7)

a. Sallie Mae is a quasi-governmental agency that packages individual student loans into pools of loans and sells shares of these to investors as Sallie Mae bonds.

i. What is this process called?

ii. How is it different for investors from a situation where investors could only buy and sell individual student loans?

iii. How do Sallie Maes actions affect the ability of students to get loans?

iv.The recession of 2008 was very severe. Many graduating students were not able to get jobs and had to default on their student loans.

1. Is it likely that investors will buy Sallie Mae bonds?

2. Is it likely that Sallie Mae bonds are now perceived to be riskier than before?

3. How will this affect the availability of student loans?