Comment on Millennials are watching monthly student loan payments skyrocket from $500 to $5000 under Trump: This will ‘crash the economy’

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AfricanExpansionist@lemmy.ml ⁨2⁩ ⁨weeks⁩ ago

Student Loan Asset-Backed Securities

Basically, people can buy the rights to your loan payments. Maybe they get packaged together with many others’ debts.

SLABSs are quite profitable, obviously. During COVID years there was a freeze on debt payments and holders of SLABS started to feel the squeeze. SLABSs are such a guaranteed return that people/banks/hedge funds can use them as collateral for loans and stuff. So during COVID, SLABSs became a liability. Or so it’s been speculated

If people start defaulting on their debts, SLABSs could be centrally involved in a financial collapse, the first domino to start chain reaction of margin calls

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