President1988

SLABS, or student loan asset backed securities are made by lending institutions under the US Government's Federal Family Education Loan Program (FFELP). The US Government guarantees loans up to 98% of the loan principal and accrued interest made by private lenders to students.

Cash flows associated with SLABS occur during 3 periods:
1. Deferment - no interest or payment of principal during study period
2. Grace - after graduation but before actual employment with no interest or payment of principal
3. Repayment - employed and paying both interest and principal amortization

Prepayments may occur because of defaults or loan consolidation.