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> The debt is from private lenders, who do have incentive to ensure borrowers pay back. Not necessarily. Private banks issuing federally-backed student loans w
by nateabele 8y ago
> The debt is from private lenders, who do have incentive to ensure borrowers pay back.
Not necessarily. Private banks issuing federally-backed student loans want you to default, because then they double their money. See here: http://www.collegescholarships.org/research/student-loans/ http://www.collegescholarships.org/research/student-loans/
- JumpCrisscross 8y agoYour link doesn’t show how a defaulted loan is more valuable to a private bank than a performing loan. It would be more accurate to say private banks are relatively indifferent to the performance of a loan. (They’re actually marginally incentivised to collect performing loans, since that is a cross-selling opportunity.)
- dragonwriter 8y ago> Private banks issuing federally-backed student loans Don't exist. They used to, before 2010, though (the propagadagraphic you link obliquely alludes to that with it's reference to the “Obama changes” that it does not explain, perhaps because they render the flowchart entirely irrelevant.)