Re:Student Loans a Lot Like the Subprime Mortgage Debacle, W...
by prostoalex on Thursday December 12, 2019 @11:15AM
(#21773136)
> I don't see any party here that needs rescuing by the government.
Contrary to public perception, there's no robust investment market for student debt. US government ends up purchasing most of it through Treasury. In theory it's a great deal, as it gets to borrow at low Treasury rates and originate at higher rates.
I don't have a link to the original source, but "In September 2018, the U.S. Treasury Department revealed in its annual report that student loans account for 36.8% of all U.S. government assets." https://www.investopedia.com/articles/personal-finance/08121...
Devaluing those assets (which Treasury marks to market) would significantly dampen (if not destroy) US government's borrowing ability as well as make some government entitlement programs [at least temporarily] insolvent.
Contrary to public perception, there's no robust investment market for student debt. US government ends up purchasing most of it through Treasury. In theory it's a great deal, as it gets to borrow at low Treasury rates and originate at higher rates.
I don't have a link to the original source, but "In September 2018, the U.S. Treasury Department revealed in its annual report that student loans account for 36.8% of all U.S. government assets." https://www.investopedia.com/articles/personal-finance/08121...
Edit: here's a more updated analysis of the Treasury disclosures, which puts the figure at 51.2% as of September 2019 https://www.advisorperspectives.com/dshort/commentaries/2019...
Devaluing those assets (which Treasury marks to market) would significantly dampen (if not destroy) US government's borrowing ability as well as make some government entitlement programs [at least temporarily] insolvent.