“My payment is $217 and now it says I only owe $184. Why?” I had to explain about interest accruing from payment to payment, and since she made her last payment at the end of Aug, if she pays now she’s only paying 14 days of interest."
This was the most confusing thing about student loans. DH had loans for grad school. We consolidated them at some point. It was a simple interest loan (compounds daily, not monthly). If you paid a day early, more went toward principal, if you paid a day late, more went to interest. If you paid extra, you had to ask them specifically to apply it to principal and you really lost out if you sent an extra payment in the middle of the month. It would all go to interest. They would also adjust the payment (only down, never up) if you paid extra so your next payment was smaller, or not due at all for another month or two. Once, we were paid ahead by quite a bit (by ignoring their persistent attempts to lower the payments), and we got a letter saying our payment had been lowered to keep us on track to pay off the loan on time rather than early! Not what we were trying to accomplish. We felt like the loan servicer was constantly working against us. None of this has ever happened with our car loans or mortgages. This is the stuff to educate kids about before they take student loans.
And yes, a realistic idea of living expenses, starting salaries, and the challenges associated with paying loans would go a long way toward reducing the problem.