Risk Assessment For Private Credit Fund On Student Loan
Situation
Our client, the private credit fund recognizes the growing need for accessible student loan options and seeks to support students pursuing higher education. To achieve this, the fund establishes a partnership with a specialized student loan platform that provides student loans to undergraduate and graduate students in the United States.
JMI was asked to perform risk assessment on the student loan platform’s underwriting practices and help them in investment monitoring and default management.
Solution
Credit Risk: JMI team conducted due diligence on the student loan platform's underwriting practices, credit assessment methodologies, and risk management strategies. These assessment helps to mitigate credit risk by ensuring loans are extended to creditworthy borrowers based on robust underwriting criteria.
Market Assessment: JMI team also analyzed macroeconomic indicators, employment trends, and historical loan performance data to assess market risk and establish appropriate risk mitigation measures.
Investment Monitoring: Following the disbursement of the credit facility, our team actively monitors the performance of the student loan platform's loan portfolio. JMI team also provide regular reporting on loan delinquency and default updates. In the event of defaults, JMI team also collaborated with the student loan platform to implement strategies such as loan modifications, repayment assistance programs, or debt restructuring to help borrowers manage their debt effectively and optimize loan recoveries.
JMI team had also provided their analysis on exit strategy based on different scenarios like Loan Portfolio sale and Renewal or refinancing for extended term depending on risk return appetite.
Outcome
Created a highly detailed and complex model for the client to understand the returns associated with financing the project.
Regularly monitored the loan portfolio and default management.
