The government guarantee on student loans helps to overcome credit market failure.

Question

Quizplus · Accepted Answer

The government guarantee on student loans provides assurance to lenders, and encourages them to offer loans to students who would otherwise be viewed as high credit risks. This helps to overcome credit market failure, where private lenders may be unwilling to lend to students due to their lack of collateral, limited credit history, or uncertain future earnings potential.

The Government Guarantee on Student Loans Helps to Overcome Credit