It's because The federal govt is making a nice profit off these low risk borrowers, which in turn subsidizes the high risk borrowers. Lose the low risk borrowe

It's because The federal govt is making a nice profit off these low risk borrowers, which in turn subsidizes the high risk borrowers. Lose the low risk borrowers from your portfolio and your overall expected return drops. In more concrete terms the Kellogg MBA in the article was paying the govt 6.5% interest, but the free market would do the deal for less than half that.