The Fed Balance Sheet: What is Uncle Sam’s Largest Asset?

The correct answer, as of the latest Flow of Funds report is … Student Loans.

The rapid growth in student debt has been an ongoing topic in the financial press. One stunning chart that continues to haunt me illustrates the rapid growth in federal loans to students since the onset of the great recession. Here is a chart based on data from the Flow of Funds Table L.105, which shows the Federal Government’s assets and liabilities.


As I point out on the chart, the two callouts are for Q4 2007, the quarter in which the Great Recession began (December 2007) the most recent quarter on record, Q1 2013. The loan balance has risen and astonishing 483 percent over that timeframe, most of which dates from after the recession.

This chart only includes federal loans to students. Private loans make up an even larger amount. See this Bloomberg article highlighting the larger problem:

But back to our quiz. Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It’s 42 percent of the total federal assets, about 6 times the 7.1 percent for the Total Mortgages outstanding and 4.2 times the size of Taxes Receivable.


Of course, assets are, sadly, the trivial side of Uncle Sam’s Flow of Funds balance sheet — about 1.60 Trillion. The liability side totaled 15.71 Trillion at the end of Q2. As I type this, the S&P 500 is a mere 1.9 percent off its all-time high. However, the student loan bubble, the biggest slice in Uncle Sam’s asset pie, will haunt us for many years to come.

Doug Short Ph.d is the author of

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