The rates on ARS are set at periodical auctions based on the bids of potential buyers.

The municipal ARS market collapsed in February 2008, and since then, there have been no new municipal ARS issuances. As of the end of July 2010, the auction rate market stood at an estimated $66.8 billion, with more than 1,350 CUSIPs outstanding. With a rolling three-month average of $1.2 billion retired per month since January 2009, the market is currently shrinking by $15 billion annually; at the current rate and assuming no new issuance, the entire municipal ARS market would be retired in less than five years.

Traditionally, student loan issuers were a significant part of ARS market share, representing a third of all municipal ARS issuance in the 10-year period from 1998 to 2007, as well as a third of the total outstanding amount at the end of 2007. However, post-crisis student loan issuers are by far the largest category of municipal ARS outstanding, with 70.4 percent of the market as of the end of July 2010.