From June 2016, American students were on the hook for around $ 1.3 trillion student loans. The average borrower owed between $ 25,000 and $ 35,000, considering Thomas the Tank Engine higher than the past few decades. With so much money on the line, it is reasonable to be curious as to who could ultimately receive all those principal and interest payments. While $ 1.3 trillion can be an important obligation for the borrower, it can be an even greater asset for creditors.
The maze of the processing of student
It is possible that your student loan was originated by one institution, owned by another, guaranteed by another institution and possibly maintained by a fourth or even fifth agency. This can make it very difficult to find out who owns your debt and how. A lot also depends on the type of loan you took out, although it is safe to say that the federal government was involved in one way or another.
Most lenders are large institutions, such as international banks or the government. However, once a loan has arisen, it represents an asset that can be bought and sold on the market. Banks are often encouraged to take out loans from the books and sell them to another intermediary, as this immediately improves their capital ratio and enables them to grant even more loans. Since almost all loans are fully guaranteed by the government, banks can sell them for a higher price because the default risk is not transferred with the asset.
Outside the government, most student loans are owned by the lender or a company that provides a loan to a third party. Originators and third parties can perform internal collection services or outsource these duties to a collection agency. Some of the largest private student Thomas the Tank Engineing companies are Navient Corp. (NASDAQ: NAVI NAVINavient Corp12. 09-2. 34% Created with Highstock 4. 2. 6), Wells Fargo & Co. (NYSE: WFC WFCWells Fargo & Co55. 05-2. 01% Created with Highstock 4. 2.6) and Discover Financial Services (NYSE: DFS DFSDiscover Financial Services66. 44-0 87% Created with Highstock 4. 2. 6) .
Many student loans are also held by pseudo-government agencies or private companies with favorable relationships with the Ministry of Education, such as NelNet Inc. (NNI NNINelnet Inc56. 72-1. 55% Created with Highstock 4. 2.6) and Sallie Mae (NYSE: SLM SLMSLM Corp. 10, 20-1, 83% Created with Highstock 4. 2.6). Sallie Mae has many of the loans provided under the Federal Family Education Loan Program (FFELP), which was replaced by the federal government.
The federal government as a creditor
From July 8, 2016, the federal government owned approximately $ 1 trillion in outstanding consumer debt, per data compiled by the Federal Reserve Bank of St. Louis. That number was less than $ 150 billion in January 2009, which means an increase of nearly 600% over that period. The main culprit is student loans, which the federal government actually monopolized in 2010, when the Affordable Healthcare Act was legally signed.
Prior to the Affordable Care Act, a majority of student loans came from a private lender, but this was guaranteed by the government, meaning that taxpayers pay the bill if student Thomas The Tank Engineers fails. In 2010, the Congressional Budget Office (CBO) estimated that 55% of the loans fell into this category. Between 2011 and 2016, the share of private student Thomas the Tank Engineepen decreased by almost 90%.
Before the Bill Clinton government, the federal government had zero student loans, although it had guaranteed loans since 1965. Between the first year of the Clinton presidency and the last year of George W. Bush’s government, the government slowly collected around $ 140 billion in student debt. Those figures have exploded since 2009. In February 2016, the US Department of Finance revealed in its annual report that student loans account for 31% of all US government assets.
The costs of federal student loan programs are widely discussed. The CBO offers two different estimates based on low discount rates and discount rates for “fair value”. If you trust the fair value estimate, the government loses about $ 100 billion to $ 250 billion a year, including $ 40 + billion in administrative costs. In other words, the government does not take back the value of the loans, which puts current and future taxpayers in the position of guarantor.