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Comment by lordnacho | Hacker News Reader

The government is a very different credit risk to a student. More likely to default -> higher interest rate.

Having said that I do think they've got something wrong over there.

The point would be that the government assumes the risk of all students as a collective. With government rates much fewer people would default.

Fewer of the people who are currently borrowing would default. That's not the same as fewer people would default.

Lower rates will cause more people to take a loan, and you have to think they are the more marginal students.

Then you're left with whether it's ok for society to pay for more people trying college and not finishing. A political question of course.

Private student loans often have very high rates, like credit cards.

Very easy to end up paying $200,000 to retire a $50K debt.

> Private student loans often have very high rates, like credit cards.

Credit card rates are often something like 20%. Are student loan rates really that high?

I've seen people with above 10%.

My highest was 14%. At their suggested payment rate it was going to take something like 15 years to pay off because the payments are mostly just covering interest. Without giving too much information away this loan was for an in-state state university, not some crazy expensive private school. It's borderline criminal in my opinion.

I'm so glad I was talked into going to a state university instead of the great private school I got accepted at, the loans for that would still be absolutely soul crushing. The loans I have now are just mildly soul crushing.

I thought the unspoken truth was almost nobody actually pays the published private tuition rates so it’s usually actually cheaper or even free to go to a private university?

Maybe people more well off or the opposite than I. As someone smack dab in the middle (my parents were just starting to make OK money and not struggle as I finished high school, AKA non-existent savings but current income looked good) the university said our out of pocket costs were around $40k a year when we sat down with financial aid. They give you next to nothing in cases like that, it is expected to be all parents money or loans. Not happening.

That was the case for the 2 private schools I visited while in the process of picking a college. Very small sample size of course, YMMV.

it is expected to be all parents money or loans

It's really problematic for large families, where schools expect parents of six kids to pay tuition as if they only had one kid.

Or I wonder what happens when you have parents who just decline to pay for you.

I had parents that not only refused to pay, but also refused to fill out the FAFSA forms. At the time even being an emancipated minor wasn't enough to not look at your parents for non private loans or grants.

I only got private loans and dropped out after one year. I couldn't make the numbers work beyond that.

Or my friends who were twins, but all of the algorithms were setup as if they wouldn't be going to college concurrently for some reason.

They'll knock a few grand off for various points, kind of like you're buying a new car. You're still spending a lot of money. Think of it as a car dealership with promotional giveaways.

Depends on the private university. At the very top (HYPMS), that's true (unless your family is very wealthy). It was cheaper for me to attend Yale than my sister to attend UT Austin, despite my parents being fairly affluent (dual-income engineers).

But the generosity of grants falls off sharply as you leave that tier. Financial assistance at schools like NYU are almost 100% in the form of loans.

Sounds like you screwed up. Current private student loan rates are on the order of 3-5%. Refi's are less than that. And that's ignoring the newfangled stuff like ISAs where there aren't even any loans to begin with.

I would *love* to know how you think I 'screwed up' as a high school kid who applied for and accepted the only college loans that were approved. My parents and I went to the planning workshops to prepare for college, we filled out the endless forms, we jumped through all the hoops. That is what I got.

It seems that a whole generation must have screwed up as well - because I am far from a unique case here. The constant talk of student debt forgiveness, default rates, and tuition costs must all just be about nothing then, my bad.

What an absurd comment.

> constant talk of student debt forgiveness

This is mostly because a lot of people got useless degrees that don't result in high paying jobs, not because of some intrinsic cost of education. The number of STEM degrees awarded [1] is far outstripped by non-STEM degrees in both number of degrees awarded and growth rate [2].

I am merely saying the current private student loan rate is 3-5%. It is not possible for substantial interest to accumulate at that rate, particularly if you factor in inflation (6.8% YoY this month...)

[1]: https://www.nsf.gov/nsb/sei/edTool/data/college-14.html [2]: https://nces.ed.gov/programs/digest/d12/tables/dt12_310.asp

Are you under the false impression that the majority of people taking loans for college only utilize government provided ones? I don't believe that to be true, everyone I know (including myself) had to utilize private providers such as Navient (SallieMae) or others to cover college tuition. That is where the insane interest rates come from and aren't reflected in your data of 3-5% rates.

Them being 'private' loans is a bit misleading as well, as they are technically backed by the government, as far as even bankruptcy will not remove them. Navient is just the servicer & middleman to collect the profits. It's more complicated than this of course but that seems to be the gist of it.

My CC’s are at 10% and 12%, many student loans are in that range.

20+% CC are out there but that’s often a tradeoff for cash back programs or for people with bad credit.

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