Transcript Document

In The Trenches:
What Financial Aid Administrators Think
This presentation does not constitute formal policy or legal
advice and should not be relied upon as such.
© Student Lending Analytics, LLC
Slide 1
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
© Student Lending Analytics, LLC
Slide 2
In The Trenches: What Financial Aid Administrators Think
Federal Student Loan Plans for 2009-10
60.0%
56%
Percentage of Respondents
50.0%
40.0%
30.0%
19%
20.0%
8%
10.0%
7%
4%
6%
0.0%
Staying in
FFELP
Staying in
Direct
Lending
Switching to
FFELP But Offer DL and
DL in 2009-10 Undecided for
FFELP
2009-10
Other
Survey question: Please select the choice which best describes your institution's plans for the 2009-10 academic year
(Direct Lending or FFELP or some variation).
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 3
In The Trenches: What Financial Aid Administrators Think
Steps To Prepare For Direct Lending
50.0%
46%
42%
37%
Percentage of Respondents
40.0%
35%
33%
30.0%
23%
20.0%
12%
11%
Create a
Team
Software
Vendor
10.0%
0.0%
Peer Schools
Dept.
Website
Conferences
Webinars
Set Up
Electronic
Acct. With
DL
None of the
Above
Survey question: My institution (either myself or other staff members) has taken the following steps to prepare for Direct Lending
should that become the platform for loan origination as well as servicing in 2010-11.
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 4
In The Trenches: What Financial Aid Administrators Think
College Administration Involvement
40.0%
34%
Percentage of Respondents
30.0%
29%
21%
20.0%
10%
10.0%
6%
0.0%
Strongly agree
Agree
Moderately
disagree
Strongly disagree
Not sure
Survey question: COMMENT ON THIS STATEMENT. The administration at my institution is interested in having a contingency
plan prepared to implement Direct Lending by the proposed July 1, 2010 start date.
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 5
In The Trenches: What Financial Aid Administrators Think
Overall- Financial Aid Systems
Percentage of Total Respondents
30.0%
28%
20%
20%
20.0%
14%
12%
10.0%
7%
18
O
th
er
s
ro
wn
eG
om
H
Pe
op
le
So
ft
at
aT
el
D
ID
S
er
FA
Po
w
Ba
nn
er
0.0%
Survey question: Please indicate the financial aid system currently used by your financial aid office.
Note: Others include CampusVue, CARS, Jenzibar and Poise
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 6
Percentage of Total Respondents
In The Trenches: What Financial Aid Administrators Think
By Loan Program Type: Financial Aid Systems
40.0%
33%
30.0%
28%
22%
22%
20.0%
15%
14%
15%
11%
13%
14%
11%
FFELP
Direct Lending
10.0%
4%
th
er
O
n/
Le
ga
cy
H
om
egr
ow
Pe
op
le
So
ft
ID
S
Po
w
er
FA
at
aT
el
D
Ba
nn
er
0.0%
Survey question: Please indicate the financial aid system currently used by your financial aid office.
Note: Others include CampusVue, CARS, Jenzibar and Poise among others
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 7
In The Trenches: What Financial Aid Administrators Think
Direct Lending Satisfaction Scores
5.0
Degree of Satisfaction (Very Satisfied = 5.0)
4.5
4.4
4.3
4.3
4.3
3.8
4.0
3.0
2.0
1.0
0.0
Loan Processing
Reconciliation
Service to FA
Office
Implementation
Service to
Customers
Value-added
services
Survey question: Describe your level of satisfaction with the Direct Lending program for each of the factors described below.
Note: Value-added services include financial literacy and default prevention activities
Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
© Student Lending Analytics, LLC
Slide 8
In The Trenches: What Financial Aid Administrators Think
Improving Direct Lending
PLUS Loan Process:
– “The PLUS loan process whereby DL would notify the borrower to e-sign
instead of printing prom notes or have the prom note available to download
on their web site similar to FFELP lenders.
