Sal Khan Is Revolutionizing Education (60 Minutes), What About The $870 Billion Student Loan Balance

Millions of people around the world are using the Khan Academy for free online education. Salman Khan, founder of Khan Academy and former hedge fund analyst, uploads video lectures from his computer in a tiny office, and you can only hear his voice and see him drawing from a digital pad. It turns out that Bill Gates is a big fan of Khan Academy and his kids use it. And Eric Schmidt, executive chairman of Google, thinks Khan Academy could take off and revolutionize education (from elementary school to advanced college courses).

Nice, now what about the $870 billion student loan balance with a 10% delinquency rate. And when loans deferred until after graduation are removed from the balance, the delinquency rate is 21%. See more numbers after the videos (read the New York Fed report). Watch the 60 Minute videos after the jump. I also embedded Khan's TED talk from March 2011 that features Bill Gates.







Source: http://www.ted.com/talks/lang/en/salman_khan_let_s_use_video_to_reinvent_education.html



More information from that New York Fed's report:

"How much difficulty are borrowers having paying back their debts? Of the 37 million borrowers who have outstanding student loan balances as of third-quarter 2011, 14.4 percent, or about 5.4 million borrowers, have at least one past due student loan account. Together, these past due balances sum to $85 billion, or roughly 10 percent of the total outstanding student loan balance."

Source: FRBNY
"From this exercise, we find that as many as 47 percent of student loan borrowers appear to be in deferral or forbearance periods, and thus did not have to make payments as of third-quarter 2011. Specifically, 17.6 percent of borrowers had exactly the same balance in the third quarter as in the second quarter of this year, and 29.1 percent increased their overall student loan balance by taking on new originations or accruing interest to the balance.

"We then recalculate the proportion of borrowers with a past due balance excluding this group of borrowers. We find that 27 percent of the borrowers have past due balances, while the adjusted proportion of outstanding student loan balances that is delinquent is 21 percent—much higher than the unadjusted rates of 14.4 percent and 10 percent, respectively (see charts below)."

I'm sure there's a trade in there somewhere. Where's the student loan ABX chart?

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