Benefits of SLBS Overview Structure of SLBS Securitization Benefits of SLBS How SLBS benefit the student loan borrowers? SLBC benefits investors, as well as the financial companies involved in SLBS. However, the biggest advantage of the SLBS system is that it gives great benefits to the general public. The funds raised through issuance of SLBS are used to expand student loans, contributing to the educational welfare of the general public. How SLBS benefit the student loan borrowers? By enhancing the lending capacity of financial institutions, SLBS make student loans more affordable and accessible for students in need. In addition, SLBS broaden ranges for borrowers to choose a loan product or a lender. SLBS make student loans more accessible. SLBS expand funding source for the student loans, lifting the loan limit for the students in need. In addition to the conventional education expenses, SLBS enable the loans to be used for living expenses, where estimated annual income of a borrower’s household falls short of certain criteria. Moreover, SLBS enable students to take out the loans, even when their parents are delinquent on a debt obligation. SLBS make the student loans more affordable. Student loans have long-term maturities up to 20 years (10 years of deferral and 10 years of amortized payment). In addition, where an estimated annual income of a borrower is less than certain criteria, the government provides interest subsidies for the grace period. (For science and engineering majors, entire amount of the interest, for others, parts of the interest accrued.), thereby alleviating P&I payment burden on the borrowers. What are the benefits of SLBS to lenders(financial institutions)? By transferring student loans to KHFC through securitization, financial institutions can eliminate the credit risk and interest risk associated with the loans. Other benefits include the improvement of BIS ratio (the min. mandatory BIS capital adequacy ratio of 8%), expansion of customer base, and diversification of profit portfolio. Improvement of BIS ratio Through securitization, student loan lenders(financial institutions) can improve their BIS ratio by transferring the loans to KHFC. Expansion of customer base As the student borrowers will continue to have transactions with the lenders when they start working after graduation, the financial institutions can secure long-term customers in advance and expand their customer base. Diversification of profit structure Financial institutions can diversify their profit portfolio with servicing fees for the securitization. Benefits for Investors As SLBS has received AAA credit rating and HF guarantees payment, it is a safe investment, and high mid-to-long-term product ratio makes it suitable for insurance and pension / fund management. It is a safe investment. - SLBS has received AAA credit rating from domestic credit rating agencies. - The underlying assets are government-guaranteed loan. (The Student Loan Credit Guarantee Fund guarantees 90% of the loss of the underlying assets.) SLBS is issued under HF’s payment guarantee. - SLBS is even saver as the government indemnifies against settlement loss. - It is listed on the Korea Exchange immediately after issuance, and you can easily trade and liquidate it. - SLBS is issued with various maturity structures to meet various funding needs of investors. It is especially suitable for insurance, pension and fund management since the ratio of mid-to-long-term products is high..