Private Student Loan Financing in an Era of Needs and Challenges

Abstract

As various industry participants whose business models focused on federally guaranteed student loans adjust to the elimination of private sector origination of these loans, some have focused their efforts on identifying opportunities in private student loans. This article explores the rapidly changing legislative and regulatory landscape affecting the student loan industry and describes the historical and current performance driven context in which private student lending has evolved. The authors detail how originators are developing new student loan products and how investment banks and specialty finance companies are creating innovative financing methods that are and may be used to securitize those products. The article also stresses the importance of enhanced servicing techniques and collection strategies for private student loans.

TOPICS: Legal and regulatory issues for structured finance, credit risk management