10-21-2015, 03:45 PM
(10-21-2015, 10:11 AM)GodHatesBengals Wrote: 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.
So when they are defaulted on, which as you say it's high, the gov subsidizes the banks and they still smash the borrowers credit rating.
School loans are crushing people. The amount of debt racked up by graduation is obscene. We would be better off if loans were not subsidized by the gov. Tuition rates would drop. schools would allow more creative payment plans. They should also drop the general Ed requirements for a degree. Those are in there to just add cost to the students anyway.
