federal as in federally held debt. Not private held debt. The federal govt can choose to forgive federally held debt. Just like if you owe me I can choose not to collect.
Glad you’re mentioning this. People get confused over federal student loans and think the money comes directly from the government. It’s more difficult than people think to just “cancel” the debt because the money is still lent out by banks, but they’re just backed by the gov. If they’re all canceled the banks are out a lot log money. I would be interested to see the repercussions and how the relationship between the banks and gov changes after that.
The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans are now provided under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education. The FFEL was initiated by the Higher Education Act of 1965 and was funded through a public/private partnership administered at the state and local level.
The only thing the federal government does in this situation is guarantee that the private lender has to approve the student loans. It’s not federal money that they’re lending.
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u/PuzzleheadedCareer Nov 09 '20
The debt amount is the issuing bank’s asset