Dispatches from District 48
That's right, it's you. That taxpayer. So when the student loan bubble bursts, taxpayers are on the hook.
No surprise here. Guarantor of home mortgages, provider of student loans and the Fed buying government securities to provide liquidity. What could possibly go wrong?
We can post again?
I guess so, yay!
Now the interest rate on student loans will be a political topic. A politicians can pick up hundreds of thousands of votes by promising not to let the interest rate rise to market levels. Not only will taxpayers be on the hook for default, but also taxpayers will be subsidizing politicians' giveaways to special interests.
What is really annoying is how the government takes over. With student loans they rewrote the loan program so that no private bank could make any money from it. Then when banks stopped loaning, to save us the federalized the whole program to save us from the evil banks. Now the government does all the loans at sub-par interest rates, and they don't bother to figure if that career in sociology is actually worth getting a 150K loan, or if the student is even likely to complete the program - unlike a private bank would do if there were no government interference. So of course kids get "free" money for their sociolgy degrees, and fine arts degrees, and then after 4 years when the money is no longer free - there is a problem.