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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: wonk who wrote (187753)	4/29/2012 10:26:10 AM
From: Bread Upon The Water	Respond to of 543046

"For all practical purposes the loans are perfectly secured, and thus should get a rate no more than say 50 basis points above the 10-30 year T-note/T-bond rate. While the loans are not secured by tangible or real property, they are personally guaranteed and cannot be expunged in bankruptcy. That guarantee is perfected by the full power of the United States Government to force collection (wage garnishments for life)." Legally they're secured by the graduated student's earning power, but practically speaking it is another story. What is the government going to do? Chase every unemployed graduated student around the country for the rest of their life? They really can only collect on working students who have acquired assets. So they realistically will have to carry so many underperforming/non-performing loans on the books--and to pay off the cost of that is why they need, presumably, the higher interest rates. The "no bankruptcy" rules went into effect for student loans because so many of them "gamed" the system by graduating from college with no assets, filed for bankruptcy, and wiped out the debt.