Bonds backed by federally guaranteed student loans will continue to pay interest even if Congress does not raise the federal debt limit, according to Moody’s Investors Service.

While the U.S. government’s cash payments Federal Family Education Loan Program securitizations could stall, these deals have sufficient liquidity to cover any temporary delays. That’s because the securitizations can use loan holders’ principal payments to cover interest due on the bonds. Moody’s estimates that cash from the government constitutes between 10% and 30% of the total cash a typical securitization receives.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.