Which of the following is an example of a subsidy provided by student loans?

Question

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A subsidy is financial assistance given by the government to a group or individual to help them achieve a certain goal. In the case of student loans, the government provides subsidies to private lenders by reimbursing them for defaulted loans. This lowers the risk for private lenders and allows them to offer lower interest rates to students. Therefore, option B is an example of a subsidy provided by student loans. The other options are not subsidies. Option A is a characteristic of student loans, but it is not a subsidy. Option C is a form of need-based financial aid, but it is not a subsidy. Option D is a requirement for student loans to be competitive with market rates but is not a subsidy.

Which of the Following Is an Example of a Subsidy