6 ms·

Why do private lenders lend to ITT students?

by gohrt 10y ago

selectodude 10y ago
Because student loans are guaranteed by the federal government. Student can default and the bank will still get their money.
- greggman 10y ago
  And this arguably the real issue. I'm all for the government funding education as long as it's effective education and not overpriced. In the case though they effectively put up a "Free Money" sign with nearly zero strings attached.
  - gambiting 10y ago
    Like in UK? Where everyone gets a student loan from the government, but no university(and that includes Oxford and Cambridge) is allowed to charge more than 9k(roughly $12k) a year? You also don't start paying back until you have a job that pays more than a certain amount per year, and you have 40 years to pay it off - if you don't, it's forfeit.
    - tathougies 10y ago
      To be fair, if you make your minimum payments on federal US loans for 25 years, the loan is forgiven (although you are taxed on the amount forgiven). The income based repayment or the public service option means that you may never even touch the principal and still have your loan forgive .
      - kaitai 10y ago
        I love federal student loans for many reasons, but I don't get why there are so many people in these comments talking about federal loans as if they're representative! The max you can get from the feds is $5,500 the first year, $6,500 the second, etc. if you are a dependent. Your parents can get more through a PLUS loan (not eligible for income-based repayment) or you can get more in certain cases when your parent was denied a PLUS loan (weird). So if you're at a place that costs $30,000 in tuition, as many do, when you max out your federal loan and your parents max out the PLUS loans you need to go into the private market. None of those loans offer public service options or IBR as part of a standard deal. The post to which I'm responding explicitly mentions federal US loans -- thank you. Lots of other folks here are not making that crucial distinction.
    - deleted 10y ago
      [deleted]
    - ensignavenger 10y ago
      Income based repayment plans are even better in the US- if you have low income, you don't pay anything the same as you describe, payments go up with income... and loans are forgiven after 10-25 years, not 40!
- deleted 10y ago
  [deleted]
- djsumdog 10y ago
  > Student can default Um no. They can't. That's the problem with American student loans. It's the only contract you can enter into under 18 and you can never declare bankruptcy on them. It's the most bullshit type of loan there is. In grad school I put part of my car on Student Loans because it was 0%. My car load was 5.2%. After I graduated, my student loans shot up to 6.8%! I quickly dumped all my savings onto them and squashed them in three months. Even if I hadn't been able to to that, I probably had the credit to get a cash loan for under that and pay them off. Most students don't have that option.
  - culturestate 10y ago
    By "default," GP means simply not paying - not bankruptcy. If someone can't afford to pay their student loans, they probably don't have assets in excess of their debt anyway.
    - coredog64 10y ago
      I'm not going to claim it is an epidemic, but I know a few people in this boat. Generally speaking they are able to get by with a few life hacks: Cohabitate rather than marry, work jobs under the table, and/or be the stay-at-home parent.
      - ensignavenger 10y ago
        Why would they allow their student loans to default in such a situation instead of enrolling in an income based repayment plan? If they have 0 income, they would have a payment of 0 dollars, still get their tax refund, and have their loans forgiven after a some time on the plan.
        kaitai 10y ago
        Not all federal loans allow income-based repayment. For instance, parent PLUS loans aren't eligible, nor are other loans made to or through parents. Moreover, there are tons & tons of private loans (often with high interest rates) pushed at these places, and none of those need to offer income-based repayment.
ryuker16 10y ago
They dont unless its a government backed student loan or unless you have a co-signer. I cant imagine any private student loan for IIT that wasnt co-signed with massive interest rates.

Why do private lenders lend to ITT students?

by gohrt 10y ago

Why do private lenders lend to ITT students?

Because student loans are guaranteed by the federal government. Student can default and the bank will still get their money.

greggman 10y ago
And this arguably the real issue. I'm all for the government funding education as long as it's effective education and not overpriced. In the case though they effectively put up a "Free Money" sign with nearly zero strings attached.
- gambiting 10y ago
  Like in UK? Where everyone gets a student loan from the government, but no university(and that includes Oxford and Cambridge) is allowed to charge more than 9k(roughly $12k) a year? You also don't start paying back until you have a job that pays more than a certain amount per year, and you have 40 years to pay it off - if you don't, it's forfeit.
  - tathougies 10y ago
    To be fair, if you make your minimum payments on federal US loans for 25 years, the loan is forgiven (although you are taxed on the amount forgiven). The income based repayment or the public service option means that you may never even touch the principal and still have your loan forgive .
    - kaitai 10y ago
      I love federal student loans for many reasons, but I don't get why there are so many people in these comments talking about federal loans as if they're representative! The max you can get from the feds is $5,500 the first year, $6,500 the second, etc. if you are a dependent. Your parents can get more through a PLUS loan (not eligible for income-based repayment) or you can get more in certain cases when your parent was denied a PLUS loan (weird). So if you're at a place that costs $30,000 in tuition, as many do, when you max out your federal loan and your parents max out the PLUS loans you need to go into the private market. None of those loans offer public service options or IBR as part of a standard deal. The post to which I'm responding explicitly mentions federal US loans -- thank you. Lots of other folks here are not making that crucial distinction.
  - deleted 10y ago
    [deleted]
  - ensignavenger 10y ago
    Income based repayment plans are even better in the US- if you have low income, you don't pay anything the same as you describe, payments go up with income... and loans are forgiven after 10-25 years, not 40!
deleted 10y ago
[deleted]
djsumdog 10y ago
> Student can default Um no. They can't. That's the problem with American student loans. It's the only contract you can enter into under 18 and you can never declare bankruptcy on them. It's the most bullshit type of loan there is. In grad school I put part of my car on Student Loans because it was 0%. My car load was 5.2%. After I graduated, my student loans shot up to 6.8%! I quickly dumped all my savings onto them and squashed them in three months. Even if I hadn't been able to to that, I probably had the credit to get a cash loan for under that and pay them off. Most students don't have that option.
- culturestate 10y ago
  By "default," GP means simply not paying - not bankruptcy. If someone can't afford to pay their student loans, they probably don't have assets in excess of their debt anyway.
  - coredog64 10y ago
    I'm not going to claim it is an epidemic, but I know a few people in this boat. Generally speaking they are able to get by with a few life hacks: Cohabitate rather than marry, work jobs under the table, and/or be the stay-at-home parent.
    - ensignavenger 10y ago
      Why would they allow their student loans to default in such a situation instead of enrolling in an income based repayment plan? If they have 0 income, they would have a payment of 0 dollars, still get their tax refund, and have their loans forgiven after a some time on the plan.
      - kaitai 10y ago
        Not all federal loans allow income-based repayment. For instance, parent PLUS loans aren't eligible, nor are other loans made to or through parents. Moreover, there are tons & tons of private loans (often with high interest rates) pushed at these places, and none of those need to offer income-based repayment.

ryuker16 10y ago

They dont unless its a government backed student loan or unless you have a co-signer. I cant imagine any private student loan for IIT that wasnt co-signed with massive interest rates.