– “PLUS Loan processing, would like DL to offer some automation, so parents
could apply online with them.”
Modifying internal systems/processes:
– “Overall, I would say the ED's processes are fine; the complicated part has
been modifying our internal systems and processes.”
Creating testing environment:
– “I'd like to have more testing opportunities to make sure the process flow is
working well. Currently, we have to set up our systems with assistance from
the DL program, but there is no opportunity to test the electronic process
flow to ensure that everything is working correctly. It's just "turn it on and
hope it works right" currently.”
© Student Lending Analytics, LLC
Slide 9
In The Trenches: What Financial Aid Administrators Think
Improving Direct Lending
Website enhancements
– “Students should be able to do the MPN and entrance counseling on the same
website. Also, the precise way a student must enter their school on the MPN site is
not user friendly. How about some type of good-old-fashion drop-down list?”
– “The DL Servicing Website needs to be more user-friendly. It needs more financial
literacy material, advice about borrowing, and calculators that are easier to locate.”
Default prevention and service to students:
– “Default Prevention, there does not seem to be many materials or much available.
Students exit and that is it.”
– “Improve customer service to students.”
Implementation assistance
– “I would like to see the Department provide some more training opportunities.”
– “Better coordination of contact for FAA with COD/Direct Loan Origination. Better
interface/instructions for set up on COD and Direct Loan Servicing site. It's not
intuitive.”
Stability of servicers
– “Keeping the same contractors for the servicing. It seems that every few years a new
contractor takes over and it takes a while for everything to move smoothly after each
transition.”
© Student Lending Analytics, LLC
Slide 10
In The Trenches: What Financial Aid Administrators Think
Who’s Going Direct?
School
New York Institute of Tech.
Auburn University
University of Connecticut
University of Louisville
Middle Tennessee State
Stony Brook University
Azusa Pacific University
CSU-Sacramento
CSU-Long Beach
Lesley University
City, State
New York, NY
Auburn, AL
Storrs, CT
Louisville, KY
Murfreesboro, TN
Stony Brook, NY
Azusa, CA
Sacramento, CA
Long Beach, CA
Cambridge, MA
2007-08
FFEL Volume
$138,100,000
$110,564,411
$109,898,958
$90,847,216
$86,700,000
$86,632,833
$77,000,000
$69,702,474
$67,116,543
$64,193,033
Source: SLA research, May 2009
© Student Lending Analytics, LLC
Slide 11
In The Trenches: What Financial Aid Administrators Think
The Geography of FFELP program
Thirteen states had at least 90% of the institutions within their state participating in
the FFEL Program in 2007-08:
–
West
• Alaska
• Hawaii
• Montana
• New Mexico
• Utah
• Wyoming
–
Midwest
• Nebraska
• North Dakota
• South Dakota
–
East
• Pennsylvania
• New Hampshire
• Vermont
–
South
• Mississippi
© Student Lending Analytics, LLC
Slide 12
In The Trenches: What Financial Aid Administrators Think
The Legislative Process From Here
H.R. 3221 Debated in House of Representatives
– Most analysts expect the bill to pass the House after August recess
Senate Committee on Health, Education, Labor and Pensions (HELP) to
introduce their own legislation
Senate debates and votes on Senate Committee’s bill
Differences between Senate and House bill to be resolved by Conference
Committee
Legislation will be reported to respective Budget Committees by October 15,
2009
House and Senate vote on respective budget bills
Differences between House and Senate resolved by Conference Committee
House and Senate vote on final budget bill
© Student Lending Analytics, LLC
Slide 13
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
© Student Lending Analytics, LLC
Slide 14
In The Trenches: What Financial Aid Administrators Think
Who’s Taking Out Those Private Student Loans?
From Project on Student Debt Analysis of NPSAS Data:
– Percentage of all undergraduate students who borrowed private student
loans jumped from 5 percent in 2003-04, to 14 percent in 2007-08.
