The student loan sector is still in relatively good health, all things considered. In fact, Fitch Ratings released a report last week saying that for the most part, student loan ABS has continued its stable performance despite the negative funding issues plaguing the market.
The rating agency also said that the weakening economy has not had an immediate impact on collateral performance as student loan delinquencies and losses typically lag economic cycles. "Students have the option to defer payments by staying in school or applying for forbearance, in effect, providing a bridge across economic cycles," said Gary Santo, a managing director at Fitch. He added that performance also has a seasonal component driven by the academic calendar and when students enter repayment after graduation.