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Currently, the Federal Government stands ready to fund non-dischargeable student loans for anyone able and willing to go to approved colleges. The government has the lowest cost of funds ($0) of any lender and the interest rates owed by borrowers are set by Congress.
Students have little leverage outside of protests to negotiate prices with colleges and universities.
So when student loan borrowers agree to the cost of tuition, that’s like government validating or setting that price. Government is the one paying for it, at least initially.
Student loan debt is like “pay fors” that attempt to acquire government revenues so that this lending (spending) has a built in positive internal rate of return.
So the cost of tuition will continue to go up until there are revenue declines from lack of willing borrowers due to the price of and/or some cultural shift against the borrower’s value of a college education.
Meanwhile, all the student loan repayment plans (Income Based Repayment options) and defaults could dramatically reduce the value of the Department of Education’s financial assets (our loan debt repayments) and the govt’s internal rate of return.
So what we have is a mostly government owned and operated student loan industry w/ a privatized servicing contractor (Navient), that, oh by the way, does nothing that the Education and Treasury departments could not already do at lower cost.
So this whole thing is madness.
Grades and education outcomes are not the most important things.