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by lesuorac 1523 days ago
The same reason a bank offers a home mortgage? They expect to get a return on their investment.

Sure some student loans are going to get discharged and the lender will take a loss (just like with mortgages). But lenders with good enough actuaries are going to price their loans so that they make more than they lose and ideally the worse lenders will go out of business.
1 comments
kapp_in_life 1523 days ago
>They expect to get a return on their investment

They only give it to you if you have a downpayment, proof of income, and they can reclaim the asset if you default on payments.

None of those aspects apply to student loans. What's going to happen is loans will require cosigners and poorer students will be cut off from access to higher education unless they can get scholarships.

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lesuorac 1523 days ago
You can get mortgages without a downpayment. You'll often end up with higher interest payments though (IIRC PIM goes away once you have ~20% equity). That said you could ask students to take a gap year to have money for a downpayment (not everybody in my class was in my generation).

Proof of income would require them to have a job which I think a lot of students do (albeit work-study pays less than tuition costs). But is it really too much to ask a loan issuer to do the math on if a student can reliable pay the loan back?

Reclaiming an asset is harder though but its an unsecured loan so by definition there isn't any asset to reclaim.

-- > What's going to happen is loans will require cosigners and poorer students will be cut off from access to higher education unless they can get scholarships.

If the goal is for everybody (or more people) to get an education then it should just be subsidized in a normal fashion. No need to trap people in decades+ of debt. That said, I would suspect you'd see more people getting bachelor degrees subsidized by their jobs instead of just the masters. Which is what the article is really about, a bunch of government employees are having their DOE loans forgiven as the former students have met their end of the agreement.

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amf12 1523 days ago
> poorer students will be cut off from access to higher education unless they can get scholarships.

(trying to understand) How is it any different right now? Students likely to default right now are poor, and may not even be in a position to pay the debt. But the debt still stays active.

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