Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W... by rhino369 on Tuesday December 10, 2019 @11:16PM (#21759532)

>Why was it necessary to change student loans to being non-dischargeable in bankruptcy?

To keep interest rates on student loans low and to make sure the loans are available to 18 year olds with no credit history.

There was a real problem with medical students racking up huge sums, declaring bankruptcy when they were making low money during residency, but then making 6 figure salaries a few years later.

>It seems like student loans should be treated like any other unsecured loan.

Nobody loans 18-22 tens of thousands (and 22-26 years olds hundreds of thousands of dollars) in unsecured loans.

And look at the interest rates for other unsecured loans. My credit card rate is 19%. Earnest gave me LIBOR + 3% on 200,000 dollars of student loans.

[ Parent | on HN ]

Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W... by azhenley on Tuesday December 10, 2019 @11:48PM (#21759682)

But federal student loan interest rates aren't low. Undergrads' loan options are determined by their parents' income, regardless of whether their parents are providing financial assistance. Graduate students can't take out subsidized loans at all anymore, even if they are on food stamps.

My loan rates are 6.55%. After 10 years of continuous school, that really, really adds up. I even had scholarships but they wouldn't cover my dorm, the mandatory meal plan, or summer classes so that I could finish undergrad faster. I looked to refinance with 3-4 different companies, like SoFi, but the lowest they offered was around 7% despite my very good credit score.

[ Parent | on HN ]

Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W... by plorkyeran on Wednesday December 11, 2019 @02:21AM (#21760329)

6.55% is low for an unsecured loan to someone without assets. Unsecured loans to people with good credit that can be discharged in bankruptcy have rates that are 3x that.

[ Parent | on HN ]

Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W... by listenallyall on Wednesday December 11, 2019 @02:51AM (#21760460)

>> without assets

and without an income

[ Parent | on HN ]

Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W... by dillonmckay on Wednesday December 11, 2019 @05:51AM (#21761304)

So, to lump medical degrees discharged in bankruptcy as a risk to undergrad loan financing is a bit disingenuous.

Not addressed to you, personally.

Lots of options here.

[ Parent | on HN ]