Shorting Student Loans???

Is it possible to short student loans? If so, how?

So many students graduating/dropping out of college with loans and no jobs in the near future.

Is there any way I can buy insurance on a student loan investment, and when people default the policy pays off? Is that possible?

Any thoughts/suggestions are appreciated.

I don't know of a way the common man can.  The Wall St. guys can cook something up just like they did with CDO's on mortgages.

Keep in mind though unlike a mortgage you can never walk away from a student loan.  If you buy a $500k home and it drops to $200k you can mail the keys to the bank.  If you take out $100k in student loans and can't find a job there is no mailing that diploma back to the school you are stuck with that loan for life.  Could there be a crash, sure, but nothing like we did in '08, and the Wall St. guys are already all over this anyway.  Again unlike when everyone thought house prices were going to go up forever, people are well aware there is high unemployment, and school prices are at all time highs=higher loans.

It is a fed thing not a state thing.  There are very few ways to get out of them.  I don't know the exact numbers, but private school defaults are like 10%, public 15%, and for profit 20%.  Give or take a few percentage points as it has been a while since I reading something on these. 

When you default that isn't really like a true default since the gov. has so many way to get their money, garnesh wages, tax returns, social security, I think they can ban you from the military.  There are also all sorts of programs out there to keep you out of default that I don't think enough students will risk facing default on a student loan to drive the numbers.

So I 100% think you are on track that default rates will rise a bit, but being backed by the gov. there isn't much that I can think of the common man can do to trade against them.  If you think of something let me know.

You could bet against the publicly traded for profits like Phoenix (betting against the school, not the loan), or short SLM (cash cow, don't do it, don't!).

No worries. Really good insight. I'm just looking for a way to short student loans more than a particular company. It looks like there isn't a way right now but maybe something will be put together by Wall Street.

I'm thinking someone may try and package these together and sell them if people start defaulting on loans.

I don't think I will be enlightening you on anything in the financial sector. You're light years ahead of me in knowledge of this stuff.

I have no clue about CDS, QIB, or ISDA's but I did understand the second half of your statement.

Best of luck.  Go read Michael Lewis's lastest if you want a good education/get up to speed.  I think shorting actual subprime loans from an individual standpoint isn't possible YET.   Big Short I think its called.  Great read.

I've read a few of Lewis' books. I like some of them, others were a bit over my head. Moneyball is one of my top 5 favorite books of all time. Liar's Poker is another.

If you happen to see anything on shorting student loans or any other opportunities, even if they aren't for the individual investor, please update the thread. I'm always interested in reading this sort of stuff.