Sallie Mae rolled out a new loan program earlier this month, and although one official there said the lender had no existing plans to fund it through securitization, market players think otherwise.

The student loan provider launched the program, called Global Health Education Loan Program, or GHELP, to allow American students to pay for graduate health education at schools outside of the U.S. It is comprised of a suite of products that will allow medical school students to borrow up to 100 percent of the costs to attend eligible higher education institutions overseas. The program includes a Federal Stafford loan with no origination or federal default fees, a private education plan, and residency and relocation funding for graduate medical students, according to Sallie Mae. The GHELP loans can also be combined with Sallie Mae's graduate PLUS loan program for graduate and professional students.

"In the near term, if they need a source of funding, it is not unlikely that they will roll it up in their private securitizations," said one securitization professional.

The student loan sector is already turning in big numbers in terms of ABS issuance. Volumes for student loan ABS were $20.7 billion year-to-date last week, up about 18.8% from the $16.6 billion that the sector produced during the same period last year, according to figures from Thomson Financial.

Whatever Sallie Mae does with its future portfolio of GHELP loans, the market is likely to notice. By late last week, Sallie Mae came to the market with five student loan securitizations totaling $12.8 billion in issuance. With that, the lender accounts for 61.8% of outstanding student loan ABS.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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