These should be low yield non junk but for some reason they're high risk/high yield in spite of the principle being backed by the full faith and credit of the US Govt. and bankruptcy non-dischargability. There's a strange disconnect between the risk and the yield.
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This non-dischargeability of the student loan changes made by Congress baffles me and strikes me as terribly unfair, and I'll never be using a student loan.
I guess we should follow the money and ask whom does the bankruptcy non-dischargeability benefit?
It benefits people who can pay back students loans and people who need students loans to make extra money.
Before loans were non-dischargeable, you'd have students run up their debts and declare bankruptcy. This sort of fraudulent activity had no consequences since student loans are unsecured.
The result was that the private student loan market was small. Nobody was going to loan money they'd never get paid back.
Doesn't it also benefit universities who can then keep upping costs because the loans will rise to match the costs no matter what?
Prior to the change was there a shortage of student loans (with a lot less people choosing university) or did we just shift the loan balance from the government to private industry?