: If many borrowers stop paying at once, the value of the security drops.

: Lenders sell these loans to third parties (like the Student Loan Marketing Association or SLMA ) to free up capital.

: New laws regarding student loan forgiveness or bankruptcy rules can suddenly change the value of the debt you've "bought". Should You Just Pay Off Your Own Loans Instead?

When people talk about "buying student loans," they usually mean one of two very different things: taking out a loan to pay for school or buying existing debt as an investment. This post explores the side of the market where student debt is treated as a financial asset. What Does it Mean to "Buy" Student Loan Debt?

: Some specialist managers buy delinquent or defaulted loans at a massive discount—sometimes as low as 6 to 8 cents on the dollar —and profit by rehabilitating those loans into "reperforming" status. Why (or Why Not) Invest? Investing in student debt is a complex "risk-reward" game. The Pros :

: Unlike other debt, student loans are notoriously hard to wipe away in bankruptcy, making them a "stickier" asset for the owner. The Cons :

The Guide to Buying Student Loans: Investing in the Future (and the Debt)