5 ms·

I don't think the other comment is accurate. edit: Yeah, that other comment is talking about European rates, not American rates. https://studentaid.gov/unders

I don't think the other comment is accurate. edit: Yeah, that other comment is talking about European rates, not American rates. https://studentaid.gov/understand-aid/types/loans/interest-rates/ https://studentaid.gov/understand-aid/types/loans/interest-r... 6.39% to 8.94%, and that's for Federal. Private ones tend to be even higher. 7/1/21–6/30/22 3.73% 7/1/20–6/30/21 2.75% 7/1/19–6/30/20 4.53% 7/1/18–6/30/19 5.05% 7/1/17–6/30/18 4.45% 7/1/16–6/30/17 3.76%

JumpCrisscross 7mo ago
Hmm. I wonder why it doesn’t make sense to launch a private lender that offers lower rates.
- ceejayoz 7mo ago
  The Fed rate is too high for the low risk involved. Private student loans are similarly protected from bankrupcty, and don't have things like income-based repayment; they are, if anything, safer for the lender. https://studentaid.gov/understand-aid/types/loans/federal-vs-private https://studentaid.gov/understand-aid/types/loans/federal-vs...
  - JumpCrisscross 7mo ago
    Sure. I’m saying why couldn’t you and I start C & J Lenders Inc. and undercut those guys. Say, 5% for a 20-year loan [1]. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=202604 https://home.treasury.gov/resource-center/data-chart-center/...
    - ceejayoz 7mo ago
      Same reason I can't easily start an AT&T/Verizon competitor. Doesn't mean their pricing is that reasonable, or that funding education should be run this way in the first place. It just means there are big barriers to entry, often established by the existing players to protect their margins. The Fed rate for student loans should be lower.
      - JumpCrisscross 7mo ago
        > there are big barriers to entry What are the barriers? Can I make non-dischargeable student loans at 5%?
        ceejayoz 7mo ago
        > What are the barriers? Lots of startup capital?
        scarecrowbob 7mo ago
        The inability to issue fiat currency based on a fraction of my actual holdings?
        Jensson 7mo ago
        That is what taking a loan is, you are able to do it, its how you afford your homes etc. The bank is the essential guarantor in that transaction, without the bank the person you buy the home from doesn't trust you enough but the bank has that trust. So essentially governments build trust with banks so those banks can issue fiat currency. Then those banks build trust with people like you so you can use the bank to issue fiat currency. Its the same system, bank pay interest to central bank for doing that and you pay interest to the bank. If you mean why you can't get money from the central bank? Its just that you haven't built trust with them. But you can do so indirectly by taking a loan from your local bank, and that trusted middleman takes a fee for it.
        phil21 7mo ago
        Finding investors willing to take less than 5% return (after paying for overhead and uncollectable loans being written off due to death/injury/ability to pay/etc) would probably be the primary one. You would likely be offering more or less the same or worse rate as I could get on a 10 or 30 year federal bond with more risk associated with it. I know I’d be completely uninterested in such an investment pitch. It would work better as a charity ask for me.

JumpCrisscross 7mo ago

Hmm. I wonder why it doesn’t make sense to launch a private lender that offers lower rates.

ceejayoz 7mo ago
The Fed rate is too high for the low risk involved. Private student loans are similarly protected from bankrupcty, and don't have things like income-based repayment; they are, if anything, safer for the lender. https://studentaid.gov/understand-aid/types/loans/federal-vs-private https://studentaid.gov/understand-aid/types/loans/federal-vs...
- JumpCrisscross 7mo ago
  Sure. I’m saying why couldn’t you and I start C & J Lenders Inc. and undercut those guys. Say, 5% for a 20-year loan [1]. [1] https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=202604 https://home.treasury.gov/resource-center/data-chart-center/...
  - ceejayoz 7mo ago
    Same reason I can't easily start an AT&T/Verizon competitor. Doesn't mean their pricing is that reasonable, or that funding education should be run this way in the first place. It just means there are big barriers to entry, often established by the existing players to protect their margins. The Fed rate for student loans should be lower.
    - JumpCrisscross 7mo ago
      > there are big barriers to entry What are the barriers? Can I make non-dischargeable student loans at 5%?
      - ceejayoz 7mo ago
        > What are the barriers? Lots of startup capital?
        scarecrowbob 7mo ago
        The inability to issue fiat currency based on a fraction of my actual holdings?
        Jensson 7mo ago
        That is what taking a loan is, you are able to do it, its how you afford your homes etc. The bank is the essential guarantor in that transaction, without the bank the person you buy the home from doesn't trust you enough but the bank has that trust. So essentially governments build trust with banks so those banks can issue fiat currency. Then those banks build trust with people like you so you can use the bank to issue fiat currency. Its the same system, bank pay interest to central bank for doing that and you pay interest to the bank. If you mean why you can't get money from the central bank? Its just that you haven't built trust with them. But you can do so indirectly by taking a loan from your local bank, and that trusted middleman takes a fee for it.
      - phil21 7mo ago
        Finding investors willing to take less than 5% return (after paying for overhead and uncollectable loans being written off due to death/injury/ability to pay/etc) would probably be the primary one. You would likely be offering more or less the same or worse rate as I could get on a 10 or 30 year federal bond with more risk associated with it. I know I’d be completely uninterested in such an investment pitch. It would work better as a charity ask for me.