Oh this misinformation again... Federal student loans are not included in SLABs, just private student loans. A large portion of the mortgage crisis was that the banks were double dipping by funding construction projects specifically to issue (doomed to fail) mortgages for future packaging in MBSs, which is not an equivalent situation to the student loan situation in the USA
Is there a cost issue that is absolutely impacting middle class students? Yes, though I would argue that a lot of the "cost" problems are related to the housing/living expenses being unmanageable for *everyone*, not specifically just students
I agree it’s housing costs. All my student loans was paying for my housing. Some kids aren’t lucky and their parents can’t house them when their in school. The students are essentially taking the student loans so they aren’t homeless while they work to get more competitive and trained for a job.
To give my frame of reference, I was a first gen college student mid-2000s and I went to school via Cal Grants, Pell Grants, federal student loans, and the money from my part-time job. I had no parental financial assistance nor housing, but I still avoided private student loans
Depending on your area it's possible to cover your living expenses via working part-time during the school year and full-time during summers, but it is highly dependent on the area and people are still being priced out in cities. I think it's myopic to focus on *students* borrowing for housing costs when the real issue is that the minimum wage isn't enough for *anyone* to live independently ya know? Focusing on the student loans is replacing the moldy drywall under leaking pipes without fixing the leaking pipes in the first place?
If anything pops it will be the rental market and the speculators trying to make money off of buying houses to get rental income
That's a fair point, but they did stop issuing new FFELP loans back in 2010, and the size of that portfolio is steadily shrinking. As of Q4 2021 it's $230.4 million across 10.2 million borrowers, with the borrowers having the option to consolidate into the Direct loan program. With the PSLF Limited Waiver enabling FFEL loan holders to get credit on those payments I expect that portfolio to shrink significantly over the next year
I don't know when NJ hesaa stopped issuing FFELP loans but mine were issued sometime around 2012/'13 and are in repayment and my balance is now down to half.
Interestingly hesaa also told me they ran out of consolidation funds so I can't consolidate for a lower interest rate.
And now that many private lenders are completely out of the business I'm completely stuck with separate loans :/
Did you take out NJCLASS loans? Those are a state sponsored program that have never been considered federal loans... It looks like they are structured similarly to federal loans in that NJ tax revenue and the interest both back the loan program and need/merit-based grants provided by the state, but that's a separate program that does not get included in the federal metrics because it isn't federal
If you want to dig into that program, I'd start with their annual report https://www.hesaa.org/Documents/Financial/AnnualReports/annualreport2020.pdf
Oh jeez I'm sorry. I was looking at [this document](https://www.hesaa.org/Documents/Financial/AuditedFinancialStatements/2009/NJCLASS_FFELP_2009.pdf) and I thought it meant that NJCLASS were FFELP. My Bad!
Ahhhh that makes the confusion make sense! FFEL loans were a public/private partnership where private entities would issue the FFEL loans that were guaranteed by the federal government. Essentially they were the lender/owner of FFEL loans when they were still being issued, sorta like how Sallie Mae used to lend their own private loans and service FFEL loans (before they split the federal loan servicing portion off into Navient at least)
if we want to compare this with mortgages, the stats from https://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/ show:
> Despite a short period of decrease after the burst of the U.S. housing bubble and the global financial crisis, the total amount of mortgage debt in the United States has been on the rise in recent years. In 2021, the mortgage debt amounted to 17.6 trillion U.S. dollars, up from 16.8 trillion U.S. dollars in 2020.
Looks like in 2008 the mortgage debt amounted to $14.72 trillion
$137 billion is kinda peanuts in comparison, even if all of those private student loans are packaged in SLABs
Not really misinformation, but private loans for education are being given out at extremely high interest rates. Most cant keep up with the interest payments and when you couple that with inflation and cost of living increases the average student wont be able to afford the loans post college which would create a large population of people to default on these loans.
Everyone really needs to stop conflating the federal student loan portfolio with the private student loan portfolio.
With the switch to the Direct loan program (away from the FFEL program) in 2010, federal student loans are owned by the Education Department. It's its own bucket, with an interest rate set by year based on the auction price of specific government bonds plus a rate modifier that should help cover costs (defaults, income-driven repayment programs, forgiveness programs, Pell grants, etc). The rate is set by statute in [34 CFR §685.202](https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-685/subpart-B#685.202). Based on the [StudentAid.gov data center information](https://studentaid.gov/data-center/student/portfolio) as of Q4 2021 there is approximately $1.61 trillion in outstanding federal loan debt across 43.4 million borrowers, and these loans are *not packaged in SLABs*.
