Melissa Korn at the WSJ has a killer lead in today’s story:
Defaulting on federal student loans may not be such a bad thing–at least, not for the federal government.
She notes that after all of the costs for the loan sharking and wage garnishing, the government still nets 85% of the money that’s missing after the loans go into default. Given that the government also collects relatively high interest rates from the people who do pay, old Uncle Sam may be doing well by appearing to do good.
As Ms. Korn astutely points out, this changes the debate about the for-profit colleges. Maybe they’re doing old Uncle Sam a favor by suckering more kids into shouldering the big debt.