SLABS stand for Student Loans Asset Backed Securitization, which is a commonly u
ID: 2657122 • Letter: S
Question
SLABS stand for Student Loans Asset Backed Securitization, which is a commonly used financial innovation in the student loan industry. Pick the correct answer:
Statement1: Loan issuing agencies sell off the debt to outside investors, because they can recover their loaned out amount quickly enabling them to make more loans as well as earn fees;
Statement 2: BUT, the loan issuers still have to bear the risk if students default on their loans.
Statement 1 is True, Statement 2 is True
Statement 1 is True, Statement 2 is False
Statement 1 is False, Statement 2 is True
Statement 1 is False, Statement 2 is False
Statement 1 is True, Statement 2 is True
Statement 1 is True, Statement 2 is False
Statement 1 is False, Statement 2 is True
Statement 1 is False, Statement 2 is False
Explanation / Answer
Statement 1 is true and statement 2 is false
Student loans asset backed securitization (SLABS) are the loan issuing agencies sell off the debt to outside inveators, because they can recover their loaned out amount quickly enabling them to make more loans as well as earn fees.
Slabs is the channed through which the lending industry moves funds from investors to students. It depends on the ability of borrowers to meet their debt obligations.
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