– At proprietary (for-profit) colleges and universities, the percentage of
students who took out these loans skyrocketed from 13 percent in the 200304 school year, to 42 percent last year.
– One in four private student loan borrowers in 2007-08 didn’t take out any
federal Stafford loans that year
© Student Lending Analytics, LLC
Slide 15
In The Trenches: What Financial Aid Administrators Think
How Has The Supply of Private Student Loans Been Impacted by Credit Crunch?
Supply of private loans declined rapidly in August-September 2008…
– Lenders representing 31-37% of private loan market stopped lending
• Credit line pulled: College Loan Corp., Education Finance Partners
• Parent company afflicted by sub-prime issues: Wachovia, CampusDoor
• Inability to access ABS market: Key Bank, Bank of America (TERI)
While incumbents have not picked up the slack…
– Securitization markets have been relatively dormant since 2007
• Recent Sallie Mae deals have been done at extremely high prices
– Concerns over credit quality has plagued student loans
• Sallie Mae expected to write-off over $1 billion in private student loans in 2009
– Limited access to capital
And new entrants have not added much new supply into market
– Discover entered market in 2007
– Credit unions starting to increase their market presence
– Peer-to-peer lenders, Fynanz and GreenNote, met with limited success
© Student Lending Analytics, LLC
Slide 16
In The Trenches: What Financial Aid Administrators Think
How Have Students Adjusted To The Decline in Availability of Private Loans?
While traditional funding sources to finance a college education have
been whacked…
– Home equity has plummeted given nationwide declines in home prices
– 529 plans have suffered in the bear market which reduced equity values over
50%
Students turning to federal loans in record numbers
– According to the Department of Education, federal loans have seen 20.8%
growth through the end of February for the 2008-09 academic year
• Stafford unsubsidized loans increased by $2,000 in July 2008
• 10% increase above trend in federal loan borrowings amounts to about $7
billion in incremental borrowing
– Parent PLUS loan growth appears to be flat
• Sallie Mae, the largest FFELP lender, saw 57% growth in Stafford volume in
their internal brands for 2008 while Parent PLUS volume was flat over the
same timeframe
Leading indicator, FAFSA filings, are up 20.8% in first quarter, so
expect this trend of increased federal loan borrowings to continue
© Student Lending Analytics, LLC
Slide 17
In The Trenches: What Financial Aid Administrators Think
Student Concern About Transparency
Selected comments from SLA Private Student Loan Ratings
survey:
“While the interest rate was not disclosed on the website after being
approved without a cosigner, I called the customer service line and they
were very helpful: they told me what my rate was, which was prime plus 2 or
3%. I asked if I could get a lower rate with a cosigner and they said I could
try, so I did and got a much lower rate.”
“They want you to sign the promissory note before you know what the
interest rate is. The interest rate is not part of the promissory note. I had to
call their customer service department to find out that my rate would be
prime + 1/2%. Why do they expect us to sign a promissory note before we
know what the interest rate is?”
© Student Lending Analytics, LLC
Slide 18
In The Trenches: What Financial Aid Administrators Think
Degree of Concern Regarding Private Student Loans
60.0%
Percentage of Total Respondents
52%
50.0%
44%
38%
40.0%
31%
30.0%
20.0%
14%
10.0%
Overall
4-year private
4-year public
2-year public
17%
6%
4%
0.0%
Very Concerned
Somewhat Concerned
Survey question: How concerned are you about the availability of PRIVATE loans for your students for the 2009-10 academic year?
Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)
© Student Lending Analytics, LLC
Slide 19
In The Trenches: What Financial Aid Administrators Think
Prevalence of Lender Lists for Private Loans
70.0%
Percentage of Total Respondents
60.0%
69%
65%
56%
54%
50.0%
42%
40.0%
34%
30.0%
23%
21%
Overall
4-year private
4-year public
2-year public
20.0%
12%
10%10%
10.0%
4%
0.0%
Yes
No
Not Sure
Survey question: Is your institution planning to provide students with a lender list for private loans for the 2009-10 school year?
Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)
© Student Lending Analytics, LLC
Slide 20
In The Trenches: What Financial Aid Administrators Think
SLA’s Private Student Loan Ratings
Launched in May 2009
Independent, objective ratings of leading lenders of private student loans
Site updated on a regular basis to capture changes in lender interest rates
and fees
Rate lenders based on variety of measures, including:
– Expected cost
– Fee structure
– Repayment options
Featured in NY Times in May
– Students’ First Lesson: Beware the Fine Print
Dozens of schools currently provide a link to this site as a resource for their
students
– Available free to schools
– Link to www.studentlendinganalytics.com/ratings.html
Thousands of visitors have flocked to the site since its launch
Named “One of Six Best College Sites” by CBS MoneyWatch
© Student Lending Analytics, LLC
Slide 21
In The Trenches: What Financial Aid Administrators Think
Lender Selection Process for 2009-10
Percentage of Respondents With Lender List for 2009-10
40.0%
35%
32%
30.0%
20.0%
14%
12%
8%
10.0%
0.0%
Formal RFI
Keep List from
08-09
All Lenders Last Informal Process
3-5 Yrs
Other
Survey question: Please describe your institution's process for developing a lender list for private student loans.
Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)
© Student Lending Analytics, LLC
Slide 22
In The Trenches: What Financial Aid Administrators Think
Lenders On Private Loan Lists
48%
Percentage of Respondents With Lender List for 2009-10
50.0%
40.0%
30.0%
24%
20.0%
17%
12%
10.0%
0%
0.0%
1
2 to 3
4 to 5
5 to 7
Over 8
Survey question: How many lenders does your institution plan to have on your lender list for private loans for the 2009-10 academic year?
Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)
© Student Lending Analytics, LLC
Slide 23
In The Trenches: What Financial Aid Administrators Think
Selection Criteria for Private Lenders
Average Weighting
25.0%
23%
20.0%
18%
15%
13%
15.0%
10%
10.0%
8%
5%
5.0%
5%
4%
0.0%
an
o
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Source: Survey of SLA Clients, June 2009
© Student Lending Analytics, LLC
Slide 24
78%
73%
80.0%
77%
73%
70.0%
60%
54%
60.0%
50% 51%
50.0%
Aug-08
Jun-09
40.0%
25%
30.0%
20.0%
19%
16% 15%
16%
3%
10.0%
osig
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r
Tu
iti
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C
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s
0.0%
S
Percentage of Total Respondents
In The Trenches: What Financial Aid Administrators Think
Strategies For Challenging Times
Survey question: What are your current strategies to help students find private, nonfederal loans for the 2009-10 school year?
Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)
© Student Lending Analytics, LLC
Slide 25
In The Trenches: What Financial Aid Administrators Think
Other Strategies/Observations
“Reach out to lenders who may be coming out with new loan
programs that have favorable terms.”
“We're only recommending private loans to foreign students who will
need to provide a co-signer. Although we're not recommending
PELs [Private Education Loans] to other types of students, we are
leaving it up to them providing counseling on good and bad points of
PELs vs federal loans.”
“We package students with a PLUS or Grad/PLUS loan, those
seeking alternative loans [must] request [one] or are due to PLUS
denial.”
“The issue is not availability. The banks keep raising their interest
rates and fees. We are a grad business school only and even our
students who have excellent scores are getting high rates. If
students get co-signers, they get much better rates.”
