The theory was that salaries would increase by the time the higher rates kicked. It was wishful thinking.
The recession started with round after round of foreclosures, the people with ARMS had been forced to default because the couldn't handle the higher monthly payments.
I'm not saying education financing is bad or wrong, but I am saying that loaning money to people who are going to have a hard time paying it back is unwise at the least. There has been plenty of news stories lately about students who's projected income doesn't justify the borrowing for their schooling.
It makes about as much sense as loaning money to a small start-up business that doesn't have a business plan.
There needs to be mechanisms to protect against follies.The interest rate is one such mechanism.
Current Events » in reply to Your argument is crystal clear but you did not show a basis for the need for deterence.
Well, adjustable rate mortgages gave people who could not afford homes the ability to buy one.
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- Get a job, longhair.