The educational-industrial complex is laughing all the way to the bank.
By Wolf Richter for WOLF STREET.
One person’s loan is another person’s asset. If the loan is canceled, the asset is destroyed. That’s how it is.
No one is making payments on government-backed student loans anymore, after two years of forever-forbearance, countless campaign promises of forgiveness, various targeted forgiveness programs already in effect, and now the biggie, the general forgiveness program being hashed out.
Total student loans outstanding, assuming they’re even still “loans,” remained at $1.59 trillion in Q2 compared to Q1, according to the New York Fed’s Household Debt and Credit Report. They have been relatively stable since the Q1 2020, as new loans were being added, while practically no one made payments, and as the numerous forgiveness programs are whittling down the tally from the other side.
Federal student loans.
Federal student loans account for about $1.3 trillion of this $1.59 trillion in total student loans, according to a separate report from the New York Fed. The remainder are Family Federal Education Loans (FFEL) owned by commercial banks, and private loans.
It’s the $1.3 trillion in federal loans that were all moved into forever-forbearance in the spring of 2020, and that are now up for forgiveness.
The median balance of federal student loans is $18,773 – meaning half of the federal student loans balances are lower than $18,773, and half are…
