Trump officials reportedly consider selling student loan debt to private investors

"Officials in the Trump administration are reportedly weighing the possibility of selling portions of the federal government's $1.6tn student loan portfolio to private investors, which experts say could carry risks for both taxpayers and borrowers potentially reshaping the student loan landscape in unpredictable ways. Senior officials at the education and treasury departments have been engaged in internal conversations about offloading select, high-performing segments of the government's student debt holdings, according to a Politico report this week. These loans are part of the larger portfolio owed by roughly 45 million borrowers nationwide."

"Administration officials have also reportedly reached out to figures in the financial industry, including potential buyers, to discuss the idea. The deliberations, which began earlier this year, initially included department of government efficiency (Doge) officials stationed at the education department but are now being guided primarily by senior political appointees. It's unclear how far the administration will take the idea, or which parts of the $1.6tn portfolio could be put on the market."

"Daniel Zibel, vice-president and chief counsel at the National Student Legal Defense Network, described the proposed loan sale as a complex and unprecedented idea, essentially the reverse of the 2008 financial crisis, when the government bought privately held loans to stabilize the market. The system for student debt is incredibly complicated, and for the administration to do this in a way that lives up to the protections that exist in the law for student loan borrowers makes it even more complicated, Zibel said. Selling them off now, he said, would shift repayment and management responsibilities to private entities, raising questions about enforcement, oversight, and the continuity of borrower protections. It could also eliminate the government's power to cancel the loan."

Senior administration officials are weighing selling portions of the $1.6tn federal student loan portfolio to private investors. The proposal targets select, high-performing segments of loans owed by roughly 45 million borrowers nationwide. Officials have contacted figures in the financial industry, including potential buyers, and deliberations began earlier this year. Initial involvement by a department of government efficiency unit at the education department has shifted to guidance by senior political appointees. The plan raises complex legal and operational challenges, increases potential taxpayer exposure, and risks weakening enforcement, oversight, borrower protections, and the government's ability to cancel loans.

Read at www.theguardian.com