5.13.M - Lesson: Government Loans

As of 2019, there is over_______ in federal student loan debt in the United States compared to only $119 billion in private student loan debt.

$1.5 trillion

Garnishing wages is a slow way of recouping those lost funds, and the lender often doesn't get all its money back.

.........

Private student loan debt

8%

federal student loan debt

92%

According to Hazlitt, what are the differences between loans provided by government agencies and loans provided by private lenders? (choose all that apply)

Private lenders risk their own money, whereas government agencies risk other people's money. Government agencies will take more risks than private lenders.

According to Hazlitt, what is the end result when the government provides loans or subsidies to business?

The government taxes successful businesses in order to support unsuccessful businesses.

Which of the following are reasons that private lenders are likely to make fewer mistakes than government lenders? (choose all that apply)

The money they're lending is their own or has been voluntarily entrusted to them. Private money will only be invested where repayment with interest or profit is expected. Private lenders are selected by a process of survival of the fittest.

According to Hazlitt, which of the following are true, in general, about the individuals selected for government loans? (choose all that apply)

They will be poorer risks than the individuals selected for private loans. More money will be lost by loans to these individuals. There will be a higher percentage of failures, or defaults, on these loans. These individuals will be less efficient and waste more resources.

Hazlitt writes, "Government 'encouragement' to business is sometimes as much to be feared as government hostility." This "supposed encouragement" often takes which of the following forms? (choose all that apply)

a guarantee of private loans; direct grant of government credit

One of the key points that Hazlitt makes in this chapter is that government loans are almost _____

always riskier than private loans.

A _______ on a loan means that the borrower has stopped making payments for several months.

default

It's estimated that ______ of students who took out student loans in 2004 will default on their loans by 2023.

forty percent

But since student loans don't require collateral, the bank's only option for recouping its money is usually _______

garnishing wages

After all, if private financial institutions were willing to give loans to these individuals, there wouldn't be a need for the

government to step in.

Many students took out large student loans and, when they completed their education, discovered they couldn't earn an ________ that matched their expectations.

income

According to Hazlitt, the belief that government loans for farmers are beneficial comes from which of the following "acts of shortsightedness"? (choose all that apply)

looking at the matter only from the standpoint of the farmers that borrow thinking only of the first half of the transaction

On a federal student loan, the loan is considered in default when payment is _______ months late

nine

By helping students pay for education, the government hoped to improve their human capital, thereby increasing their income:______ On a large scale, this would also improve the entire economy's productivity, increasing the nation's __________

potential and productivity GDP and standard of living.

Student loans are ______ for the lender than other loans.

riskier

The current system of federal student loans came about because student loans are ______ for the lender and have no _________, which makes it difficult for students to get loans from private companies.

risky real collateral

What does garnishing wages mean?

taking a percentage of a worker's wage out of every paycheck