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ARTICLE · 14 DECEMBER 2016

Proposed Amendments To The Bankruptcy Code Could Adversely Affect Student Loan Securitizations

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In response to the growing balance of student loan debt in the United States, lawmakers have proposed legislation that would eliminate the most lender-protective feature of student loans...

United StatesConsumer Protection
Joseph Cioffi
Joseph Cioffi
Massimo Giugliano
Massimo Giugliano
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In response to the growing balance of student loan debt in the United States, lawmakers have proposed legislation that would eliminate the most lender-protective feature of student loans – the inability to discharge the debt in bankruptcy. Similarly, to foster the restructuring of student loan debt, the Department of Education has recommended making privately issued student loans dischargeable in bankruptcy if the lender fails to offer debt relief payment options. If implemented, these and similar initiatives could significantly impact investor returns on student loan asset-backed securities (or SLABS) backed by privately issued student loans and give rise to lawsuits by or on behalf of investors.

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