This section is for you curious nerds out there that want to know more about Younomics.
Feel free to skip this section and jump straight to the settlement talk down below.
Right away, we see three different types of entities:
A holding corporation
A trust is an entity involving two parties: the trustor and the trustee. The trustor gives the trustee certain property to hold title to for the trustor’s benefit.
In the student loan world, we typically see a trust when the loan has been securitized.
A securitized student loan is a process in which loans made to individual student loan borrowers are pooled into securities backed by cash flows from these loans.
A security, in this case, represents an ownership interest in a student loan trust. These securities are sold to investors who hope to generate a consistent cash flow from the payments made by student loan borrowers on the loans owned by the trust.
A holding corporation is an entity that exists for the sole purpose to control other entities. You create a holding company to protect your other business from losses.
In the case of Younomics, the business that’s being protected from losses is PSLT Holdco I, Inc.
The reality is that there’s a chance that the student loan pool held by Younomics Private Student Loan Trust may have a higher than expected default rate. If that happens, the trust may suffer losses. If it does, PSLT Holdco Inc., is protected from those losses because it created Younomics Holding Corp to be its firewall.