Comment: Obviously, it is ALL guess

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Obviously, it is ALL guess

Obviously, it is ALL guess work.

But private interest rates for student loans now are generally 2% higher than the rate the government gives.

You could argue that federal interventionism in the market has caused low rates overall.

But, before 2010, before jobs became scarce, student loans were paid back with a very high frequency. Federal student loans over 99% were paid back in full, and over 98% had no problems making payments after the first six months. When banks see that kind of return, they will be more likely to make money available for student loans, and rates will come down heavily. If you think about it, is a much safer investment than a business. Also, as I have mentioned before, the banks were buying into the economic hype of the Clinton and Bush years. Everyone was spending and investing was not done rationally. The fed did help inflate that attitude, but that attitude is their non-the-less. Everyone was buying into anything they could.

Another way to think about it; if the rate was 20%, that means that banks would see, for a 9-year investment, 200+% profit, which is insane. Someone would undercut them, considering they had a 98% non-default rate. Unless they all act in cahoots to prevent access to those funds.

In our current recession, you may have somewhat of a point, with a full payback rate of only 92%, and with over 30% of students having problems making payments. But I don't think it would cause too much of a rise in rates, since businesses are doing even worse (and its all relative over where the banks want to put their money).

Plan for eliminating the national debt in 10-20 years:


Specific cuts; defense spending: