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
The economy is a house of cards stacked on top of another house of cards that somehow even less stable. Eventually something big enough is going to come and blow it all down and it’s going to be the end of the system as we know it, if things start rolling downhill too fast nothing will be able to stop it
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
The economy is a house of cards stacked on top of another house of cards that somehow even less stable. Eventually something big enough is going to come and blow it all down and it’s going to be the end of the system as we know it, if things start rolling downhill too fast nothing will be able to stop it