Quote:
Originally Posted by 2000cs
#1 is interest on the student loan. This is not a tax, it is the cost of borrowing. While the rate may appear high, it is not as high as credit card interest, for example. The rate reflects the cost of money, its time-value, and the risk of non-payment including late payment (including associated collection costs), and the deferred start to payments for a variety of reasons (one would be loans to a freshman can’t expect to begin payments until after graduation, so at least 4 years). It also likely includes some actuarial cost since not all borrowers will live long enough to repay in full, but I suspect that is small. These loans would not exist without the federal guarantee, which protects the lenders from loss. Taxpayers pick that up, along with program administration costs. None of this is a tax to the borrowers, in fact it is a taxpayer funded subsidy.
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There is no other lender. We’re talking about loans issued purely by the federal government.
This whole tangent is due to
Watching The World Burn being so bent out of shape at the use of the word profit when referring to revenues that exceed expenses on a government program. But also not wanting to call it a tax. But it is “interest”.
Interest is revenue generated on loans which drives profits on loans. Just like rent is revenue generated on real estate that drives profit on real estate.
The double speak is insane.