The Fed Balance Sheet: What Is Uncle Sam's Largest Asset?

Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset on Uncle Sam’s balance sheet?

• A) U.S. Official Reserve Assets
• B) Total Mortgages
• C) Taxes Receivable
• D) Student Loans

The correct answer, as of the latest quarterly data, 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 Financial Accounts Table L.105, which shows the Federal Government’s assets and liabilities. I’ve used a log-scale vertical axis.

For a more dramatic look at the same data, here it is with a standard linear axis.

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, Q3 2014. The loan balance has risen and astonishing 614 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 published last year that highlights the larger problem:

• $1 Trillion Debt Crushes Business Dreams of U.S. Students

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 44.2 percent of the total federal assets. This is about 7.2 times larger than the 6.4 percent for the Total Mortgages outstanding and 4.8 times the size of Taxes Receivable.

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