Once-regular issuers in the "orphaned" ABS market backed by government-guaranteed FFELP loans are now scrambling to reposition their businesses and offering new private loan products. But investors in student loan ABS are unlikely to see a regular deal flow anytime soon.

Top executives at student loan bellwether Sallie Mae were less than upbeat during their earnings conference call July 21. Albert Lord, Sallie's vice chairman and CEO, noted the firm's changing operations as it seeks greater market share in areas such as loan servicing and private loans. And he pointed to more than $100 million of "investment spending" in the first six months of the year to improve private credit, underwriting and loan service systems and other operations.

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