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by harryh 3784 days ago
If you think that student loans are systematically overpriced you should consider starting a student loan company that charges a lower interest rate. There are ample backers for this sort of thing if you have strong enough evidence for your thesis.

Or maybe student loans are pretty much a commodity product in which sellers viciously compete to provide the lowest possible price so the interest rates we see are commensurate with the actual risk being taken.
1 comments
unprepare 3783 days ago
shifting the goalposts

i didn't say student loans are overpriced, i said a student loan is lower risk than most other types of loan, since it is non-dischargeable debt.

That is the argument i'm making and your response doesn't address any of it.

also, in case you arent aware, the overwhelming majority of student loan debt has been financed through federal and state government programs, not the private market "in which sellers viciously compete to provide the lowest possible price" as you seem to believe

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harryh 3783 days ago
1) Loans are priced based on their risk! Saying student loans are actually less risky than lower priced loans IS saying that they are overpriced.

2) You are correct that most student loans are financed by government programs. That allows them to undercut even the viciously competing private market because the government isn't trying to make a profit. So that makes the loans even cheaper which makes your assertion that they're overpriced more, not less, ridiculous.

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unprepare 3783 days ago
Congress sets the rate for federal student loans, they are not based on their risk.
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unprepare 3783 days ago
To whomever is downvoting my comment:

>Rather, pricing and loan limits are politically determined by Congress

https://en.wikipedia.org/wiki/Student_loans_in_the_United_St...

>Who sets interest rates for federal student loans?

>Interest rates on federal student loans are set by Congress.

https://studentaid.ed.gov/sa/types/loans/interest-rates

Also, there have been several bills proposed to congress to lower the loan rates, and to allow refinancing of existing loan rates. Anyone saying federal loan rates are determined by some actuary calculating risk is plainly wrong.

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