Question

Why are student loans usually guaranteed by the government??

Answer 1

Students loans are normally guaranteed by the government because governments have collateral on the students in form of the revenue authority pins which can enable them to trace students when there's payment default. This is not the case with other institutions which offer loans to public, they don't have any security on the student.

Answer 2

the reason why student loans usually guaranteed by the government is: Banks don't have any collateral for student loans.

The recipients of students loan will be most likely still don't have any form of income in their pocket, so the bank sees student loan s something that gives them too big of a risk. The government on the other hand, is less driven by profit compared to the bank, so they could afford to guarantee it.