Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm News
High Rate of Student Loan Defaults Fails to Deter Investors
Author: Joel R. Glucksman
Date: March 14, 2013
Key Contacts
Back
Student Loan Default Can not be Dismissed Through Bankruptcy
More Americans are carrying student loan balances now than ever before and defaulting on their balances at even higher rates. Despite the risky nature of this borrowing category, however, it appears that student loan securities are in high demand by investors.
The Federal Reserve Bank of New York recently reported that Americans owe roughly $970 billion in student loan debt, more than triple the amount the country shouldered eight years prior. In addition, the shaky job market, double-digit increases in rent prices, and a slowly recovering housing market have resulted in higher rates of loan default, particularly as bankruptcy law does not typically allow federally-backed student loans to be discharged during proceedings. Nevertheless, the current environment has not deterred investors from participating in the student loan securities market, and has instead led to an explosion in demand for these products.
A recent Wall Street Journal article noted that investors’ demand for this category of securities demonstrates “the lengths they are willing to go to generate returns in a period when interest rates are hovering near record lows.”
Despite the fact that more than 30 percent of borrowers are 90 days or more behind on payments, private education lender Sallie Mae recently announced it had sold $1.1 billion worth of new securities backed by student debt, according to the Atlantic. Further, there was 15 times more demand for the highest-risk, highest-return batch than there was supply, the Atlantic added.
The growing demand for risky securities is reminiscent of the market scenario that eventually led to the mortgage crisis, and many analysts are calling student loans the next “bubble” on the verge of bursting. However, other industry professionals argue that student loan securities still make up too small a market share to do considerable damage and most of the loans are backed by the federal government. Although many are speculating about the ways in which the spike in risky securities investing might impact the economy, the number of investors participating in the student loan market does not appear to be slowing down.
Related post: Cash Loans In The United Kingdom.
- Practices: Corporate Transactions & Business
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
John M. Scagnelli Re-Elected to LSRPA Board of Trustees
Scarinci Hollenbeck is pleased to announce that Partner John M. Scagnelli has been re-elected to serve on the Board of Trustees of the Licensed Site Remediation Professionals Association (LSRPA) for an additional two-year term. LSRPA is the statewide professional organization representing New Jersey’s Licensed Site Remediation Professionals (LSRPs), playing a central role in advancing environmental […]
Author: Scarinci Hollenbeck, LLC
Robert E. Levy Re-Certified as Civil Trial Attorney by the Supreme Court of New Jersey
Scarinci Hollenbeck is pleased to announce that Robert E. Levy has been re-certified as a Certified Civil Trial Attorney by the Supreme Court of New Jersey. This re-certification, combined with Levy’s existing designation as a Certified Criminal Trial Attorney, places him among less than one percent of all certified attorneys in New Jersey to hold […]
Author: Scarinci Hollenbeck, LLC
Scarinci Hollenbeck Partner Donald M. Pepe Named to ROI-NJ’s 2025 Real Estate Influencers List
Scarinci Hollenbeck, LLC is pleased to announce that Donald M. Pepe, a partner in the firm’s Real Estate, Land Use and Development Group, has once again been named to ROI-NJ’s Influencers: Real Estate list for 2025. Donald Pepe has been included on the ROI Influencers: Real Estate list each year since 2022, reflecting his continued […]
Author: Scarinci Hollenbeck, LLC
Scarinci Hollenbeck Announces Three Attorney Promotions for 2026
Scarinci Hollenbeck, LLC announces the promotion of three attorneys effective January 1, 2026: Samantha L. Blake and Brittany P. Tarabour to Counsel, and Kevin M. Cuddihy to Senior Associate. The following summarizes each attorney’s practice and experience. Samantha L. Blake Promoted to Counsel Samantha L. Blake has been promoted to Counsel and practices out of […]
Author: Scarinci Hollenbeck, LLC
NJBIZ Features Two Scarinci Hollenbeck Partners on the 2026 Commercial Real Estate Market Forecast
Scarinci Hollenbeck real estate partners Donald Pepe and Joe DeMarco were recently interviewed by NJBIZ reporter Kimberly Redmond for a feature examining what may shape the commercial real estate market in 2026. The article explores several issues currently influencing development and investment decisions across New Jersey, including redevelopment considerations, regulatory and financing pressures, emerging asset […]
Author: Scarinci Hollenbeck, LLC
Scarinci Hollenbeck Partner Angelo Auteri Receives the Michael A. Pane Ethics in Government Award
Little Falls, New Jersey — Scarinci Hollenbeck, LLC is pleased to announce that Partner Angelo Auteri has been awarded the Michael A. Pane Ethics in Government Award, one of New Jersey’s most esteemed recognitions for integrity and professionalism in public service. The award was presented on Thursday, November 20th during the New Jersey State League […]
Author: Scarinci Hollenbeck, LLC
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.