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I'm not entirely sure what FHA did to the housing market, but as for student loans, yes it wasn't a great outcome, but it is a substantially better outcome than
by notus 7y ago
I'm not entirely sure what FHA did to the housing market, but as for student loans, yes it wasn't a great outcome, but it is a substantially better outcome than everyone being in debt with high interest rates with predatory lenders.
- entropicdrifter 7y agoExcept that student loans can't be abandoned even if you declare bankruptcy. That one little factor makes them some of the worst loans imaginable in terms of long-term prospects.
- notus 7y agoStill not worse than triple digit interest rates
- godzillabrennus 7y agoThose unpaid predatory loans fall off your credit report after about a decade. Student loans are forever.
- deleted 7y ago[deleted]
- chasd00 7y agothe tradeoff is insanely low interest rates. Without the federal backstop student loans would have the interest rates of credit cards because as soon as new graduates get into the workforce, can't find a job, they'll file for bankruptcy to get out of the loan. Managing that risk without a backstop means incredibly high interest rate to cover for the losses of loans lost in bankruptcy.
- deleted 7y ago[deleted]
- dsfyu404ed 7y agoStudent loans didn't have those kinds of interest rates back when they could be discharged in bankruptcy 20+yr ago. Why would they now?
- mrguyorama 7y agoThe downside/risk to the lender is about 10x higher per loan than it was 20+ years ago
- deleted 7y ago[deleted]
- woeirua 7y agoNo, it's not a better outcome than if the market was private because frankly no one would graduate with $150k in debt for a degree in basket weaving if private lenders were backing the loans. A well regulated private market would prevent the extreme situations that we are seeing today. You can make a (somewhat legitimate) argument that we shouldn't require young kids to major in subjects that result in good paying jobs, but on the other hand you wind up with the mess that we are in if you don't. The status quo cannot go on. I'm in favor of either fully privatizing the system again, OR fully socializing it. In either case, the government would absolutely not be backing loans anymore.
- heavenlyblue 7y agoWhat does it mean to “fully socialise it” in the context of being from the US? Do you mean buying out all of the universities? PS: I come from Europe, studied in the UK when the tuition was capped at £3K/year.
- woeirua 7y agoNo, it would mirror the European experience. Essentially just capping the cost of tuition, fees and room/board and subsidizing the schools to an extent to make up the difference.
- heavyset_go 7y ago> No, it's not a better outcome than if the market was private because frankly no one would graduate with $150k in debt for a degree in basket weaving if private lenders were backing the loans People get private loans for bullshit degrees all of the time. Lenders don't care, because private student loans are non-dischargeable.
- woeirua 7y agoIn a privatized system student loans would be dischargeable under the existing bankruptcy laws, as they were before Congress changed the law.