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>The lender is not guaranteed to be paid their principal back. This may apply for personal loans, where real money is given up; but, it's not really correct to
by windows_tips 8y ago
>The lender is not guaranteed to be paid their principal back.
This may apply for personal loans, where real money is given up; but, it's not really correct to call a bank, the originators of most private student loans, as far as I know, a 'lender'; as, banks don't lend their own money, but create new money through promissory notes.
- chimeracoder 8y ago> This may apply for personal loans, where real money is given up; but, it's not really correct to call a bank, the originators of most private student loans, as far as I know, a 'lender'; It is 100% correct to refer to a bank as a lender. This is standard use of terminology.
- windows_tips 8y agoDo you have an official reference? I would believe that persons in the industry may use slang terms, but technically it would be incorrect to refer to a bank as a lender in most 'loans' they perform. If you check the Promissory Notes, I'd guess they probably don't say "lender", except as possibly an alias for a definition that is not equivalent to the standard definition -- wherein, one forgoes actual physical property (cash, for example) for another's use; with the expectation that the property will be returned at some point (possibly with some form of payment to compensate for the real loss of property). Edit: Do you think Wells Fargo has myriad $100k bundles just sitting around waiting for students to take? I don't think so. They use their power to create new money, rather than loan out the entire principal from their reserves.