Last week, a few of us from Overture attended the CBA's Private Student Loan Workshop here in the Washington D.C. area. As a private student loan decisioning and underwriting software vendor, the CBA sponsored events are a great way to understand the environment our customers are dealing with. In no particular order here are some impressions.

In terms of investor demand, the only thing lower than federally backed students loans right now are private student loans ( a bit of hyperbole here, as they actually mentioned that Ambac bonds are lower than student loans). One thing is clear: student loans are not going to lead a credit market recovery. The rough consensus was that it will be a year before the larger markets recover and between 18 months and two years for the student loan securitization market to come back.

One of the most interesting things was to listen to analysts from the various rating agencies question the efficacy of traditional FICO-like credit scoring models for underwriting private student loans. Private student loans are more like an investment than a consumer loan such as a credit card or personal loan. Inherently it is the quality of the investment that really will matter. Credit officers will need to examine this non-traditional approach going forward, and private student loan credit decisioning systems and technologies need to flexible enough to incorporate these new data sources.

Numerous new types of disclosure requirements are being considered by policy makers in Washington. While well meaning, the new requirements could be counter productive. So much legal disclosure language will be thrown at consumers that none of it will be actually read and understood.