Private Student Loans Work Like Subprime Mortgages
By Matt Cantor, Newser Staff
Private lenders offered student loans without confirming that recipients could pay them back -- then sold them to investors, thus protecting the lenders against defaults, a government study finds.
Sound familiar? It should: It's a lot like the process that caused the subprime mortgage crisis. Some $8.1 billion worth of private loans -- more than 850,000 cases -- are now in default, the AP reports. "Subprime-style lending went to college, and now students are paying the price," says Education Secretary Arne Duncan.
--Written by Mark Cantor of Newser
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