I had the impression that this was happening because they had excess cash and nowhere particularly interesting to put it. Why would you borrow if you have cash sitting around and expectations of a good-to-crazy rate of return?
I'm sure that some people can't afford to live and take these loans. I've also personally known people who take them because they're terrible at managing money, and they make impulsive choices.
I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it. That's how it is supposed to work. We don't typically reward people for digging themselves into a hole by bailing them out. Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
I can't see the logic in it either, by the time they're done paying off a typical loan even for the $87k variant, you would be up into triple figures for it. It could have cost as much as some people's homes.
Because of risk. Just because there's 10k people out there that can afford to borrow and repay, doesn't mean you set 100k loans hoping you got some of them.
This is exactly it. Now if LendUp would lend someone $200 for 30 days for a $1.50 (APR of 9%) they wouldn't be extortionate in their rates, but they would be leaving money on the table that they could be taking from people who really need a loan. And what lender ever likes to leave money on the table?
Because it's a dumb predatory loan that should never have been made in the first place. There is a type of business for making dumb loans and using force to ensure they are paid back: the mafia.
The mafias of old are nothing in size when compared to the student loan industry.
Didn't the loan place a lot of restrictions on them? You have to trade off the low interest rate against that, especially when the rate they are getting with the bonds isn't that much worse.
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