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If 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 s
by muzz 13y ago
If 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.