Slide 1 © Student Lending Analytics, LLC 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.
Mar 26, 2015
Slide 1© Student Lending Analytics, LLC
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.
Slide 2© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
Slide 3© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Federal Student Loan Plans for 2009-1056%
19%
8% 7%4%
6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Staying inFFELP
Staying inDirect
Lending
Switching toDL in 2009-10
FFELP ButUndecided for
2009-10
Offer DL andFFELP
Other
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 4© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Steps To Prepare For Direct Lending46%
42%
37%35%
33%
12% 11%
23%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Peer Schools Dept.Website
Conferences Webinars Set UpElectronicAcct. With
DL
Create aTeam
SoftwareVendor
None of theAbove
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 5© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
College Administration Involvement
29%
34%
10%
6%
21%
0.0%
10.0%
20.0%
30.0%
40.0%
Strongly agree Agree Moderatelydisagree
Strongly disagree Not sure
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 6© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Overall- Financial Aid Systems
14%
7%
12%
20%20%
28%
0.0%
10.0%
20.0%
30.0%
Banne
r
Power
FAIDS
DataT
el
Peopl
eSof
t
Hom
e-G
rown
18 O
ther
s
Per
cen
tage
of
Tot
al R
esp
ond
ents
Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and PoiseSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 7© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
By Loan Program Type: Financial Aid Systems
33%
14% 15% 15%13%
11%
28%
22% 22%
11%
4%
14%
0.0%
10.0%
20.0%
30.0%
40.0%
Banne
r
DataT
el
Power
FAIDS
Peopl
eSof
t
Hom
e-gr
own/L
egac
y
Oth
er
Per
cen
tage
of
Tot
al R
esp
ond
ents
FFELPDirect Lending
Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and Poise among othersSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 8© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Direct Lending Satisfaction Scores
4.5 4.4 4.3 4.3 4.3
3.8
0.0
1.0
2.0
3.0
4.0
5.0
Loan Processing Reconciliation Service to FAOffice
Implementation Service toCustomers
Value-addedservices
Deg
ree
of S
atis
fact
ion
(V
ery
Sat
isfi
ed =
5.0
)
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 activitiesSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 9© Student Lending Analytics, LLC
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.”
Slide 10© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Improving Direct LendingWebsite 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.”
Slide 11© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think Who’s Going Direct?
2007-08School City, State FFEL VolumeNew York Institute of Tech. New York, NY $138,100,000Auburn University Auburn, AL $110,564,411University of Connecticut Storrs, CT $109,898,958University of Louisville Louisville, KY $90,847,216Middle Tennessee State Murfreesboro, TN $86,700,000Stony Brook University Stony Brook, NY $86,632,833Azusa Pacific University Azusa, CA $77,000,000CSU-Sacramento Sacramento, CA $69,702,474CSU-Long Beach Long Beach, CA $67,116,543Lesley University Cambridge, MA $64,193,033
Source: SLA research, May 2009
Slide 12© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
The Geography of FFELP programThirteen 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
Slide 13© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
The Legislative Process From HereH.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
Slide 14© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
Slide 15© Student Lending Analytics, LLC
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 2003-04 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
Slide 16© Student Lending Analytics, LLC
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
Slide 17© Student Lending Analytics, LLC
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
Slide 18© Student Lending Analytics, LLC
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?”
Slide 19© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Degree of Concern Regarding Private Student Loans
14%
44%
17%
52%
6%
38%
4%
31%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Very Concerned Somewhat Concerned
Per
cen
tage
of
Tot
al R
esp
ond
ents
Overall
4-year private
4-year public
2-year public
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)
Slide 20© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Prevalence of Lender Lists for Private Loans
56%
34%
10%
69%
21%
10%
42%
54%
4%
12%
65%
23%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Yes No Not Sure
Per
cen
tage
of
Tot
al R
esp
ond
ents
Overall
4-year private
4-year public
2-year public
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)
Slide 21© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
SLA’s Private Student Loan RatingsLaunched 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
Slide 22© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Lender Selection Process for 2009-10
35%
32%
12%
8%
14%
0.0%
10.0%
20.0%
30.0%
40.0%
Formal RFI Keep List from08-09
All Lenders Last3-5 Yrs
Informal Process OtherPer
cen
tage
of
Res
pon
den
ts W
ith
Len
der
Lis
t fo
r 20
09-1
0
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)
Slide 23© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Lenders On Private Loan Lists
0%
17%
48%
24%
12%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
1 2 to 3 4 to 5 5 to 7 Over 8
Per
cen
tage
of
Res
pon
den
ts W
ith
Len
der
Lis
t fo
r 20
09-1
0
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)
Slide 24© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Selection Criteria for Private Lenders
23%
18%15%
13%
10%8%
5% 5%4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Loan C
ost
Loan A
pprova
l Rat
es/T
erm
s
Custo
mer
Serv
ice
Technolo
gy
Lender
Bac
kgrou
nd
Borro
wer B
enef
its
Transp
aren
cy
Default
Initi
ativ
es/ L
itera
cy
Direct
-to-C
onsu
mer
Mar
keting
Ave
rage
Wei
ghti
ng
Source: Survey of SLA Clients, June 2009
Slide 25© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Strategies For Challenging Times
73% 77%
60%
16%
78% 73%
54%
25%19%
3%
16%
50%
15%
51%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Paren
t PLUS
Co-sig
ner
Tuitio
n Rep
aym
ent P
lans
Couns
eling
State
pro
gram
s
Insti
tutio
nal
Multi
ple Len
ders
Credi
t Unio
ns
Per
cen
tage
of
Tot
al R
esp
ond
ents
Aug-08
Jun-09
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)
Slide 26© Student Lending Analytics, LLC
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.”
