Kasia Klimasinska of Bloomberg reports that:
Student loans in February were worth more than half the value of outstanding Treasury debt with a maturity of 10 years or more.
That represents a lot of money. About $800 billion and according to Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut.
“If you were fairly confident that all those loans are going to be paid back, then it wouldn’t be that big of an issue. But … we’ve got double-digit delinquencies on student loans, and the problem only seems to be getting worse.”
And if that trend continues, the government will go from making:
about 14 cents on every dollar lent, according to the Congressional Budget Office.
To a situation where:
On subsidized student loans (the most basic kind), the government is forecast to start losing money as early as next year. The CBO already revised up its estimate of how much the loans will cost the government for 2016-2025 by 30 percent, citing higher estimates of the number of loans in default (which in turn would mean the government won’t be able to collect on as many payments as initially thought).
