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We haven't guaranteed student loans since 2010 when the government started directly issuing student loans. Today 91% of student loan disbursements are public l

We haven't guaranteed student loans since 2010 when the government started directly issuing student loans. Today 91% of student loan disbursements are public loans that are funded directly from the treasury. The remaining new private loans aren't federally guaranteed (although we still make it difficult to discharge them in bankruptcy).

slg 8y ago
Undergrad students are limited to $31k or $57.5k in federal loans (including only $23k of subsidized loans) depending on whether they are a dependent or not. [1] That is still not enough for many students to attend their college of choice. I will admit I chose the wrong word in my prior comment when I said guaranteed since that has a very specific meaning in this context. I was using that phrase more colloquially because there are other ways that the government protects the lender beyond a literal guarantee. For example, student loan debt cannot be discharged in a bankruptcy like mortgages, medical debt, or credit card debt. This was done because a private lender is normally heavily disincentivized from loaning money to someone with no credit history, no collateral, no income, and no expectation to start making payments on the loan for years. [1] - https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#how-much https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsid...
- learc83 8y ago
  It's enough that only a small percentage of students are taking out private loans. New private loans are a very small part of the problem. I'm not really concerned with whether or not students are able to attend their "college of choice." If government loans provide enough to go to a state school, or even enough to live at home or off campus and go to a community college for the first 2 years, I'm fine with that. Also you'll notice that I mentioned bankruptcy in my comment.

slg 8y ago

Undergrad students are limited to $31k or $57.5k in federal loans (including only $23k of subsidized loans) depending on whether they are a dependent or not. [1] That is still not enough for many students to attend their college of choice. I will admit I chose the wrong word in my prior comment when I said guaranteed since that has a very specific meaning in this context. I was using that phrase more colloquially because there are other ways that the government protects the lender beyond a literal guarantee. For example, student loan debt cannot be discharged in a bankruptcy like mortgages, medical debt, or credit card debt. This was done because a private lender is normally heavily disincentivized from loaning money to someone with no credit history, no collateral, no income, and no expectation to start making payments on the loan for years. [1] - https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#how-much https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsid...

learc83 8y ago
It's enough that only a small percentage of students are taking out private loans. New private loans are a very small part of the problem. I'm not really concerned with whether or not students are able to attend their "college of choice." If government loans provide enough to go to a state school, or even enough to live at home or off campus and go to a community college for the first 2 years, I'm fine with that. Also you'll notice that I mentioned bankruptcy in my comment.