How SLABS work....
Let's ignore the "student" adjective and just talk about loans. We'll ignore percentages and other things to keep it simple.
Let's say you want to get a $10,000 loan and you promise to pay back $12,000 by the end of the year. You sign a contract, get the money, and leave the bank.
Now the bank has given you $10,000, but they know by this day next year they will have $12,000. That's what your contract says.
The bank can then ask another bank to give them money in return for your loan contract. The other bank wants to make a little money, so maybe they buy your loan for $11,000. So the bank you got the loan from made $1,000 in short order, and the new bank is going to make $1,000 off of your loan. Everyone's making money but you, the debtor.
So if your debt was cancelled before this happened, your bank would lose both the $10,000 they gave you as part of the loan and the extra $2,000 in interest you were going to pay. (Obviously you might've paid some of it back but we're staying simple.) The $10,000 hurts a little more because the $2,000 was still imaginary future money.
But if it happens after your loan is sold as a SLABS, the new bank loses the $11,000 they paid for your $10,000 loan and the $1,000 in interest they expected. But this time there's MORE real money they lost so it hurts even more.
If you think about it really hard, this is very similar to how the housing crisis wrecked banks in 2008 and 2009. It turns out they didn't learn a lesson and just started doing the same thing with different loans. If we cancel student debt, it will be just like what happened when all the bad loans they gave out started defaulting.
But they're being a bit alarmist. If we "cancel" student debt what we really mean is the government's going to pick up the tab. But the government might only pay back the original amount, not the interest, and that's bad for the people who are gambling with student loans via SLABS since they paid some of the interest when they bought the loan. So they're spending all the money they can telling people the sky will fall if student debt is canceled, just like people who overinvest in NFTs spend all their time promoting what a great investment their NFTs are.
It's almost like it's not a great idea to let banks gamble with any kind of loan because it incentivizes predatory behavior, but what do I know?