Bernie Sanders and the Tragedy of Price Discrepancies

Bernie Sanders received some hefty backlash and ridicule on Twitter for this tweet:

The blogosphere responded similarly, but with more informed criticism. Megan McArdle and Steven Horowitz, for example, had great points.
Many of the responses correctly pointed out that loans like mortgages and auto loans have collateral – if the borrower can’t pay back the lender, ownership of the house or the car is transferred to the lender. The lender usually then sells the asset to recover as much of unpaid amount as possible. With student loans, the student can’t transfer ownership of their degree or education, and so lenders may charge more to cover the risk of default.
Others, like Megan McArdle, also look to the credit-worthiness of the borrowers in both cases. Students usually have short or no credit history, low or no income, and no way to guarantee payment, except with their own signature or a cosigner. Mortgages are given to those who have a longer credit history, at least some income, and a house as a collateral.

This post was published at Ludwig von Mises Institute on JANUARY 8, 2016.