Stories about rising costs of Higher Education and consequently rising debts for HE graduates abound. But most stories look at it only from the perspective of the students/graduates and their families. In the article in Humanities “Investing in College Education: Debtors, Bettors, Lenders, Brokers”, Ellen Messer-Davidow from the University of Minnesota looks at it from a broader financial-economic point of view – admittedly in a strong-worded Marxist tirade against neo-liberalisms. She shows that the student’s loans – which have grown significantly in proportion to the Federal grants over the past decades – are being “securitised” in pretty much the same way that subprime mortgage loans were to produce the financial crisis on 2007/08.
With a total volume of 1 300 000 million US dollars (avoiding the difference between the American and European “trillion”), students loans may well become a huge burden on the American economy – because of the high default risk and the government’s guarantee of the loans. With the mortgage crisis of 2007/08, major European banks were heavily involved as they had bought huge portions of the securitised subprime bonds. How much of the “securitised student loan bonds” are now in the possession of these European banks? And does the guarantee by the American federal government also extend to not American holders of these bonds?