SLM Corp.'s planned $2.5 billion securitization of FFELP loan receivables made news for a couple of reasons. The student-loan ABS issuer broke its four-month abstention from the ABS market, just as the House of Representatives passed legislation that threatens to terminate its $25 billion buyout by J.C. Flowers & Co., Bank of America, JPMorgan Chase and Friedman Fleischer & Lowe.

The House passed the College Cost Reduction Act of 2007 last Wednesday, which proposes to reduce the special allowance payments made to college tuition lenders by about 10 basis points for loans made after July 1. It would also reduce the exceptional performer guarantee rate to 95% from 97% and to 97% from 99%, according to market sources. The proposals would essentially use the savings to increase Pell Grant scholarships and enact other policies meant to reduce college funding costs for students.

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