Federal Losses From current Student Loans
Topic: Go as far as you can to determine likely Federal losses from existing student loans.
· Just address undergraduate Stafford loans – both subsidized and unsubsidized.
· Assume 97% guarantee
Naïve approach:

Determine amount of loans outstanding
Determine the default rate
Calculate defaulted $ amount, multiplied by 0.97
Multiply this by recovery rate – between 50% and 80%

Less naïve: Calculate how much the Federal Government is subsidizing loans.
· Given characteristics on loans: maturity, default probabilities, cost of funds, and profit margin, calculate rate that would/should have been charged by a private bank
· Actual rate, minus calculated rate = subsidy from government
Need the following information:

Stafford loan issuance by year, with rates
Loan amounts outstanding, by year
Default rates, by year
10-year Treasury rate by year
Recovery rate



The post Federal Losses From current Student Loans appeared first on Lion Essays.
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

Federal Losses From current Student Loans was first posted on March 6, 2019 at 9:14 pm.©2019 “Lion Essays”. Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at support@Lion Essays.com

"Do you need a similar assignment done for you from scratch? We have qualified writers to help you with a guaranteed plagiarism-free A+ quality paper. Discount Code: SUPER50!"

order custom paper