Q: Why would Wall Street Go Crazy for Risky College Loans as Borrowers fall Behind on Payments?

[Skwmom]

Note: This is from 2013. Wonder what the stats are now///


From afar, it's be easy to mistake the student debt market as a single, massively inflating bubble on the verge of bursting. On Friday, the Federal Reserve Bank of New York reported that Americans are now shouldering about $970 billion worth of student loans, roughly triple what they owed eight years ago. It's by far the fastest growing category of household debt. And of those student borrowers whose loans are currently due, a staggering 30 percent are at least 90 days behind on payments.

What's more, most of those bonds were extremely safe. That's because they were made up of debt issued under old Family Federal Education Loan Program, in which the government guaranteed student loans made by banks. Tax payers could sadly end up on the hook for those assets if students start defaulting en masse (frustrating, I know), but they won't ever blow up Wall Street, especially because unlike mortgages, banks don't use student-debt-backed assets as collateral to secure their day to day.

But in the mean time can you say $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$. Wonder how much of that guaranteed student loan debt is associated with for profit colleges in which the big banks and our politicians billionaire buddies own an interest?

http://www.theatlantic.com/business/archive/2013/03/dont-panic-wall-sts-going-crazy-for-student-loans-but-this-is-no-bubble/273682/