Trade Radar Operator

Sallie Mae: Subsidy Cuts Hurt, But Why So Bad?

Default rates on student loans are high and the government guaranties make it worthwhile for private lenders to offer these loans. Given that the government limits what interest rate can be charged to borrowers, the government has effectively caught lenders in a vise - they are unable to adjust credit cost according to creditworthiness if the lender wants to participate in the FFEL program.