They say that private student loans have been made so that they cannot be discharged in bankruptcy to eliminate risk for the bank. They also say that making these loans dischargable in bankruptcy would make them more expensive. So my question is this:
If these loans cannot be discharged then why is good credit or a cosigner required to get them and why are rates commonly over 10%?
Yes it is true.These are unsecured loans with higher interests.
Yeah, eliminating risk for the banks of course makes for terms more favorable to the banks, not for borrowers. All we need do is look back to before private student loans became undischargeable through bankruptcy, and see if they've become less or more expensive since then? I'm sure they haven't gotten any cheaper; it was a miserably cynical law change enacted by corporate lobbyists to protect their obscene profits.
These private student lenders had a market niche made for them, and they are free to do extremely bad business because they take no risk, while the borrower is locked in irredeemably. The co-signer of course ensures maximum profits as well.
