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America’s Student Debt Pain Threatening a Corner of Bond Market

A commencement ceremony in Boston.

A commencement ceremony in Boston.

Photographer: John Tlumacki/The Boston Globe via Getty Images
Updated on

America’s mounting student-debt problem is threatening to create trouble in part of a $170 billion bond market tied to government-guaranteed loans.

With borrowers increasingly struggling to repay their student loans, Moody’s Investors Service is warning it may take investors longer than promised to get their money back. The credit grader said this month it may lower rankings on $3 billion of top-rated debt as investors face the threat of slowing principal payments or even receiving no interest.