The Federal Student Loan Portfolio
Understanding the $1.6 trillion federal student loan portfolio – its true value, if it could be sold, and what that means for borrowers
Why now?
President Trump’s recent Executive Order to dismantle the Department of Education (ED) included moving the $1.6 trillion federal student loan portfolio “to an entity equipped to serve America’s students.” What does this mean? Where will the loans land and could the government actually sell them? Here’s what we know.
Could the government sell federal student loans to a private buyer?
It is legal—but there’s a catch. The law allows the Department of Education to sell Direct Loans to a private buyer, provided that the sale “not result in any cost to the Federal Government.” A government analysis estimates the breakeven price on a sale of the portfolio is around $1.08 trillion— or 31 cents on the dollar. But for a number of reasons, this figure is inflated and inaccurate. Even assuming accuracy, no private buyer would pay the government’s breakeven price.
PPSL did an in-depth analysis on what a potential sale of the federal student loan portfolio means for both borrowers and potential buyers.
TL;DR
PPSL President and Executive Director Eileen Connor explains it all in this 3-minute video:
Eileen also wrote about this in a piece for American Banker: “The federal student loan portfolio isn't an attractive asset.”
