[QuarterReptile]

Your numbers support parent's argument. It's an unsecured loan to 18 year olds, given in identical fashion at institutions where non-graduation rates are substantial.

Those rates should clearly be higher than the rates for Americam mortgages, which, after all, have down payments and are secured by the most privileged asset in the history of the world.

[FireBeyond]

If they weren't protected from discharge, they would be. That's why the rates are lower, because there's no loan maturity, it just keeps generating interest until it is paid off.

If the argument is "student loan interest rates should be higher" then 1) they should be dischargable, and 2) I'm not sure I'd agree. Though I'd hope that that (and falling applications to schools) would have a downward pressure on tuition rates, I'm skeptical that would happen. So now student loans just become more expensive, and less attainable.