FITCH RATINGS: New US Student Loan Rules Minor Risk to Student Loan Asset-Backed Securities (ABS)
Career College Central Summary:
The recent Gainful Employment (GE) regulations focusing on for-profit colleges and schools, both degree and non-degree, are mildly negative for US student loan ABS, according to Fitch Ratings.
Those loans comprise less than 10% of current Fitch-rated federal and private student loan ABS trusts. And as GE is unlikely to affect funding until 2017 at the earliest, we believe new ABS deals will avoid these types of loans.
GE's objective, announced by the Dept. of Education, is to lower student loan burdens and help ensure that recent graduates secure salaries that are sufficient to service their loans.
The regulations could cause some schools or programs to close due to lack of funding and we could see some marginal ramifications for existing borrowers.
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