Student Loans

Are ISAs the Solution or a New Problem in Student Lending?

Jun 20, 2019 | By JOSEPH CIOFFI

Individual stories tend to get lost when stories are told on a massive scale. Reporting on student debt as a $1.5 trillion problem is like watching buildings being crushed by Godzilla in scenes of sweeping destruction – the focus is on the giant monster and not the impact on the individuals caught in the chaos. Now, a new type of education finance option, known as the Income Sharing Agreement (ISA), is putting the focus solely on the individual student, with the promise of changing the student ...

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Student Loans

Something iiBIG Just Happened: 11th Annual Education Finance & Loan Symposium

May 16, 2019 | By JOSEPH CIOFFI

Last week, Joseph Cioffi moderated a panel on valuation and trends in student loan securitizations at the iiBig 11th Annual Education Finance & Loan Symposium. Below, he provides key takeaways from the conference and shares insights from his fellow panelists: Grant Carwile, Managing Director at SL Capital Strategies LLC Jonathan Riber, Senior Vice President, U.S. ABS at DBRS Melvin Zhou, Director, ABS Consumer at Kroll Bond Rating Agency As the panel discussed at the conference, two of the best ...

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Student Loans

Watch Out for Madden v. Midland Risks in Education Lending

May 03, 2019 | By JOSEPH CIOFFI

Success stories of marketplace lending in consumer credit markets are plentiful. They provide models of success for lenders seeking to leverage technology to reach underserved markets, but along with the successes, there is a significant legal issue that has impacted marketplace lending of which student loan lenders and investors should be aware. We’ve written about Madden v. Midland Funding (Madden) risks in prior blogs and articles in connection with marketplace lending. A recent settlement ...

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Student Loans

Behind-the-Scenes Strategies for Success – Part Two: We Speak to Revenue Connections on the Importance of Borrower Attributes to Student Loan Collections

Apr 17, 2019 | By JOSEPH CIOFFI

Take care of your business at home, before searching for greener pastures. It’s a key takeaway from Part One of our interview regarding subprime auto: lenders and servicers with modernized collection and recovery systems have a solid foundation for profitability that should be a requisite before embarking on business development plans. In Part Two of our discussion with David Albers, CEO of Revenue Connections, we asked David to share his advice on ways to positively impact collection efforts ...

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Student Loans

When An Act Is Not A Disclosure, States Win the Preemption Battle

Jan 16, 2019 | By JOSEPH CIOFFI

Like Ali v. Frazier II and III, it’s not much of a rivalry if one side keeps winning the decision. The battle began when the Department of Education fired a shot across the bow with its letter arguing that state laws attempting to regulate student loan servicers – whether through licensing requirements or consumer protection laws – were preempted by federal law, which calls for uniform administration of federal student loan programs. Now state victories are starting to pile up. Given consumer ...

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Student Loans

As Less Enforcement Leads to More Lawsuits, We Speak to Education Loan Finance on Ways Lenders and Servicers Can Avoid Future Issues

Oct 17, 2018 | By JOSEPH CIOFFI

It’s been said that a war doesn’t determine who is right, but rather, who is left. Although there’s been much talk of an epic battle between states and the federal government that will determine the scope of federal preemption in the student loan space, it’s not going to be much of a fight if only one side shows up.  If current trends hold, it looks like states will be left to dominate the legal landscape of consumer protection. In the wake of statements by the resigning student loan ombudsman ...

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Student Loans

Student Debt Burden: Whose Problem Is It, Anyway?

Sep 20, 2018 | By JOSEPH CIOFFI

It’s back to school time, and there’s so much noise about a student loan crisis that there’s a need to corral all the noisemakers and to gain an understanding of what’s actually going on. Sister Mary Elephant had the right idea when she scolded her classroom to be quiet some 40 years ago. It does sound pretty bad. Student debt surpassed $1.5 trillion earlier this year, and it’s estimated that nearly 40 percent of borrowers will default on their student loans by 2023. But talks of a collapse are ...

