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How often do your borrowers default?
Too often borrowers default later on.
This way, they are on the hook for less money if borrowers default.
The companies attract investors by promising repayment, even if borrowers default.
But both companies and taxpayers are on the hook if borrowers default.
That's because they are usually allowed to wait until borrowers default before registering losses.
Moreover, if borrowers default during this period, their loans will also be downgraded.
Others get tranches with higher yields, but will lose their principal if enough borrowers default.
Some struggle, of course: The Department of Education estimates that 7percentt of graduate borrowers default.
In Kentucky, the Higher Education Assistance Authority is responsible for notifying licensing boards when borrowers default.
The bureau has decided that student loan servicers are the reason why borrowers default.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com