too many people saving on their student loans

[thingamabobs]

http://www.pressherald.com/2015/06/10/student-loan-refinancing-boom-could-cost-taxpayers-billions/

Shouldn't it be a good thing if the gov't is less extended on credit?

[slugline]

No, those loans aren't the government extended on credit. Those loans are actually revenue generating assets for the government. But if companies like SoFi are successful in recruiting customers, the federal loan portfolio that would be left would be increasingly made up of people with higher risk of defaulting.

It would be like starting with a bond index fund that suddenly starts divesting assets until what remained was mostly junk bonds.

[thingamabobs]

Yes, I understand that was the point of the article. But really, it's great that there are now options to refinance. Perhaps the gov't needs to look into how it can retain the good credit borrowers to balance their portfolio before it's too late.

[kpd905]

I would have been happy to pay my interest to the government if they had given me a reasonable rate, but they gave me 6.8% and 7.9%.  So I went to Sofi and got 4%.

[Alabaster]

Holy maceroli, student loads can be discharged in bankruptcy now! When the hell did that happen? Where the heck was I?

This is what happens without television I guess. I spent many evenings listening to Suze Orman tell people that student loans were terrible because they couldn't be discharged.

[forummm]

I think it's possible but still difficult to discharge them in bankruptcy.

[Sibley]

As far as I know, the bankruptcy rules haven't changed in years.

Though I have no sympathy for the government. They've allowed diploma mills to be accredited. They screw up accounts all the time (we didn't even want to try to fix what they did to my sister's account, it just got refi'ed with SoFi). Their customer service sucks. Their websites are terrible, if they even exist. You can't get adequate information from them. (can you tell I'm bitter?)

[TrulyStashin]

Amen, kpd905.   I had the same interest rates and it was highway robbery.

This podcast on student loans was eye-opening. http://radicalpersonalfinance.com/214-radical-strategies-for-dealing-with-student-loans-interview-with-jay-fleischman-attorney-and-host-of-the-student-loan-show/

The attorney/ guest on that show detailed changes to bankruptcy laws in 2005 that expanded the SL market dramatically (at -75:00 in the show).  Up until 2005, PRIVATE student loans could be discharged in bankruptcy.  We're in the fix we're in today largely because of this ginormous gift to the banking industry.

[gReed Smith]

So, government inflexibility results in a poorly run business. I'm not surprised because their goal was never to be running a business.

My rate was 6.8%, so I refinanced to 2.53%.  It wasn't a tough decision.  The government wasn't going to make a competitive offer, probably because congress has not authorized them to.

[Merrie]

Hah. Cry me a river. I had 70k at 6.8% and refinanced to 5.365% and hopefully soon can go lower. If the government had offered a decent interest rate I'dve stayed.

[Bob W]

So, government inflexibility results in a poorly run business. I'm not surprised because their goal was never to be running a business.

My rate was 6.8%, so I refinanced to 2.53%.  It wasn't a tough decision.  The government wasn't going to make a competitive offer, probably because congress has not authorized them to.

Well that is awesome!