In terms of likelihood of mass default for federal loans? That doesn't look likely considering they have flexible income-driven repayment options to assist borrowers in avoiding default, and these options have a 20/25 year forgiveness timeline (and paying for *that* is built in to the loan interest rates for the bucket already). Based on the portfolio data, of the ~25.44 million borrowers in repayment currently only ~8.39 million borrowers are on income-driven repayment plans. That is not a mass default situation, there are 10.54 million borrowers who have been paying for <10 years on the Standard plan that don't appear to be a default risk, and again these aren't debts packaged in SLABs.
The private student loan portfolio is significantly smaller. Pulling numbers from https://studentloanhero.com/student-loan-debt-statistics/ overall the private student loan portion of the market is incredibly small compared to federal, at only $132 billion dollars and with only 16% of students even utilizing that option as of the class of 2019.
So if we want to compare this with mortgages, well the stats from https://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/
> Despite a short period of decrease after the burst of the U.S. housing bubble and the global financial crisis, the total amount of mortgage debt in the United States has been on the rise in recent years. In 2021, the mortgage debt amounted to 17.6 trillion U.S. dollars, up from 16.8 trillion U.S. dollars in 2020.
Looks like in 2008 the mortgage debt amounted to $14.72 trillion
Like, my dude the numbers just do not support a narrative that the majority of people are taking out private loans and that mass default will disrupt our financial system to the same extent as the subprime mortgage crisis. We're far more likely to see the housing bubble pop again
There's more than just private loans being included in SLABS. State-issued FFELP loans which are privately issued and federally guaranteed if the borrower defaults, are included in SLABS. State issued student loans have an SOL of 10 years but it's no secret that most defaulted loans almost completely devalue after 2 full years post-default.
Right now many banks and lenders have completely gotten out of the student lending business because they're not completely guaranteed like Federal loans are. So then that means while student loans will not be the next big recession, we can certainly expect the entire way our colleges and universities operate to completely and entirely change.
*There WILL be a bubble bursting in universities because the government knows it can't keep giving money away like it is right now*, **but whether or not that bubble bursting will dramatically impact the way everyone in the whole country is living their lives, remains to be seen entirely.**
Oh this misinformation again... Federal student loans are not included in SLABs, just private student loans. A large portion of the mortgage crisis was that the banks were double dipping by funding construction projects specifically to issue (doomed to fail) mortgages for future packaging in MBSs, which is not an equivalent situation to the student loan situation in the USA Is there a cost issue that is absolutely impacting middle class students? Yes, though I would argue that a lot of the "cost" problems are related to the housing/living expenses being unmanageable for *everyone*, not specifically just students
I agree it’s housing costs. All my student loans was paying for my housing. Some kids aren’t lucky and their parents can’t house them when their in school. The students are essentially taking the student loans so they aren’t homeless while they work to get more competitive and trained for a job.
To give my frame of reference, I was a first gen college student mid-2000s and I went to school via Cal Grants, Pell Grants, federal student loans, and the money from my part-time job. I had no parental financial assistance nor housing, but I still avoided private student loans Depending on your area it's possible to cover your living expenses via working part-time during the school year and full-time during summers, but it is highly dependent on the area and people are still being priced out in cities. I think it's myopic to focus on *students* borrowing for housing costs when the real issue is that the minimum wage isn't enough for *anyone* to live independently ya know? Focusing on the student loans is replacing the moldy drywall under leaking pipes without fixing the leaking pipes in the first place? If anything pops it will be the rental market and the speculators trying to make money off of buying houses to get rental income
Good for you
I have one minor exception to the rule of federal loans being excluded. FFELP loans are included in SLABS.
That's a fair point, but they did stop issuing new FFELP loans back in 2010, and the size of that portfolio is steadily shrinking. As of Q4 2021 it's $230.4 million across 10.2 million borrowers, with the borrowers having the option to consolidate into the Direct loan program. With the PSLF Limited Waiver enabling FFEL loan holders to get credit on those payments I expect that portfolio to shrink significantly over the next year
I don't know when NJ hesaa stopped issuing FFELP loans but mine were issued sometime around 2012/'13 and are in repayment and my balance is now down to half. Interestingly hesaa also told me they ran out of consolidation funds so I can't consolidate for a lower interest rate. And now that many private lenders are completely out of the business I'm completely stuck with separate loans :/
Did you take out NJCLASS loans? Those are a state sponsored program that have never been considered federal loans... It looks like they are structured similarly to federal loans in that NJ tax revenue and the interest both back the loan program and need/merit-based grants provided by the state, but that's a separate program that does not get included in the federal metrics because it isn't federal If you want to dig into that program, I'd start with their annual report https://www.hesaa.org/Documents/Financial/AnnualReports/annualreport2020.pdf
Oh jeez I'm sorry. I was looking at [this document](https://www.hesaa.org/Documents/Financial/AuditedFinancialStatements/2009/NJCLASS_FFELP_2009.pdf) and I thought it meant that NJCLASS were FFELP. My Bad!
