Student Lending Analytics Blog

For Private Student Loans, Chase No Longer Offering Non-School Certified Product, Continuing to Offer Certified Product

Found this on Chase's website this morning (which had been announced in March apparently so I guess you could say I missed this one!):

"Chase is no longer accepting applications for its non-certified private student loan.  However, the school-certified Chase Select Private Student Loan is still available."

Federal Reserve regulations (to take effect in mid-February) regarding private student loans will require students to complete a self-certification form, with schools providing financial aid information to facilitate this process.  This regulation would appear to make non-certified loans obsolete in the future. 

With Chase discontinuing their non-certified product, the Wells Fargo Education Connection Loan is one of the few private loans that I am aware of that doesn't require school certification.  Wells also offers a school-certified product too, the Collegiate Loan. 

From The FSA Conference To The Wall Street Journal Editorial Page

In case you missed Saturday's paper, the WSJ had the following editorial "Colleges Against Government Takeover of Student Loans."

Looking For Advice About Student Loan Repayment?

This article from the Los Angeles Times can help. 

First, it recommends categorizing your student loans:

"If you have been borrowing all the way through school, you probably have a variety of loans with different interest rates and terms. Before considering repayment options, you need to examine the type of loans you have and separate your loans into piles. Gather your documents and sort them by loan type:

* Perkins loans
* Subsidized Stafford loans (the federal loans that you were granted because you had financial need)
* Unsubsidized Stafford loans (federal student loans that anyone can apply for)
* Stafford loans that you got before 2006.'

Then, it describes repayment options:

"* Standard repayment, which repays your loan over a 10-year period.
* Extended repayment, which allows you to repay a significant balance over as much as 30 years.
* Income-based repayment, which allows you to pay what you can afford, based on your discretionary income."

Finally, here is some expert advice they gathered:

"If you have sufficient income to repay your loans, standard repayment is the best bet, said Mark Kantrowitz, president of FinAid.org, a website that explains financial aid options. It gets the job done fastest with the lowest overall cost...If you need a lower monthly payment, you could choose the extended repayment option and spread your repayment over 25 years...If your earnings are low, income-based repayment could allow you to pay nothing at all, Kantrowitz said. The catch? There's far more continuing paperwork with this loan because you have to verify your income each year. When your income rises, your payments will too."

With the grace period for recent graduate's student loans ending, this is useful advice to be presenting. 

In Case You Missed Thursday/Friday's Posts...

I had a problem with Feedburner so SLA Blog's Thursday posts didn't make it out to subscribers.  Here are the posts from both Thursday and Friday:

Thursday

• Number Of Google Searches On "Student Loans" Declining
• What Is On the Mind of Financial Aid Administrators At the FSA Conference?
• ED Officials Would Be "Shocked and Amazed" If New Perkins Program In Place By June 2010
• ED To Make Public Three Year Cohort Default Rates On December 14th

This Week in Financial Literacy News

• What is the relationship between money and happiness?:  This professor has an interesting exercise to provide an important lesson for students:

"In an exercise that readers might like to try, each student lists at least ten people they know well, and then rates each one for wealth, with 1 being relatively poor and 5 being rich. There should be at least one 1 and one 5. They then similarly rate each person for happiness.

I ask them to work out the average happiness score for each wealth level, and bring that information to discussion groups, where we calculate the group averages. The results so far: there has been no correlation between wealth and happiness."

• One business editor's viewpoint at financial literacy conference:  Don't expect much from consumers when it comes to understanding financial products: 

What Were Most Popular Recent SLA Blog Posts?

Here are top five over the last 30 days (November 3rd to December 3rd).  Interestingly two of the stories were just posted this week:

What Can Institutions Do Legally To Collect Student Debt?: A Webinar

Thanks to David Levy of Scripps for passing this along earlier today.  Note that the cost for the webinar series is $95: 

Withholding Transcripts and other Ways Institutions Collect Student Debt: What Can Institutions Do Legally?

Featuring:
Julia R. Hoke, Esq., Director of Legal Affairs and General Counsel
North Carolina State Education Assistance Authority (NCSEAA)

What Does It Cost To Originate A Federal Student Loan?

After I saw in the Miller/Harkin press release that the re-scored Student Loan Community Proposal reduced the origination fee from $75 to $55, I had two questions:

• How might this impact the smaller loan originators, who are signatories to the proposal?
• What does it cost the government to originate a loan?

I Bet They Won't Be Exchanging Holiday Cards...

I think that this is what they refer to as the gloves coming off.  After Dow Jones broke the story about Sen. Casey's student loan reform proposal, Chairman of the House Education and Labor Committee George Miller had this to say:

"You can dress this up 100 different ways and put a Santa Hat on it, but this is still the same budget gimmick lenders have been pushing for months to line their own pockets with billions of dollars that should be used to help students,” said Miller. “The House saw this proposal for what it was and soundly rejected it, instead choosing to pass the Student Aid and Fiscal Responsibility Act, which invests all of its savings in students, families and taxpayers. Americans are sick and tired of CEOs and banks taking them for a ride and are ready for policies that will reduce waste and excess and do what’s best for Main Street – not Wall Street."

Citizens Bank Eliminates Origination Fees on TruFit Loan

Continuing a recent trend among purveyors of private student loans, Citizen's Bank announced that they would be eliminating origination fees on their TruFit private student loan effective .  Here is the link to their announcement which took effect on November 25, 2009.  The current rates on the TruFit loan are LIBOR + 3.00% to LIBOR + 13.00% or 3.24% to 13.24%, although the maximum rate on their loan with a creditworthy cosigner is 11.49%. 

Previously, Citizens TruFit loan charged origination fees of up to 5%.  SunTrust eliminated their repayments fees of up to 6% in October (their margins did increase 50bp however), while Sallie Mae cut their maximum disbursement fee from 5% to 3%, while also eliminating their 0.25% interest rate reduction for EFT payments and reducing their maximum margin from LIBOR + 14% to LIBOR +12.5%.