Student loan ABS

Borrowers' high incomes and the abundance of monthly free cash flow speed up repayments and mitigate the transaction's exposure to economic downturns.

Almost all the collateral was extended to borrowers attending four-year schools, and the same percentage was made to borrowers attending not-for-profit schools.

The $1 billion securitization includes a $424 million fixed rate Aaa-rated portion with a yield of 5.133% as well as a $424 million floating Aaa-rated portion priced at 110 basis points over the Secured Overnight Financing Rate.

The agency wants the National Collegiate Student Loan Trusts, which sell student loan asset-backed securities (ABS) to investors, to pay $2.25 million in fines to borrowers.

Any risk of mis-matching of fixed and floating rates among the assets and transaction notes is minimal. Between 80%-90% of the notes pay a fixed rate, while 78% of the loans are fixed rate.

The bonds exist with several redemption provisions, including the first maturity date, a special redemption option from excess revenues, and a special mandatory redemption from excess revenues.

This is ECMC's first securitization of a pool of rehabilitated loans since 2021.

The action stems from 2017, when the CFPB filed a lawsuit claiming Navient steered borrowers who might have qualified for income-driven repayment plans into more expensive forbearance instead.

The AA, A and BBB notes have 12.7%, 12.5% and 7.0% in credit support, which included excess spread.

Firstrust Savings Bank and First Citizens Bank originated the loans, all of which are in-school, and a vast majority of the loans in the pool, 82.0%, are fixed rate.