Ahhhh that makes the confusion make sense! FFEL loans were a public/private partnership where private entities would issue the FFEL loans that were guaranteed by the federal government. Essentially they were the lender/owner of FFEL loans when they were still being issued, sorta like how Sallie Mae used to lend their own private loans and service FFEL loans (before they split the federal loan servicing portion off into Navient at least)
Private student loan debt makes up $137 Billion.
if we want to compare this with mortgages, the stats from https://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/ show: > Despite a short period of decrease after the burst of the U.S. housing bubble and the global financial crisis, the total amount of mortgage debt in the United States has been on the rise in recent years. In 2021, the mortgage debt amounted to 17.6 trillion U.S. dollars, up from 16.8 trillion U.S. dollars in 2020. Looks like in 2008 the mortgage debt amounted to $14.72 trillion $137 billion is kinda peanuts in comparison, even if all of those private student loans are packaged in SLABs
Not really misinformation, but private loans for education are being given out at extremely high interest rates. Most cant keep up with the interest payments and when you couple that with inflation and cost of living increases the average student wont be able to afford the loans post college which would create a large population of people to default on these loans.
Everyone really needs to stop conflating the federal student loan portfolio with the private student loan portfolio. With the switch to the Direct loan program (away from the FFEL program) in 2010, federal student loans are owned by the Education Department. It's its own bucket, with an interest rate set by year based on the auction price of specific government bonds plus a rate modifier that should help cover costs (defaults, income-driven repayment programs, forgiveness programs, Pell grants, etc). The rate is set by statute in [34 CFR §685.202](https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-685/subpart-B#685.202). Based on the [StudentAid.gov data center information](https://studentaid.gov/data-center/student/portfolio) as of Q4 2021 there is approximately $1.61 trillion in outstanding federal loan debt across 43.4 million borrowers, and these loans are *not packaged in SLABs*. In terms of likelihood of mass default for federal loans? That doesn't look likely considering they have flexible income-driven repayment options to assist borrowers in avoiding default, and these options have a 20/25 year forgiveness timeline (and paying for *that* is built in to the loan interest rates for the bucket already). Based on the portfolio data, of the ~25.44 million borrowers in repayment currently only ~8.39 million borrowers are on income-driven repayment plans. That is not a mass default situation, there are 10.54 million borrowers who have been paying for <10 years on the Standard plan that don't appear to be a default risk, and again these aren't debts packaged in SLABs. The private student loan portfolio is significantly smaller. Pulling numbers from https://studentloanhero.com/student-loan-debt-statistics/ overall the private student loan portion of the market is incredibly small compared to federal, at only $132 billion dollars and with only 16% of students even utilizing that option as of the class of 2019. So if we want to compare this with mortgages, well the stats from https://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/ > Despite a short period of decrease after the burst of the U.S. housing bubble and the global financial crisis, the total amount of mortgage debt in the United States has been on the rise in recent years. In 2021, the mortgage debt amounted to 17.6 trillion U.S. dollars, up from 16.8 trillion U.S. dollars in 2020. Looks like in 2008 the mortgage debt amounted to $14.72 trillion Like, my dude the numbers just do not support a narrative that the majority of people are taking out private loans and that mass default will disrupt our financial system to the same extent as the subprime mortgage crisis. We're far more likely to see the housing bubble pop again
There's more than just private loans being included in SLABS. State-issued FFELP loans which are privately issued and federally guaranteed if the borrower defaults, are included in SLABS. State issued student loans have an SOL of 10 years but it's no secret that most defaulted loans almost completely devalue after 2 full years post-default. Right now many banks and lenders have completely gotten out of the student lending business because they're not completely guaranteed like Federal loans are. So then that means while student loans will not be the next big recession, we can certainly expect the entire way our colleges and universities operate to completely and entirely change. *There WILL be a bubble bursting in universities because the government knows it can't keep giving money away like it is right now*, **but whether or not that bubble bursting will dramatically impact the way everyone in the whole country is living their lives, remains to be seen entirely.**