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Better answer: just stop central government guarantees on loans. State guarantees are what allow FM&FM to lend money without regard for actual risk management,
by sooheon 3y ago
Better answer: just stop central government guarantees on loans. State guarantees are what allow FM&FM to lend money without regard for actual risk management, because they know they will be bailed out.
Remove the guarantees, and banks will actually have to do their due diligence on credit risk. No need for clunky regulation, when this is what the credit market is for.
- vxNsr 3y ago[flagged]
- PartiallyTyped 3y agoWhy not allow defaults on federal loans?
- sooheon 3y agoSure. Or why have federal loans at all?
- PartiallyTyped 3y agoPrecisely; tertiary education should be free as it’s a matter of natsec.
- thom 3y agoWhat effect would this have on the type of people would got to go to college?
- sooheon 3y ago1. It would lower price of education, because you no longer have a source of infinite credit. 2. More people would "get to" go to college, because 1. 3. Those who do get loans, would get loans proportional to the value the education will generate. 4. Unprofitable majors will become cheaper to take. Also, this isn't just about student loans, it's an even bigger problem for mortgages.