Re:U.S. forgives 40k student loans
by kevinsundar on Wednesday April 20, 2022 @01:29PM
(#31100243)
Colleges already have a mechanism for determining chance of success in college, and degrees have data on the average income after graduation. It would be trivial for private lenders to take into account the school, factors in standard college applications, the degree, and expected income to make a loan decision instead of relying on credit, debt-to-income, etc.
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And just hope students don't default right after they graduate? You realize how picky they'd have to get? 40% of undergrads drop out [0] who would probably all default alone which is completely unworkable to be profitable considering credit card default rates are between 1.5 and 7 percent [1] and look at the interest rates they charge.
It would also create a massive false negative problem where kids whom could have succeeded never got to go to college because banks would get so picky if they even were too somehow make a loan like that work.
[0]: https://educationdata.org/college-dropout-rates#:~:text=In%2....