The Potential Bubble: Student Loans and Wall Street's Role

Economists are expressing concerns about the student loan asset-backed securities (SLABS) market, as the outstanding student debt in the U.S. exceeds $1.7 trillion. Some experts fear that the ballooning student loans could pose a systematic risk to the American economy, similar to the subprime mortgage-backed securities that contributed to the 2008 financial crash. While the national cohort default rate for student loans has dropped, the Consumer Financial Protection Bureau estimates that one in five borrowers may struggle when federal student loan payments resume. However, not all experts agree, with some arguing that the SLABS market is smaller and poses less of a systemic risk due to increased credit enhancement measures implemented after the 2008 recession.