The subprime mortgage mess is taking its toll on the nation’s investors. Financial experts say that fixed income investors have seen their share of losses this year because of the precipitous decline in the subprime mortgage market.
At the same time, defaults on car loans appear to be rising, increasing worries for investors. As a result, some investors are wondering whether another major market for fixed income investors, student loans, may be the next sector to fall.
But the troubles affecting the subprime market and the auto loan market may not necessarily translate into problems for the student loan sector. Still, there is the distinct possibility that student loans could become a risky investment in the near term. That’s because student loan default rates have been increasing in the past few months. But while the defaults are cause for concern, they don’t appear to be a trend as of yet.
If, however, there is a noticeable increase in the unemployment rate, student loan defaults could escalate.
One of the advantages to investing in student loans is the fact that they are insured by the U.S. Department of Education. Private student loans are not federally insured, but applicants for those loans need to demonstrate a solid credit history in order to qualify. In addition, such private loans often require a co-signer who is legally responsible if the student should default.
Yet, the subprime loan crisis could have a potential impact on private student loans. If the housing crisis leads to a recession, new college graduates may find it difficult to find a high-paying first job. As a result, they may find it difficult to keep up with their student loan payments. So far, however, the housing situation has not fanned the flames of recession.
Other articles you might like;
- A Debt Consolidation Glossary
- Getting a Personal Loan If You're Self-Employed
- Natural Expectations Associated With Debt Consolidation
- The Area Where You Reside Can Be a Factor in Your Auto Insurance Rates
- You Can Get Rid of Student Loans by Consolidating the Debt
- What You Should Understand About Debt Consolidation
- Can You Begin Again With Debt Consolidation?
- How Can a Broker Help You?
- Personal Loan Insurance
- Getting Life Insurance For Less
Related Posts
- The Uncertainty Of Investors Having Weakening Effect On Performance Of US Stocks It should not be surprising that with little in the way of positive economic news issuing from Washington that the mood on Wall Street remains decidedly black. The pessimism of many investors is just a sign that there is
- Fed Cuts Interest Rates Once Again The Federal Reserve Board has once again tried to ignite a sputtering economy by cutting interest rates. The Fed has decreased the federal funds rate, the rate that banks charge each other for overnight loans. The rate cut marks the third one
- Mortgage Rates Have Once Again Fallen The financial situation for banks continues to be volatile, and the situation they face has caused them to reduce their mortgage rates again, for the sixth consecutive week. Now, the rates sit at their lowest level in over several months,
- Mortgage Modification Program Reports Higher Rate of Success The mortgage modification program has been under fire over the last few months because of the small number of people actually helped. That seems to be changing as the U.S. Treasury department reports that 947,000 people have seen their mortgage
- Time to Pay for Holiday Purchases The holidays have come and gone, and despite a recession there are millions of homes receiving credit card statements with higher balances. Many gift purchases were charged even though families were struggling to stay ahead of the debt in place
- Mortgage Rates Hovering at 5.25 Percent When it comes to debt management, one thing a lot of people have trouble with is the concept of debt vs investment. One reason for this might be the traditional terminology of bad debt and good debt. Certainly, this is
Recent Comments