student loans pt 2

Living in the US has transformed me from a flaming libertarian to an ardent happy-to-pay-lots-of-taxes socialist.

This is one of the reasons.

How does it work in Sweden? Well, for starters, the agency you deal with as a student is a government agency, not private, no expectations on profit, no incentives to misbehave. Furthermore, half of what you get is a public, available to ALL stipend, the other half is a loan. Finally, monthly cost to the student for your studies is on the scale of $30. For every university in Sweden.

But his previous post showed this to largely be the work of the government.

Is everyone in Sweden guaranteed access? Scouting around the Internet a little, it looks like both the fraction of people graduating from high school and the fraction attending college are noticeably higher in the US.

I don't think the previous post showed that it was largely the work of the government. What I understood from that is that it was largely the work of the loan companies, who also managed to get the government to make student loans no-risk for the lenders (both by making them impossible to clear through bankruptcy, and by guaranteeing the loans in case of default).

That's interesting though - I just checked the Sallie Mae website, and most of their loans seem to be at the interest rate of LIBOR + 10% or so. That seems ridiculously high to me. I wonder if there's any reason why student loan interest rates are so much higher than other forms of credit (apart from credit cards, which seem to be in the 13-20% range). If anything, all these government guarantees should reduce the interest rate by making the loans less risky - but I suppose student loans are riskier than car or house loans because they have no collateral?

Everyone in Sweden is pretty much guaranteed access, yeah. Not necessarily to the line of study you'd prefer, but certainly to university studies as such. For 6 years of study, you can draw on the government funding for your subsistence while studying as well.

This (and the earlier post) is beyond ridiculous. It very much makes me want to do research and fact-checkin'.

Searching for "There is no limit on the amount the interest rate can increase"
http://www.google.com/search?q=%22There+is+no+limit+on+the+amount+the+interest+rate+can+increase%22
this looks real:
https://www.salliemae.com/content/html_emails/disclosures/Sallie_Mae_SOSL_App_Disclosure_DegreeGranting.pdf
plus other legit looking sites.

Oh, and the "there is no limit on the amount the interest rate can increase" sounds scarier than it actually is. The lender doesn't get to choose what interest rate you're paying. It's fixed as a certain percentage spread above LIBOR, which is basically the interest rate banks can borrow money at from each other.

Of course, if at some point there is substantial inflation, then the Fed and other bodies will raise interest rates, which would drive LIBOR up. But when you have debts to pay, substantial inflation is always a good thing, because it increases the nominal pay you receive while the nominal amount of the debt stays fixed.

That all being said, it's still crazy that the spread between this rate and LIBOR is 10%, rather than the 4-6% spread you find for car and house loans.

Who knew?

So, basically any government "welfare" programme is just a front to guarantee obscene profits to a few rich money-lenders, lobbyists and political donators. I am shocked. I really am.