Why do you think this will lead to new loans getting cheaper? It seems like it would make loans riskier (there’s now a precedent that creates less incentive for future borrowers to make repayments) and thus more expensive.
I said that if it proves the feasibility of larger. government subsidies on student loans, it could pave the way for future government policies that subsidize new loans. Banks don't care if they're getting paid by the borrower or the government, as long as they're getting paid.
Someone in another thread suggested that universities will raise their tuition to offset the subsidies, for no reason other than profit. I hope that's not the case (it's dystopian to think education is subject to price gouging out of greed, but then I suppose if medicine is, we're already in that dystopia). But even if it is, the tuition would raise equal to the subsidies and the cost to the student wouldn't increase, it just wouldn't decrease.
Best case is universities aren't entirely heartless and realize that they're surviving and profiting just fine on the current tuition, and the education they provide is so important that they shouldn't just raise costs arbitrarily "because they can" in spite of their students. In which case, the loan principals remain the same, but the student pays less.
Worst case, as mentioned above, is we're in a true capitalist dystopia, in which case the costs won't get cheaper, but they also won't get more expensive.
You mentioned the risk of nonrepayment. There is no increased risk of that: the loan servicers will definitely get repayed by the government, and the remaining balance (if there is any) has lower risk of nonrepayment from the student because the payments will be lower, and thus easier to afford.
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Why do you think this will lead to new loans getting cheaper? It seems like it would make loans riskier (there’s now a precedent that creates less incentive for future borrowers to make repayments) and thus more expensive.
I said that if it proves the feasibility of larger. government subsidies on student loans, it could pave the way for future government policies that subsidize new loans. Banks don't care if they're getting paid by the borrower or the government, as long as they're getting paid.
But you don’t think that will cause them to get more expensive?
Someone in another thread suggested that universities will raise their tuition to offset the subsidies, for no reason other than profit. I hope that's not the case (it's dystopian to think education is subject to price gouging out of greed, but then I suppose if medicine is, we're already in that dystopia). But even if it is, the tuition would raise equal to the subsidies and the cost to the student wouldn't increase, it just wouldn't decrease.
Best case is universities aren't entirely heartless and realize that they're surviving and profiting just fine on the current tuition, and the education they provide is so important that they shouldn't just raise costs arbitrarily "because they can" in spite of their students. In which case, the loan principals remain the same, but the student pays less.
Worst case, as mentioned above, is we're in a true capitalist dystopia, in which case the costs won't get cheaper, but they also won't get more expensive.
You mentioned the risk of nonrepayment. There is no increased risk of that: the loan servicers will definitely get repayed by the government, and the remaining balance (if there is any) has lower risk of nonrepayment from the student because the payments will be lower, and thus easier to afford.