10-21-2015, 10:11 AM
(10-21-2015, 09:16 AM)BmorePat87 Wrote: https://twitter.com/berniesanders/status/654741381294874624
"It makes no sense that students and their parents pay higher interest rates for college than they pay for car loans or housing mortgages."
That was pretty unintelligent. Student loans have no collateral and a higher default rate than mortgages and car loans...
His only real mistake there was using Twitter to discuss a complicated issue; in the overall picture, he is absolutely correct.
The thing forgotten by all of the self-proclaimed economic geniuses at The Weekly Standard and the Washington Times who railed him for that statement is that student loans are pretty much the safest loan a lender can give. For one thing, they're subsidized by the government. True, they have a higher default rate; but the lender gets the advantage that there is no court order required for them to garnish the borrower's wages. Also, let's not forget: student loans can't be discharged by filing bankruptcy.
In other words, while there's no material collateral, the lender is going to get every penny owed, including interest, almost without fail. Given the extremely low risk vs. virtually guaranteed reward, he is right: it makes no sense for the interest rates on student loans to be higher than car loans.
Sadly, you can't fit all of that into a Twitter post. To me, it all proves two things: 1. Twitter is the worst thing man has ever shat onto the planet, and 2. always be wary about right wing news outlets comprised of believers in supply-side voodoo calling anybody economically illiterate.
