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Gee cry me a river: 'As a result, “the government has made it difficult for banks to price to default rates,” says Mike Cagney, founder of Social Finance, a
by pm24601 12y ago
Gee cry me a river:
'As a result, “the government has made it difficult for banks to price to default rates,” says Mike Cagney, founder of Social Finance, a socially based student lending operation known informally as SoFi. “By accepting FDIC insurance, banks lose pricing flexibility and can’t charge interest rates commensurate with the quality of schools—and default rates vary widely by schools.”'
How about the banks just get out of the student loan business?
Banks are make shitloads on the student loan program: all loans that default are insured.
- netcan 12y agoThe meat of the article is about the follow on effects from that. Higher default should mean higher interest rates is a higher cost which would push down enrollment in those underperforming schools (which also underperform for students) and/or push the the school's price down. To the extent that loans are insured, the banks profits aren't really affected by incorrectly priced risk. I'm very skeptical of free market solutions to higher education affordability issues. I think it's nonsense. But, screaming your slogan (fuck banks!) at a sentence from an article making a point about a different point of view is basically youtube comments.
- rlucas 12y agoThe "meat" of the article is PR hamburger for SoFi. (Not that SoFi aren't doing something genuinely interesting. But this is a straight-up advertisement. I'd bet a nickel that SoFi's agency even made the graphs for it.)