Can we drop the pretense that the Department of Education’s student loan portfolio is actually making money? 40% of its loan portfolio is non-current on their loans. Keep in mind, people with loans still in school are listed as “current”. Those also on IBR or other payment plans also get to be listed as current even though it’s an effective haircut.

The main problem with the Federal student loan program is that it is effectively designed to lose money. There is absolutely no underwriting process beyond “do you have a high school diploma (or GED) and enrolled in any accredited college?”

Everybody gets the same rate, whether they’re going to MIT to study computer science or majoring in general studies at Directional State U or some godawful for-profit college designed to do nothing but milk the Federal student loan program.

It’s been 6 years since the Federal government effectively nationalized the undergraduate student loan market and most repayment schedules are measured in decades. It’s all but a certainty that Education will have to mark down their loan portfolio by hundreds of billions of dollars in the 2030s or sooner.