EAllusion wrote:Simply comparing default rates between mortgages and student loans doesn't make sense because if you default on your mortgage, you have a valuable assets that the lender can use to cover its losses. One of the main drivers of the mortgage rate is trying to figure out how cheaply a customer can be lent money while still getting enough return on investment to cover expenses and underwrite the risk of default.
Thanks. Put that way, it is easy to see why privately owned lending institutions have no choice but to charge higher interest rates for student loans than for mortgages. They don't benefit directly just because the recipient of the loan has a higher earning potential upon successful completion of the education financed by the loan. The government, on the other hand, has a potentially great financial incentive to subsidize higher education and/or the loans designed to enable it.
No precept or claim is more likely to be false than one that can only be supported by invoking the claim of Divine authority for it--no matter who or what claims such authority.
“If you make people think they're thinking, they'll love you; but if you really make them think, they'll hate you.”
― Harlan Ellison
I think I see the main cause of this woman's problem. If she had only paid back $32,700 in 23 years, that's an average of only $1,421.74 per year or $118.48 per month. Unless the annual interest rate on her loan was less than 5.39%, that would not even be enough to pay the yearly or monthly interest due on her loan. Why did she let herself be talked into a deal that allowed periodic payments that would not even cover the interest due on the loan? No wonder she is deeper in debt than when she first got the loan!
Monthly payments as little as $189 or so per month would have paid off a 6% interest rate loan of that amount in just 20 years--and the total amount of her payments ($45,360 or so) would have been close to what she now owes after 23 years. A 7.5% loan could have been paid off in that same time with monthly payments of $212 or so. Even I could handle payments like that with no great difficulty, if I had to. on my retirement pay, with only minor adjustments to my current lifestyle--and I am far, far from wealthy (at least not by American standards).
Nevertheless, I still think it should be possible to get a more than adequate education for less than $26,400.
No precept or claim is more likely to be false than one that can only be supported by invoking the claim of Divine authority for it--no matter who or what claims such authority.
“If you make people think they're thinking, they'll love you; but if you really make them think, they'll hate you.”
― Harlan Ellison
