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FTA: To make this product work on a mass scale, you need the government guarantee--and the government's ability to shield those loans from bankruptcy. The def
by maximilian 16y ago
FTA:
To make this product work on a mass scale, you need the government guarantee--and the government's ability to shield those loans from bankruptcy. The default rate on student loans is 7%, not all that much lower than the current 8.8% default rate on credit card loans--even though student loans are not dischargeable in bankruptcy, are deferrable for hardship, and are supposed to be made to people who end up with higher than average earning power.
How does one actually default on the loan if you can't default? Do they just stop paying?
- billswift 16y agoThe law is that student loans cannot be discharged through bankruptcy. There are several ways they can be legally defaulted on, for example if the person becomes disabled and begins receiving SSI. Plus, as you said they can simply not pay, but that completely and permanently trashes their credit, since it doesn't go away (or so I understand - I could be wrong about whether it eventually falls off their credit rating).