Why do student loan companies exist

[noob_trad3r]

Why not have the government loan directly to students instead?

Since the government backstops all loans I do not understand the point of the middleman scalping risk free profits

 

[MattF]

they do.

Like anything, private companies started up due to a large and growing market, plus an easy way to make profit.

 

[Renegen]

In Canada it's the government for most loans. I think a few like med school are given to banks.

You have to remember that Wall Street makes money securitizing the student loans, so they probably made sure the market was private.

 

[Martinghoul]

Because Americans are inordinately attached to and believe in mkt-based solutions to all things, including provision of public goods, such as education, healthcare, etc. The mkt is brought into play, to one degree or another, even when it makes little sense...

 

[TraderZones]

Quote from noob_trad3r:

Why not have the government loan directly to students instead?

Since the government backstops all loans I do not understand the point of the middleman scalping risk free profits

I suspect it has something to do with the concept that an amount $X can be used to underwrite a large multiple of X in loans. But that still does not change the fact the govt should probably lend directly.

 

[telozo]

Lending money requires an infrastructure that government doesn't have and should not have. The fact that government backstops these loans is all too sad, and unfortunately a new trend that creates a moral hazard.

 

[taclander]

The government should be minimally involved as possible. They turn 99% of what they touch into a corrupt, inefficient bureacracy. They create agency after agency to do the simplest of things and we truly don't need anymore government employees.
Remember the clowns that bitched up and down about bonuses, and buying aircraft. Well, these same clowns tried buying planes for themselves, gave out really nice bonuses to all their staff las year, and are currently proposing to increase their office budgets across the line by 8%. At my wife business, a profitable business, they have been instructed to cut back there budgets by 4%.
Do you really want the incompetence of these morons running another business that can be done by the private sector, with maybe minimal regulation on the lending?

 

[wutang]

Things really turned out great when regulations were changed in the 80's to allow the securitization of mortgage loans right... Why trust these things to private industry that has zero interest in the public good or any accountability? Market solutions may make these processes more efficient, but efficient to what end? It's a very short sighted solution, which leads to "too big to fail" and bailouts when infrastructure is tied to corporations whose soul purpose is to rape and pillage. Especially now that they know they'll get bailed out after they blow up.

 

[dewton]

Quote from taclander:

The government should be minimally involved as possible. They turn 99% of what they touch into a corrupt, inefficient bureacracy. They create agency after agency to do the simplest of things and we truly don't need anymore government employees.
Remember the clowns that bitched up and down about bonuses, and buying aircraft. Well, these same clowns tried buying planes for themselves, gave out really nice bonuses to all their staff las year, and are currently proposing to increase their office budgets across the line by 8%. At my wife business, a profitable business, they have been instructed to cut back there budgets by 4%.
Do you really want the incompetence of these morons running another business that can be done by the private sector, with maybe minimal regulation on the lending?

i guess goldman, aig, etc are far less corrupt and more efficient than the government...

i guess goldman's $16 billion in bonuses in december of 2006 is nothing compared to the 8% increase congressmen are requesting for their staff to cover increases in living expenses and inflation.

 

[taclander]

It's the government that failed in their regulatory responsibility. As a matter of record their any number of documented cases of our protector agencies knowing what was going on was wrong, and letting it go. Our own Congress idiots were partaking of the mortgage scams that were going on as long as they got a piece of the action. Do you really think these are the guys that are going to help out? No, they are going to get companies and people to pay them to enact legislation for the highest bidder. My Dad gets Social Security and is on Medicare and he isn't gettiing a cost of living increase next year, but will probably pay moe for Medicare, but the clowns of waste get one, and one that is way above inflation?!!! Are you nuts?
You want billions and trillions in waste look at every bill these jerk wads put forth. It is supposed to be for one thing, yet are stuffed with billions and yes, trillions of waste and pork for their own personal gain. Take a llok at all the buildings that clown Murtha has named after himself. Or the jerk wad in Alaska who finally was busted. The bonuses for the executives, which I will never argue with you are obscene in light of their own mismanagement, are nothing compared to the evil empire(Congress) you want in charge of anything. Chekc out the benfit package that Congress gave themselves. You will never see anything like in you life.
I'm done on the subject, so feel free to rip it up and tell me how wrong I am. I know the truth, I am not a passive person who sits around thinks all is well and the government will make it right. I do my research and read the bills that are put forth and contact my Senators and Congressmen regularly. Everyone should and hold them much more accountable, instead of allowing life time appointments due to apathy.