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Student loan interest rates should be tied to the major. Engineering major? $0 down, 3.5% interest rate. Art History major? 25% down, 15% interest rate.
by bluedevil2k 8y ago
Student loan interest rates should be tied to the major. Engineering major? $0 down, 3.5% interest rate. Art History major? 25% down, 15% interest rate.
- mythrwy 8y agoSounds like a recipe for an astronomical default rate.
- bluedevil2k 8y agoIt would theoretically lead to a lower default rate, as it would dissuade "art history" majors from pursuing that low-paying profession. As it stands now, the people who pursue higher paying majors are subsidizing those who pursue the lower paying majors. You can't seriously say that an engineering major is the same risk as an art history major. Then why should they pay the same interest rate? You aren't going to claim that everyone should pay the same mortgage rate, right?
- VikingCoder 8y agoWhy not just progressive taxation? Don't predicate the rate on a hypothetical earning... Base it on actual earnings.
- bluedevil2k 8y agoThe interest rate is acting as a market signal to pursue majors/professions that would lead to higher actual earnings.
- aianus 8y agoIt seems like it might be a good business to offer to refinance loans for, say, CS students at top-tier schools at a lower rate than the government loans. Ideally that would raise the default rate of the government loans and push up the interest rates of the arts students. Right now the STEM majors are subsidizing everyone else if the interest rates are the same.
- chillacy 8y agoI thought that was a pretty good idea so I looked to see if it was legal and lo and behold: https://www.upstart.com/ https://www.upstart.com/ A startup exists which refinances loans based on college major and SAT scores