3 ms·
Those institutions that can convince lenders that graduates will be in a position to pay back the loans quickly will be able to offer lower rates to students, a
by brown9-2 13y ago
Those institutions that can convince lenders that graduates will be in a position to pay back the loans quickly will be able to offer lower rates to students, and thus attract more and better students.
This assumes that a lender's primary interest is in having a loan repaid quickly. I don't think it's true - they are in it to make a profit, and exploiting the young adult with penalties and hidden fees or tricks helps expand that profit.
- mseebach 13y agoNo, true, they won't care about the speed. But they will care about the default rate - and the ability to pay the debt down faster correlates strongly with a lower risk of default.
- brown9-2 13y agoBut all other things being equal, would they choose a speedy repayment or a slower, more expensive schedule? I think one good reason for government participation in the student loan market is that it helps reduce exploitation of the borrowers, who are mostly just-turned-18 adults so eager to attend a college they'll sign anything.
- mseebach 13y agoAll other things being equal, just like with mortgages and credit cards and car loans and other credit products, there will be different options with different terms available from different providers. Including these guys: http://www.economist.com/news/finance-and-economics/21578670-peer-peer-lending-needs-new-name-end-peer-show http://www.economist.com/news/finance-and-economics/21578670...