The student loan industry has seen another major deal. ReliaMax, a large private student loan servicing and insurance-provider for banks, credit unions and other lenders, is picking up an additional $73 million in private student loans from MetaBank. These two companies have worked together in the past, so it should not be unexpected.
Within the past year, ReliaMax announced that it was selected to service and insure thousands of MetaBank’s private student loan portfolio according to The Student Loan Report. This additional $73 million in private student loans represents a large portion of the remaining loans with MetaBank following the aforementioned deal. It is unclear if ReliaMax will move to purchase the rest of MetaBank’s portfolio, but for those affected, it should not mean many changes in their payment or management of their loan for the time being.
While this kind of development has been seen before, the recent move helps cement ReliaMax’s place in the industry as a true leader in private student loans. Acquiring such large portfolios from traditional lenders helps Reliamax’s business, and they’ve done it more than once.
Reliamax chairman and CEO Michael VanErdewyk remarked, “With the latest deal, ReliaMax has steadily grown the volume of its private student loan portfolio channel to $340 million in loans.” He continued, “This marks our 12th deal since the inception of our portfolio channel. This year along, we’ve closed 5 deals for more than $108 million.”
These kinds of deals are not to be taken lightly. ReliaMax dominates the market with some $3.3 billion in the loan asset class. Even with this market share, the company continues to take on new portfolios at a breakneck pace.
So, what does this mean for the average consumer?
For those who had or currently have a private loan with MetaBank, it is going to be business as usual. You will continue to pay down your student debt according to schedule, and no major changes to your premiums, rates, or terms should happen.
However, there is a small risk to the market, with companies like ReliaMax starting to dominate the private student loan servicing industry. Reliamax is also taking a stake in the risk associated with private student loans. Companies react to changes in risk which could affect the average borrower.
Debt is a fickle thing, and although ReliaMax has prospered under the current agreements, this might not be the case in the future. If a company needs to adapt to additional risk, then a student loan borrower might see change in their repayment.
For instance, if the economy took a turn for the better, borrowers with variable rates could see their payments go up as the market adjusts to a stronger lending environment. Changes in the variable interest rate or the terms of future agreements could be adjusted to make up the difference.