© Student Lending Analytics, LLC
Slide 26
In The Trenches: What Financial Aid Administrators Think
SLA Outlook for 2009-10
Top two lenders, Sallie Mae and Citibank, saw reductions in their private
loan originations in the most recent June quarter of 57% and 30%,
respectively
Interest rate margins continue to rise with only a few exceptions
– Wells Fargo reduced the floor on their index by 1.5%
Expect to see more activity from credit unions seeking to fill the gap
– Credit Union Student Choice now has over 70 credit union participants
– State of Connecticut partners with credit unions
State private loan programs remain important and have demonstrated an
ability to access the capital markets
–
–
–
–
NJCLASS: $450 million
Minnesota: $100 million
Maine: $54 million
Connecticut: $30 million
See SLA Blog post: The Incredible Shrinking Private Student Loan Market
for Additional Details
© Student Lending Analytics, LLC
Slide 27
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
© Student Lending Analytics, LLC
Slide 28
In The Trenches: What Financial Aid Administrators Think
Financial Literacy Research
Negative trends at the high school level
– The financial literacy of high school students has fallen to its lowest level
ever, with a score of just 48.3 percent.
College students score 30% higher than high school students
– Scores increase by each grade level in college
In terms of their topical strengths and weaknesses:
– Strengths: Income and Spending
– Weaknesses: Money Management and Saving
College student test results question efficacy of high school courses
in personal finance or money management
– May not be appropriate until students care (situation specific)
Simulations/Interactive exercises seem particularly effective
Source: The Financial Literacy of Young American Adults, by Lewis Mandell, Ph.D.
© Student Lending Analytics, LLC
Slide 29
In The Trenches: What Financial Aid Administrators Think
$3.0 Billion College Access and Completion Innovation Fund
Proposed in 2010 budget with $3.0 billion commitment over 5 years
Current House bill has 50% of fund allocated to State Innovation
Completion Grants with activities including:
– Financial literacy, education and counseling
– Programs to help students reduce amount of loan debt
Recent credit card bill also may spur literacy programs
– Education/Treasury/Office of Financial Literacy to study current activities
– Looking into funding these programs through credit card transaction fees
Expect an explosion of online financial literacy programs
– College Foundation, Inc.
– NSLP
– USA Funds
Check out Sorted.org.nz to see what New Zealand has
accomplished with a centralized “cradle to grave” site
© Student Lending Analytics, LLC
Slide 30
In The Trenches: What Financial Aid Administrators Think
Increased Interest in Financial Literacy Programs
80.0%
Percentage of Total Respondents
70.0%
63%
60.0%
50.0%
37%
40.0%
30.0%
20.0%
10.0%
0.0%
Yes
No
Survey question: Have you seen an increased interest in financial literacy by the students at your institution?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 31
In The Trenches: What Financial Aid Administrators Think
Prevalence of Financial Literacy Programs
59%
Percentage of Total Respondents
60.0%
50.0%
40.0%
39%
33%
30.0%
26%
20.0%
10.0%
0.0%
Overall
4-year public
4-year private
2-year public
Survey question: Does your institution currently offer a financial literacy program beyond standard entrance and exit loan counseling
to your students?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 32
In The Trenches: What Financial Aid Administrators Think
Financial Literacy Topics
88%
Percentage of Total Respondents
90.0%
74%
80.0%
73%
70.0%
57%
60.0%
53%
51%
50.0%
41%
40.0%
38%
35%
31%
30.0%
20.0%
10.0%
0.0%
g
in
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ia
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ve
Survey question: What are the topic(s) covered by your financial literacy training?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 33
In The Trenches: What Financial Aid Administrators Think
Content Delivery for Financial Literacy Programs
90.0%
82%
Percentage of Total Respondents
80.0%
70.0%
60.0%
46%
50.0%
43%
40.0%
30%
30.0%
18%
20.0%
10.0%
0.0%
In-person group
workshops
Handouts
Reference page on
website
Online tutorials
Other
Survey question: How does your institution administer the financial literacy program?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 34
In The Trenches: What Financial Aid Administrators Think
Content Delivery for Financial Literacy Programs
Percentage of Total Respondents
90.0%
77%
80.0%
70.0%
60.0%
50.0%
40.0%
26%
30.0%
23%
20.0%
9%
10.0%
5%
0.0%
Financial Aid
Office
Guarantor
Lender
Students
Survey question: Who is responsible for conducting the financial literacy workshops? Please select ALL that apply
Other Dept.