Slide 27© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
SLA Outlook for 2009-10Top 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
Slide 28© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
Slide 29© Student Lending Analytics, LLC
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.
Slide 30© Student Lending Analytics, LLC
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
Slide 31© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Increased Interest in Financial Literacy Programs
63%
37%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Yes No
Per
cen
tage
of
Tot
al R
esp
ond
ents
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)
Slide 32© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Prevalence of Financial Literacy Programs
39%
59%
33%
26%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Overall 4-year public 4-year private 2-year public
Per
cen
tage
of
Tot
al R
esp
ond
ents
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)
Slide 33© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Financial Literacy Topics
88%
74% 73%
57%53% 51%
41% 38% 35%31%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Budget
ing
Loan R
epay
men
t
Credit
Cards
Protec
ting P
rivac
y
Credit
Repor
t
Schola
rship
/Gra
nts
Balancin
g Chec
kbook
Findin
g Loa
ns
Earnin
gs P
oten
tial
Inve
sting
Per
cen
tage
of
Tot
al R
esp
ond
ents
Survey question: What are the topic(s) covered by your financial literacy training?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
Slide 34© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Content Delivery for Financial Literacy Programs
82%
46%43%
30%
18%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
In-person groupworkshops
Handouts Reference page onwebsite
Online tutorials Other
Per
cen
tage
of
Tot
al R
esp
ond
ents
Survey question: How does your institution administer the financial literacy program?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
Slide 35© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Content Delivery for Financial Literacy Programs
77%
26%
9%5%
23%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Financial AidOffice
Guarantor Lender Students Other Dept.
Per
cen
tage
of
Tot
al R
esp
ond
ents
Survey question: Who is responsible for conducting the financial literacy workshops? Please select ALL that apply.Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
Slide 36© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Assessment of Existing Financial Literacy Programs
17%
38%
30%
15%
0.0%
10.0%
20.0%
30.0%
40.0%
Poor Good Very Good Excellent
Per
cen
tage
of
Tot
al R
esp
ond
ents
Survey question: How would you rate the current financial literacy program at your institution?
Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)
Slide 37© Student Lending Analytics, LLC
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
Slide 38© Student Lending Analytics, LLC
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
Slide 39© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
Slide 40© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Increase in Numbers Counseled
1% 2% 2%
11%
38%
29%
19%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Over 20%decline
Between 10and 20%decline
Between 1and 9%decline
No change Between 1and 10%increase
Between 11and 20%increase
Over 20%increase
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 41© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Prevalence of Topics Discussed in Counseling Families
51%32%
23% 30%21% 17% 25% 18% 15% 17% 21%
43%
53%58% 49%
48%44%
36%42% 43% 39% 30%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Schola
rship
s/Gra
nts
Wor
k Stu
dy/Job
opps.
Profes
sional
Judgm
ent
Feder
al an
d Priv
ate L
oans
Impa
ct of
Sch
olar
ship
s on A
id
Appea
l EFC
FAFSA
No Par
enta
l Suppor
t
Change
in A
wards i
n Futu
re
Privat
e Loa
n
Aid's
Impac
t on A
dmiss
ions
Per
cen
tage
of
Tot
al R
esp
ond
ents
Frequently
Very Frequently
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)
Slide 42© Student Lending Analytics, LLC
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, FSAConferences, 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
Slide 43© Student Lending Analytics, LLC
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"!!!
Slide 44© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Agenda
Federal Student Loans
Private Student Loans
Financial Literacy programs
Financial Aid Counseling
Perkins Loan Program
Slide 45© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Perkins Loan Proposal in SAFRANew 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.
Slide 46© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Importance of Perkins Loans To Overall Aid
11%
4%2%5%6%
27%
45%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
0.0%
- 1.9
%
2.0%
- 3.9
%
4.0%
- 5.9
%
6.0%
- 7.9
%
8.0%
- 9.9
%
Ove
r 10%
Do Not
Know
Per
cen
tage
of
Tot
al R
esp
ond
ents
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)
Slide 47© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Annual Change in Perkins Loans 27%
15%
12%
26%
12%
2% 1%
5%
0.0%
10.0%
20.0%
30.0%
Over 20%decline
Between10 and20%
decline
Between 1and 9%decline
No change Between 1and 10%increase
Between11 and20%
increase
Over 20%increase
Do NotKnow
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 48© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Perkins Loan Outsourcing
83%
14%
3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Yes No Not Sure
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 49© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think Outsourced Activities
83%79%
42%37%
34%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Collections Loan Servicing Compliance Exit Counseling Prom. Note
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 50© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Market Share For Perkins Loan Providers
31%
23% 23% 23%
0.0%
10.0%
20.0%
30.0%
40.0%
ECSI UAS Campus Partners ACS
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 51© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think Willingness Of Institution To Reduce Cost of
Perkins Loans
25%
51%
20%
3% 2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Definitely Not Probably Not Maybe Probably Definitely
Per
cen
tage
of
Res
pon
den
ts
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)
Slide 52© Student Lending Analytics, LLC
In The Trenches: What Financial Aid Administrators Think
Questions
????
Slide 53© Student Lending Analytics, LLC
Student Lending AnalyticsBackground
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
Slide 54© Student Lending Analytics, LLC
The Student Lending Analytics ProcessRFI Management
Slide 55© Student Lending Analytics, LLC
Student Lending AnalyticsResearch 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
Slide 56© Student Lending Analytics, LLC
Student Lending AnalyticsContact Information
For more information about SLA contact us at: Tim Ranzetta
Student Lending Analytics LLC
650-218-8408
www.studentlendinganalytics.com