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This article was from about 3 weeks ago: http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815?print=true http:
by johnrob 13y ago
This article was from about 3 weeks ago:
http://www.rollingstone.com/politics/news/ripping-off-young-america-the-college-loan-scandal-20130815?print=true http://www.rollingstone.com/politics/news/ripping-off-young-...
Short version: The government makes money off student loans, and there is no defaulting on them (unless you die of course). There are no incentives to keep tuition costs in check because the lenders (government) are happy to put more money into the asset class. We're getting to the point where the price of education can't be made up with an eventual increased salary. The author considers this to be an unfair tax on the lower middle class and an eventual drain on the economy.
- muzz 13y agoIf the government is making money off student loans, then how are they a subsidy? If profitable, that would imply that commenters calling loans a subsidy are simply incorrect.
- skylan_q 13y agoStudents are getting loans from the government on terms that they wouldn't be getting from the bank. That creates more effective demand for schools which drives up the price of tuition. If the banks did this and the student/graduate had to default, the bank would have to take a loss. The government isn't allowing default on the loans they themselves give the students, so they'll make sure they get their money back.
- muzz 13y agoPrivate student loans are generally non-dischargeable in bankruptcy also, as they typically meet Section 221(d)(1) requirements.