Citi CFO says student-loan market shows signs of overheating

Student loans are showing signs of growing too fast, perhaps the only market flashing a warning even as the U.S. economic recovery grows older, Citigroup Inc. Chief Financial Officer John Gerspach said.

“The only place I think right now where you see evidence of anything that would suggest perhaps overheating, oddly enough, is with student lending,” Gerspach said Thursday on the company’s fixed-income conference call with analysts. “And that is a market that is being driven by the government, not by banks or private interests at all.”

U.S. authorities have estimated that about one in four of the nation’s roughly 44 million student debtors are either in default or struggling to stay current — setting up a potential cascade of borrowers seeking forbearance or forgiveness on debt often backed by the government. Banks such as Citigroup and JPMorgan Chase & Co. have withdrawn from the student-loan market in recent years.

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