.
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 35
In The Trenches: What Financial Aid Administrators Think
Assessment of Existing Financial Literacy Programs
38%
Percentage of Total Respondents
40.0%
30%
30.0%
20.0%
17%
15%
10.0%
0.0%
Poor
Good
Very Good
Excellent
Survey question: How would you rate the current financial literacy program at your institution?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
© Student Lending Analytics, LLC
Slide 36
In The Trenches: What Financial Aid Administrators Think
Recommended Financial Literacy Sources
Student groups
– Students in Free Enterprise (SIFE) association
Schools
–
–
–
–
–
–
–
–
Brigham Young University
James Madison University
Midwestern University
Montgomery College
Texas Tech’s Red to Black Program
University of Georgia
University of Wisconsin-Madison
Virginia Tech
Media
– Magazines: Money, Kiplinger
– Online: Motley Fool, CNN Money
© Student Lending Analytics, LLC
Slide 37
In The Trenches: What Financial Aid Administrators Think
Recommended Financial Literacy Sources (cont.)
Guarantors
–
–
–
–
–
–
TGSLC – Positive Balance
NSLP – Financial Literacy Online
NY HESC
USA Funds Life Skills
EdFund
MGSLP
Non-Profits/Associations
– NASFAA
– National Endowment for Financial Education (NEFE) – Cashcourse.org
WASFAA Spring Training 2008 – Developing and Delivering
Financial Literacy Program
© Student Lending Analytics, LLC
Slide 38
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
© Student Lending Analytics, LLC
Slide 39
In The Trenches: What Financial Aid Administrators Think
Increase in Numbers Counseled
50.0%
38%
Percentage of Respondents
40.0%
29%
30.0%
19%
20.0%
11%
10.0%
1%
2%
2%
Over 20%
decline
Between 10
and 20%
decline
Between 1
and 9%
decline
0.0%
No change
Between 1
and 10%
increase
Between 11
and 20%
increase
Over 20%
increase
Survey question: Estimate the annual change in the number of students/families counseled by financial aid staff at your institution.
Source: SLA Flash Survey: Financial Aid Counseling, June 2009 (178 respondents)
© Student Lending Analytics, LLC
Slide 40
100.0%
90.0%
80.0%
70.0%
43%
60.0%
53%
50.0%
58% 49%
48%
40.0%
30.0%
20.0%
Frequently
44%
36%
Very Frequently
42% 43% 39% 30%
51%
10.0%
32%
23%
30%
21% 17% 25% 18% 15% 17% 21%
ip
s/G
ra
St
nt
ud
s
Pr
y/
J
of
ob
es
op
s
io
Fe
ps
n
al
de
.
Ju
ra
la
dg
Im
nd
m
pa
en
P
ct
t
ri
va
of
te
Sc
Lo
ho
an
la
rs
s
hi
ps
on
A
id
A
pp
ea
lE
FC
N
FA
o
Pa
FS
C
re
ha
A
nt
ng
a
ei
lS
n
up
Aw
po
ar
rt
ds
in
Fu
A
tu
id
Pr
re
's
iv
Im
at
pa
eL
ct
oa
on
n
A
dm
iss
io
ns
0.0%
W
or
k
Sc
ho
la
rs
h
Percentage of Total Respondents
In The Trenches: What Financial Aid Administrators Think
Prevalence of Topics Discussed in Counseling Families
Survey question: Indicate the frequency with which each of these issues is discussed in counseling sessions with students and families.
