[September 04, 2014]

Fitch: U.S. SLABS Universe Shrinking as Outstanding Loans Top $1 Trillion

Link to Fitch Ratings' Report: Student Loan ABS (News - Alert) and the College Tuition Bubble (College Costs Continue to Rise, Despite Warning Signs)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=760927

The size of the student loan ABS subsector continues to shrink as the broader universe expands to record-highs, according to Fitch Ratings in a follow-up to its 'College Tuition Bubble' report from last year.

Outstanding student loans totaled $1.1 trillion as of second-quarter 2014 (2Q'14) and remains firmly entrenched behind mortgage loans as the second largest consumer debt segment. Of that amount, less than 25% was securitized and funded through the ABS market. And that number continues to fall.

Student loan ABS issuance has fallen significantly in recent years, to $14 billion in 2011 from $67 billion in 2006. 'The termination of the FFELP program four years ago figures to dampen student loan ABS issuance further going forward,' said Senior Director Tracy Wan.

Government-backe student debt still makes up the vast majority of student loans. However, private loan issuance is showing signs of bouncing back after languishing the last four years. And the compositional makeup of these loans has improved, according to Wan.

'Private student loan ABS transactions issued after the financial crisis are benefiting from significantly higher credit enhancement and more stringent underwriting standards on the underlying loans,' said Wan. 'As the economy recovers, performance for both federal and private programs stands to improve.

'Student Loan ABS and the College Tuition Bubble' is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

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