Page "Asset-backed security" Paragraph 22

ABS collateralized by student loans (“ SLABS ”) comprise one of the four ( along with home equity loans, auto loans and credit card receivables ) core asset classes financed through asset-backed securitizations and are a benchmark subsector for most floating rate indices.

Federal Family Education Loan Program ( FFELP ) loans are the most common form of student loans and are guaranteed by the U. S. Department of Education (" DOE ") at rates ranging from 95 %- 98 % ( if the student loan is serviced by a servicer designated as an " exceptional performer " by the DOE the reimbursement rate was up to 100 %).

As a result, performance ( other than high cohort default rates in the late 1980s ) has historically been very good and investors rate of return has been excellent.

The College Cost Reduction and Access Act became effective on October 1, 2007 and significantly changed the economics for FFELP loans ; lender special allowance payments were reduced, the exceptional performer designation was revoked, lender insurance rates were reduced, and the lender paid origination fees were doubled.