Originally posted by: O2bnVegas
Question: Are all college loans under one umbrella? I thought not. Don't some come from the college, some from different grants (e.g. Pell grant), some from faith-related organizations, some from the Federal Government, any number of originating sources that the prospective student applies for a loan from? Thus, I don't get what 'broad brush' forgiveness of a student loan is all about. Surely some of those sources grant the loan based on the prospect of it being repaid and are counting on repayment so monies can be churned into subsequent loans for newer applicants and/or other operations? I guess I'm dense.
Candy
If the gummint is involved in a student loan, the amount "carried" by the lending institution will vary, from 10% to 90%. The government essentially guarantees the rest. So rarely, if ever, would cancellation of a student lender's obligation to the government negatively affect the lender.
Since the news media has a way of dumbing things down, it hasn't been explained that this isn't "loan forgiveness" at all. It's a reduction of balances of the portions of student loans that are guaranteed by the government. And they apply only to debtors who meet income guidelines.
Furthermore, despite the idiot conservitard rhetoric, this won't affect or cause inflation at all. It just means that money stays in the pockets of borrowers instead of going into the pockets of banks. And the amounts are relatively small anyway. A person who receives $10,000 in loan forgiveness on a balance carried at 6% simple will have his loan payments reduced by $50 a month. That's not likely to make the earth spiral into the sun.
