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by ceejayoz 74 days ago
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%
1 comments
JumpCrisscross 74 days ago
Hmm. I wonder why it doesn’t make sense to launch a private lender that offers lower rates.
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ceejayoz 74 days ago
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...

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JumpCrisscross 74 days ago
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/...

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ceejayoz 74 days ago
Same reason I can't easily start an AT&T/Verizon competitor.

Doesn't mean their pricing is that reasonable, or that funding education should be run this way in the first place. It just means there are big barriers to entry, often established by the existing players to protect their margins. The Fed rate for student loans should be lower.

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JumpCrisscross 74 days ago
> there are big barriers to entry

What are the barriers? Can I make non-dischargeable student loans at 5%?

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phil21 74 days ago
Finding investors willing to take less than 5% return (after paying for overhead and uncollectable loans being written off due to death/injury/ability to pay/etc) would probably be the primary one. You would likely be offering more or less the same or worse rate as I could get on a 10 or 30 year federal bond with more risk associated with it.

I know I’d be completely uninterested in such an investment pitch. It would work better as a charity ask for me.

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ceejayoz 74 days ago
> What are the barriers?

Lots of startup capital?

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