If the plan is extended to more borrowers, we would expect a marginally positive impact on the credit quality of the collateral pools in FFELP trusts. FFELP borrowers would be able to consolidate their FFELP loans into direct consolidation loans and reduce their overall chances of default. Borrowers using PAYE tend to have a higher chance of default, and their consolidation into direct loans would leave the remaining trusts with better credit quality.
It has been reported that
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The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
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Source: Fitch Ratings
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