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by kube-system
1655 days ago
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In finance, interest rates are calculated with the formula: rate = risk free interest rate + inflation premium + default risk premium + liquidity premium + maturity premium Stable governments can currently borrow at or close to the risk free rate because inflation is low, stable governments are at low risk of default, and bonds are fairly liquid. These things are not the case for student debt, however. Selling a student loan is harder than selling a bond, and any individual borrower is less reliable than the entire US or Swedish government. The only other way to influence those rates is through direct intervention, like government subsidies, or other regulations that change the risk profile (like making student loans nondischargeable) Which is exactly what the US government does with their public loans, which are at lower rates than loans through any bank. (3.73% for undergrads) Sweden must subsidize their loans more. |
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