Taxpayers aren’t the only ones on the hook when Uncle Sam gives borrowers more time to pay off their student loans; investors in student-loan backed securities are also paying a price.   

While the Department of Education guarantees up to 98% of principal and interest on Federal Family Education Loan Program loans, it doesn’t guarantee that these payments will be made on time. This puts investors in FFELP securitizations at risk of default if the loans don’t pay off by maturity.

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