Cezary Podkul
speaker
149 appearances
3 recordings
1 series
first heard Mar 2018
last heard Jan 2020
Cezary Podkul’s voice in public audio — every appearance, attributed to the second.
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WSJ Your Money Briefing · Some Bonds Tied to Student Loans Won't Mature Until the 2070s · 9 Jan 2020
podcast
Yeah, it was a program that was created by Congress and implemented in 2009.
It's called income-based repayment.
And what it meant was that students who were struggling to pay their loans because they were eating up a large chunk of their monthly income could get those monthly payments capped at 15% of their discretionary income.
which meant that the loans would become more affordable to them on a monthly basis.
But for this small chunk of the $1.5 trillion that's owned by investors, that meant that those bonds would not repay by those final maturity dates.
Sure.
So there was a program that was created in the 1960s called the Federal Family Education Loan Program.
It no longer exists.
It was terminated by Congress in 2010.
But under that program, private lenders would originate federally guaranteed student loans that they would then package into securities and sell to investors.
So those are the bonds at question here.
They primarily include older student loans because this program was terminated in 2010.
And those are the ones that had this legal maturity issue where basically they weren't going to repay in time and issuers had to push those due dates back sometimes quite dramatically.
She's a nurse anesthetist in Seattle who had student loans outstanding from various degrees she took out over the years.
And like many borrowers, she had no idea that they were even packaged into these student loan trusts.
So we did some digging.
We traced her particular loans to one of these trusts that sold these bonds.
And we found that, like many students, there's about 7,000-some borrowers in that trust.
And like many borrowers in that trust, she had an income-based repayment plan that was given to her
And what that meant was her payment was lower, but she was going to take longer to repay.
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