Episode 80: You Can’t Make College Free
Words & Numbers
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The Importance of Policy Prescriptions in Student Loans
If the loans are not guaranteed by the government as they are now, if the student defaults on the loan, the bank is left holding the bag. A bank takes tremendous interest in whether they believe that your business will succeed. If you're going to major in some weird major for which there is not much market demand, the bank's going to demand a high rate of interest because there's a much higher probability you'll default. You want to be a finance major,you're going to pay a much lower rate of interest. I think the better analog here would be business loans.
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