Mayberry, CTO of Intel... Midland College. A technical college. (I double checked that this was not a mistake and no, they're not referring to Midland University.)

    Sure?

    The current Midland University in Nebraska had former names Midland College (1887-1962) and Midland Lutheran College (1962-2010).

    The current Midland College in Texas is a public junior college which first held classes in 1975, though it offers one bachelor's degree program (not in Mayberry's majors).

    Mayberry earned a bachelor's degree in 1978 and a PhD in 1983.
  • twoinanddonetwoinanddone Registered User Posts: 20,548 Senior Member
    That's compounding annually. Most interest that compounds (and student loan interest is simple interest except for the one time compounding when it is put into payments) does it daily or at least monthly.. Credit card interest usually compounds based on daily balance over a 60 day average. Same concept, much more math.
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