Some experts are worried the securitization market around student loans could pose a systematic risk to the American economy.
in outstanding student debt, according to the Federal Reserve Bank of St. Louis.
Billions of dollars worth of student loans are packed and sold as assets known as student loan asset-backed securities to some of the biggest investors in America. But as student loans continue to balloon, experts have expressed growing concerns surrounding the SLABS market. The worry is that SLABS could pose a systematic risk to the American economy, similar to how subprime mortgage-backed securities contributed to the crash back in 2008.
"I saw the parallels and it really freaked me out because I realized that this cycle was only going to repeat," said Allison Pyburn, an asset-backed securitization expert and former editor-in-chief at Debtwire ABS. She continued,"I think one of the key ways to uncover the similarities between student loans and mortgages is to look at the affordability issue."
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