
Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Author: Joel R. Glucksman
Date: March 14, 2013
Partner
201-896-7095 jglucksman@sh-law.comMore 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.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Author: Dan Brecher
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!