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Student Loans

Student Loans: 60-Second Market Review and Insights

Jun 20, 2018 | By JOSEPH CIOFFI

Originations and Issuances, by the Numbers Student loan debt rose to $1.52 trillion in Q1 2018, up from $1.44 trillion a year earlier, and now accounts for 10.7% of the $13.21 trillion in total household debt, based on Federal Reserve Board of Governors and Federal Reserve Bank of New York data. According to a report issued by DBRS, $16.7 billion in student loan asset-backed securities (SLABS) were issued in 2017, up 10% versus a year ago. Of the total 2017 SLABS issuance, student loan ...

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Student Loans

iiBig 10th Annual Education Finance & Loan Symposium

May 17, 2018 | By JOSEPH CIOFFI

Last week, Joseph Cioffi was a featured speaker at the iiBig 10th Annual Education Finance & Loan Symposium in Alexandria, Virginia.  He participated in a panel regarding the latest trends and issues impacting collections and also moderated a panel on valuation and trends in student loan securitizations.  Below, he shares key takeaways from the conference and shares insights from his fellow panelists. The conference was highly informative, including the insights of the experts on the valuation ...

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Student Loans

The Latest Non-Answer to the Student Loan Debt Burden: Foregoing Social Security Benefits

Mar 16, 2018 | By JOSEPH CIOFFI

College students – prepare to be educated on a new case of Hobson’s choice, a term typically used to describe situations where there appears to be a choice available, but in reality, there is no choice at all.  It’s named after a stable owner in England who rented out horses, but would only offer customers the horse nearest the stable door.  But this time around, the concept is reflected in a proposed bill that would offer student loan borrowers debt elimination in exchange for delaying their ...

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Student Loans

The Economic Payoff of a Student Loan Payoff

Feb 21, 2018 | By JOSEPH CIOFFI

For all the talk about Dreamers in the national immigration debate, a recent research paper positing the positive effect of erasing the nation’s $1.3 trillion student debt burden has given the term new meaning.  If someone could wave a magic wand and make student loan debt disappear, we would hear the collective cheers of student borrowers all the way to the moon.  But rather than treat such an act like a fairy tale, a group of economists here on earth went about determining the kind of ...

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Student Loans

Student Loans in 2018: Debt Relief Discussions Will Become De Rigueur

Jan 18, 2018 | By JOSEPH CIOFFI

2018 may be the beginning of the end of an education finance system that has resulted in overburdened students and families struggling to pay back loans that were too high at their inception relative to the reasonable income potential of the degree earned. Change won’t come overnight, but potential solutions should be put in motion this year, mainly aimed at relieving the student loan debt burden. Below are a few touchstones for change that would signal the beginning of the end of the current ...

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Student Loans

Student Loans: 60-Second Market Review and Insights

Sep 14, 2017 | By JOSEPH CIOFFI

Originations and Issuances, by the Numbers Student loan debt rose to $1.34 trillion in Q2 2017, up from $1.31 trillion at the end of 2016, and now accounts for 10.4% of the $12.8 trillion in total household debt. In Q2 2017, $3.3 billion in student loan asset-backed securities (SLABS) were issued, down 34% versus year ago. Of the total first half 2017 SLABS issuance of $7.9 billion, student loan refinance (refi) ABS issuances were $2.3 billion, a 30% increase versus year ago. Traditional ...

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Student Loans

Show Me the Note, Again …

Jul 27, 2017 | By JOSEPH CIOFFI

Years ago, “show me the note” contagion took hold in the subprime mortgage market. Borrowers launched widespread attacks on foreclosure actions once tales of successful early challenges were reported in the media.  With the recent reports in The New York Times about National Collegiate Student Loan Trusts’ problems enforcing student loans due to incomplete documentation, the same contagion could again take hold in the nation’s courts. In the aftermath of the 2008 financial crisis, courts were ...

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Student Loans

A New Approach to Discharging Student Loan Debt?

May 31, 2017 | By JOSEPH CIOFFI

Student loans carry a reputation for inevitability surpassed only by death and taxes. With good reason, too. In order to discharge a student loan in bankruptcy—the only way to shake it for good—a borrower in bankruptcy must show that being required to repay the loan would cause them “undue hardship.” Making that showing has proven difficult indeed. In applying the “undue hardship” standard, most courts use the Brunner test, which requires petitioners to prove that they: (i) cannot maintain a ...

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