Student Loan Forgiveness Expected to Have Positive Net Effect on SLABS

In a comment from S&P Global, the rating agency determined that the Biden-Harris Student Loan Debt Relief Plan will not have an impact on the ratings of student loan ABS backed by FFELP loans. Recent guidance from the Department of Education states that commercially held FFELP loans that were not consolidated before September 29, 2022 will be ineligible for forgiveness. FFELP loans that were consolidated before September 29 will be forgiven and will act as a prepayment to the trust. S&P expects these prepayments to offset the extension risk from
income-based repayment plans with the “net effect on student loan ABS ratings expected to be somewhat positive.”

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