What exactly is wrong with it? They’re still heavily incented to get their students hired. If all they’re selling is F tier contracts then eventually they’ll dry up. They clearly need to continue pumping out students capable of repaying those loans.
This simply gives them a way to tap into the cash they would get in the future, just a few years earlier. And if there’s a 3rd party that wants to take on that risk I see no issue with it.
It means that in the sort of zero interest rates environment that we are in, where investors are desperate for yield, they will probably be able to sell these for years longer than they otherwise would have (and ruining lives in the process) before the house of cards finally comes crashing down.
In theory you are right, and in theory savvy investors would have never allowed the subprime mortgage market to get so ridiculous to allow the 2009 GFC to manifest.
But I think in reality it changes the game greatly. Before securitization Lambda is incentivized to produce grads with lucrative job placements. Now they may find that they get a better return on their efforts going for volume and marketing their ISA bundles. Teaching 5K bootcampers to code is hard. They may find that roping in a Masa Son or other less savvy fund to overpay for a portfolio of 100k ISAs (growth produced by lowering standards and taking on unqualified candidates ) to be relatively easier.
This simply gives them a way to tap into the cash they would get in the future, just a few years earlier. And if there’s a 3rd party that wants to take on that risk I see no issue with it.