Bernie Sanders apparently has Fauxcahontas for an economic advisor

[Adam]

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The man who would be President....

[Billy Jingo]

Meh. Generic Western Democratic Socialist with a respect for gun rights (non cult variety).

Try not to freak out that he doesn't worship The Market.

[scott]

Meh. Generic Western Democratic Socialist with a respect for gun rights (non cult variety).

Try not to freak out that he doesn't worship The Market.

What does "market worship" have to do with it? He seems to have failed economics and has decided that we need a chief micromanager to pick and choose who gets cheaper loans.

6 8 10%? That's way cheaper than my student loans were. It's also an issue with the government creating this problem by switching to fixed rate loans instead of variable rate loans. The loans themselves are actually fixed but the rate for different loans used to vary for each loan - now they are fixed for all loans. It's the problem with socialism - one size never fits all.

https://static.newamerica.org/attachments/2339-student-loan-interest-rates-history-subsidies-and-cost/Interest%20Rates%20Issue%20Brief%20Final_0.dd93f4cdc2a8402fbc921f7c61ca3ead.pdf

Now Bernie proposes to fix this with yet another government policy.

[Adam]

Meh. Generic Western Democratic Socialist with a respect for gun rights (non cult variety).

Try not to freak out that he doesn't worship The Market.

Good grief.

I take it that you, too, either do not understand why there is interest on loans, or else just refuse to accept the reality of why there are varying interest rates depending upon the type of risk involved.

Unsurprising.

[Tom Servo]

Socialist man cries that poor people have to pay 6-10% interest on student loans while homeowners get a low 3% rate.

Capitalist man cries that he isn't making enough money off the 3% loan when student loans are so much more lucrative.

Life goes on.

[Frostbit]

when student loans are so much more lucrative.

Not when those taking them out think that they are an automatic ticket to a future. College is not, especially today and once the "everybody gets a trophy" generation graduates, if they graduate, and can not summon the work ethic required to be successful in the real world they then default on those loans. Not a "lucrative" investment for anyone with sense.

[Adam]

Not when those taking them out think that they are an automatic ticket to a future. College is not, especially today and once the "everybody gets a trophy" generation graduates, if they graduate, and can not summon the work ethic required to be successful in the real world they then default on those loans. Not a "lucrative" investment for anyone with sense.

Gosh, you make it sound like student loans carry more risk than a loan on a house. How can that be?

[Djharkavy]

Gosh, you make it sound like student loans carry more risk than a loan on a house. How can that be?

Not when the government guarantees them, and they can't be discharged with bankruptcy.

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[Adam]

Not when the government guarantees them, and they can't be discharged with bankruptcy.

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And when that student can never, ever pay off the loan because they never get a job above fry cook, what collateral gets taken back for the loan?

[Djharkavy]

And when that student can never, ever pay off the loan because they never get a job above fry cook, what collateral gets taken back for the loan?

None.
The government covers it for the bank and then the country as a whole covers the debt. The ball has no risk with the standard loans.

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[scott]

None.
The government covers it for the bank and then the country as a whole covers the debt. The ball has no risk with the standard loans.

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22% of private loans are not government-backed and those are the ones with higher interest rates.

[Djharkavy]

22% of private loans are not government-backed and those are the ones with higher interest rates.

I agree that those should have higher rates.

But Federally insured rates vary from 4.29 to 6.84%, with no risk for the bank.



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[scott]

I agree that those should have higher rates.

But Federally insured rates vary from 4.29 to 6.84%, with no risk for the bank.



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The bank isn't charging or fixing the rate, that's the government. Bernie is complaining about a problem he helped create.

Note the distinction between the government program and the for profit mortgage sector which is charging much lower rates.

[Frostbit]

None.
The government covers it for the bank and then the country as a whole covers the debt. The ball has no risk with the standard loans.

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So they are a bad investment with higher interest rates in the hopes of covering the bad debt they create. Similar to the increased insurance rates created by the ACA when the percentage of enrollees not getting a subsidy turned out drastically lower than "predicted".