[sethammons]

In all the cases you mentioned, the banks have risk. Normal lending falls into normal economic rules. We've (effectively) removed the risk for banks with education loan. Wanting "all their money" is a translation of "accept no risk." The risk is required for economic rules to apply.

Why should banks not accept risk at all? Why was 7 years protection not effective? I have seen no evidence that the previous protections banks had were insufficient.

[AnthonyMouse]

"No risk" is not a thing. For example, someone could borrow $250,000 from the bank and then get hit by a bus the day after graduation.

Moreover, interest isn't just about risk, it's the time value of money. If you put money in a CD at a major bank which is FDIC insured, the risk of you losing that money is as close to zero as anything reasonably gets, but you still get paid interest.

The risk premium is on top of that. And the higher the risk, the more interest people have to pay.