Source: SLA Flash Survey: Financial Aid Counseling, June 2009 (178 respondents)
© Student Lending Analytics, LLC
Slide 41
In The Trenches: What Financial Aid Administrators Think
Counseling Resources Identified To Assist Financial Aid Staff
Most commonly cited resources
– Experienced staff leading in-office training
• Some indicated that junior staff sat in on counseling sessions with more
seasoned staff
• Mock counseling sessions
• Cross-training to understand other services provided on-campus
– Internal workshops run by College staff to generate ideas on improving customer
service
– Local/regional/national conferences by financial aid administrator organizations
(NASFAA and local chapters)
– Federal resources: IFAP, Guide to Federal Student Aid, FSA Coach, FSA
Conferences, FSA University (online)
– State agencies, guarantor and lender workshops and seminars
• Guarantors mentioned specifically: USA Funds, EdFund, PHEAA, TG, NSLP
Other resources mentioned
– Academic Impressions' video/webinar featuring a financial aid director and a
psychologist on how best to cope with anxiety and anger
– www.youcandealwithit.com (AES website for debt management)
– College Board Financial Aid Institute
© Student Lending Analytics, LLC
Slide 42
In The Trenches: What Financial Aid Administrators Think
Success Stories – Representative Quotes
“Nothing beats helping students and families achieve the dream and goal of
college.”
“Having more students and families complete the FAFSA.”
“Luckily, because I'm at an affordable 2-yr public, our greatest achievement
is convincing students and families that an education is obtainable. There is
sufficient federal assistance available to cover tuition and fees for any
student, regardless of the family's income.”
“We make all students apply for federal aid before we will process any
private loan. Sometimes there is resistance, but they usually comply and
many times they receive federal aid.”
“I always think it is a success when the parent or student actually owns the
information/process when I am finished counseling them (they show that
they really understand).”
“Family's realization of ability to afford the University after financial aid is
awarded.”
A simple "Thank You" or "I appreciate it"!!!
© Student Lending Analytics, LLC
Slide 43
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
© Student Lending Analytics, LLC
Slide 44
In The Trenches: What Financial Aid Administrators Think
Perkins Loan Proposal in SAFRA
New name: Federal Direct Perkins Loan program
Funding: To increase from $1 billion to $6 billion
Interest rate subsidy to be discontinued
– Terms and conditions similar to unsubsidized Stafford loans
Allocation Method:
– ½ based on self-help need of institution
– ¼ based on low tuition incentive
– ¼ based on ratio of Pell Grant recipients completing degrees
Schools to pay unspecified matching funds for the purpose of providing loan
benefits to borrowers
Options with existing Perkins loans:
– Continue to collect outstanding loans and return the ¾ federal share to ED, minus an
administrative fee of 0.5 percent of outstanding principal and interest
– Assign the loans to ED and receive payments of the ¼ institutional share from ED.
© Student Lending Analytics, LLC
Slide 45
In The Trenches: What Financial Aid Administrators Think
Importance of Perkins Loans To Overall Aid
Percentage of Total Respondents
50.0%
45%
40.0%
27%
30.0%
20.0%
11%
10.0%
6%
5%
4%
2%
ot
K
no
w
10
%
ve
r
D
o
N
O
-9
.9
%
8.
0%
-7
.9
%
6.
0%
-5
.9
%
4.
0%
2.
0%
0.
0%
-1
.9
%
-3
.9
%
0.0%
Survey question: What percentage of federal student aid was represented by Perkins Loans for the last academic year at your institution?
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)
© Student Lending Analytics, LLC
Slide 46
In The Trenches: What Financial Aid Administrators Think
Annual Change in Perkins Loans
30.0%
27%
Percentage of Respondents
26%
20.0%
15%
12%
12%
10.0%
5%
2%
1%
0.0%
Over 20% Between Between 1 No change Between 1 Between Over 20%
decline
10 and
and 9%
and 10%
11 and
increase
20%
decline
increase
20%
decline
increase
Do Not
Know
Survey question: What was the annual change in loan volume for your Perkins Loan program over the past academic year?
