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SVTPerformance's Chain of Restaurants
Road Side Pub
Student Loans: Who's got em, and who thinks its a bubble
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<blockquote data-quote="black4vcobra" data-source="post: 16074135" data-attributes="member: 82394"><p>I think you are looking into it too deeply, that or I'm missing something myself. The (obvious) reason why banks/government loan money is because they earn a rate of return on it, otherwise there would be much less incentive to lend. Currently the federal student loan rate is 5.05%. If inflation is less than that, which it is as it's recently been around 2% annually, the lender makes money assuming 0 defaults. </p><p></p><p>Of course we know there still are defaults even though unemployment is low so the profitability cushion is reduced. Its not easy to get rid of student loan debt though so most of the time the lender gets their money one way or another. </p><p></p><p>I thought it was common knowledge the government makes a net profit on student loans - <a href="https://money.cnn.com/2016/08/04/pf/college/federal-student-loan-profit/index.html" target="_blank">Is the government making money off your student loans?</a></p></blockquote><p></p>
[QUOTE="black4vcobra, post: 16074135, member: 82394"] I think you are looking into it too deeply, that or I'm missing something myself. The (obvious) reason why banks/government loan money is because they earn a rate of return on it, otherwise there would be much less incentive to lend. Currently the federal student loan rate is 5.05%. If inflation is less than that, which it is as it's recently been around 2% annually, the lender makes money assuming 0 defaults. Of course we know there still are defaults even though unemployment is low so the profitability cushion is reduced. Its not easy to get rid of student loan debt though so most of the time the lender gets their money one way or another. I thought it was common knowledge the government makes a net profit on student loans - [URL="https://money.cnn.com/2016/08/04/pf/college/federal-student-loan-profit/index.html"]Is the government making money off your student loans?[/URL] [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Student Loans: Who's got em, and who thinks its a bubble
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