Things look good in the student-loan sector of the ABS market following the recent passage of a bill that fixed lending rates, preventing a plan that was meant to reduce private education lending. There have also been two first-time issuers looking to tap the primary market. The lack of new-issue supply is nothing to worry about, sources note, as conditions currently favor the holding of student loans on books, but it should pick up later this year, following the resetting of rates in July.
Initially passed by the U.S. Senate Dec. 20, the House of Representatives finally passed S. 1762, more commonly known as the student loan interest rate fix. S. 1762 reverses the Education Reform Act of 1993, President Clinton's initiative to move the lending activity from private banks into the hands of the government-sponsored Direct Loan Program.