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)
© Student Lending Analytics, LLC
Slide 47
In The Trenches: What Financial Aid Administrators Think
Perkins Loan Outsourcing
100.0%
90.0%
83%
80.0%
Percentage of Respondents
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
14%
10.0%
3%
0.0%
Yes
No
Not Sure
Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process?
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)
© Student Lending Analytics, LLC
Slide 48
In The Trenches: What Financial Aid Administrators Think
Outsourced Activities
100.0%
90.0%
83%
80.0%
79%
Percentage of Respondents
70.0%
60.0%
50.0%
42%
37%
40.0%
34%
30.0%
20.0%
10.0%
0.0%
Collections
Loan Servicing
Compliance
Exit Counseling
Prom. Note
Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process?
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)
© Student Lending Analytics, LLC
Slide 49
In The Trenches: What Financial Aid Administrators Think
Market Share For Perkins Loan Providers
40.0%
31%
Percentage of Respondents
30.0%
23%
23%
23%
UAS
Campus Partners
ACS
20.0%
10.0%
0.0%
ECSI
Survey question: Identify the name of the vendor(s) utilized to manage your Perkins Loan program.
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (205 respondents named at least one provider)
© Student Lending Analytics, LLC
Slide 50
In The Trenches: What Financial Aid Administrators Think
Willingness Of Institution To Reduce Cost of Perkins Loans
60.0%
51%
Percentage of Respondents
50.0%
40.0%
30.0%
25%
20%
20.0%
10.0%
3%
2%
Probably
Definitely
0.0%
Definitely Not
Probably Not
Maybe
Survey question: Would your institution consider providing funding to reduce the costs of Perkins loans to students?
Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)
© Student Lending Analytics, LLC
Slide 51
In The Trenches: What Financial Aid Administrators Think
Questions
????
© Student Lending Analytics, LLC
Slide 52
Student Lending Analytics
Background
Founded in 2007
Independent Research and Advisory Service with NO lender affiliations
Mission: Find best lenders for students through an analytically rigorous and
comprehensive process
Services
–
–
–
–
SLA Private Student Loan Ratings
RFI Management of FFEL and Private Loans
Consulting practice
Research
Successes to Date
–
–
–
–
–
Managed RFI process at institutions with over $1 billion in loan volume
Inside Student Lending, our monthly newsletter, reaches over 5,000 financial aid
administrators
Student Lending Analytics Blog has become the go-to source for breaking
developments and analysis on the student lending industry
SLA Flash Surveys have included the insights from over 1,500 financial aid
professionals on a variety of timely topics
Private Loan Options and the SLA’s 2009 Private Loan Guide provides
students and financial aid offices with an objective and focused list of private lenders
© Student Lending Analytics, LLC
Slide 53
The Student Lending Analytics Process
RFI Management
© Student Lending Analytics, LLC
Slide 54
Student Lending Analytics
Research Services
Inform financial aid offices on industry developments
– Student Lending Analytics Blog
• Timely insights on new developments in student lending industry
– Monthly newsletter
– Webinars
• June – Uncovering the Mysteries of Private Student Loans
• April – Lessons Learned in Trenches of Lender Selection Process
• September – HEOA and Lender Lists
• December – Conversation about FFEL and Direct Lending Programs
– Surveys (summaries available on our website)
• FFEL vs. Direct Lending
• RFI Practices
• Implementing increased Federal Stafford loan limits
• Private loan availability
• Private Loans for International Students
– Legislative and regulatory updates and implications for financial aid offices
– Help Line to answer questions/resolve issues throughout the year
© Student Lending Analytics, LLC
Slide 55
Student Lending Analytics
Contact Information
For more information about SLA contact us at:
Tim Ranzetta
Student Lending Analytics LLC
650-218-8408
[email protected]
www.studentlendinganalytics.com
© Student Lending Analytics, LLC
Slide 56