medium · Asset-Backed Securities asset-nuances
A student loan ABS pool consists of FFELP loans. During the 2005 to 2007 period, what was the primary driver of the 'consolidation boom' that dramatically increased prepayment speeds?
- The rollout of the Public Service Loan Forgiveness program for eligible borrowers.
- A sharp increase in defaults following the expansion of subprime student lending.
- A binding mandate from the Department of Education requiring immediate payoff of existing loans.
- The ability for borrowers to lock in low fixed rates by consolidating variable-rate loans
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