[standardUser]

In the US, student loan interest rates tend to be close to market (which I find despicable) and there is no automatic forgiveness. In fact, student loan debt has extra rules in the US making it difficult to get discharged in bankruptcy, so even that route doesn't work for a lot of people.

[ceejayoz]

Yeah, I find this deeply frustrating. Interest rates are supposed to reflect the level of risk, and student loans are deeply low-risk to the lender.

[phil21]

Risk is only one component. Opportunity cost and the time value of money is another.

Risk premium is on top of the other bits.

[JumpCrisscross]

> student loans are deeply low-risk to the lender

Based on the other comment, they absolutely reflect that.

[ceejayoz]

I don't think the other comment is accurate.

edit: Yeah, that other comment is talking about European rates, not American rates.

https://studentaid.gov/understand-aid/types/loans/interest-r...

6.39% to 8.94%, and that's for Federal. Private ones tend to be even higher.

  7/1/21–6/30/22  3.73%
  7/1/20–6/30/21  2.75%
  7/1/19–6/30/20  4.53%
  7/1/18–6/30/19  5.05%
  7/1/17–6/30/18  4.45%
  7/1/16–6/30/17  3.76%

[JumpCrisscross]

Hmm. I wonder why it doesn’t make sense to launch a private lender that offers lower rates.

[ceejayoz]

The Fed rate is too high for the low risk involved.

Private student loans are similarly protected from bankrupcty, and don't have things like income-based repayment; they are, if anything, safer for the lender. https://studentaid.gov/understand-aid/types/loans/federal-vs...

[JumpCrisscross]

Sure. I’m saying why couldn’t you and I start C & J Lenders Inc. and undercut those guys. Say, 5% for a 20-year loan [1].

[1] https://home.treasury.gov/resource-center/data-chart-center/...

[retired]

Had to look it up, it is 2.3% for 2026 which is a bit below the Euribor 1 year rate. Between 2017 and 2022 it was 0%.

Loan forgiveness happens after 35 years so for most academics that is about 10 years before retirement. Forgiveness also happens upon death.

Bankruptcy is a bit different here. We have a program where someone manages your finances for about three years, and after that most remaining debt is forgiven. However, student debt is an exception, that one stays

[musicale]

> Forgiveness also happens upon death.

Comforting I'm sure. But it wasn't always that way:

"Six years after the death of Christopher Bryski, a 23-year-old student at Rutgers University, Key Bank has agreed to forgive his student loan. But Bryski's family is not stopping there: It's now fighting to change the laws in the hope of sparing others the trauma it endured as lenders continued to hound it for payment on its dead son's debts."

And it might not be mandatory:

"But it is guidance, not law, and it does not cover creditors collecting their own debts, as they are not covered by the FDCPA (Fair Debt Collection Practices Act)," she said.

https://abcnews.com/Business/bank-forgives-dead-students-loa...