Market Buzz (October 16, 2008)

• The weakness in the economy impacting students' college application choices, according to NY Times Blog, Motherhood:
  • An online survey of 2,500 users on the website meritaid.com, found that 57 percent of seniors are looking at “less prestigious” schools because they cost less. Add to that a study released this week by the online admissions counseling service ApplyWise.com and Next Step Magazine, a publication for high school students, which found that half of all families polled are limiting their children’s choices to less expensive, in-state public college options in response to grim economic news.

• NYT article provide several case studies on families struggling to pay college tuition bills. 

• Student Loan Xpress parent, CIT, saw rising deliquencies and and non-performing assets in their student loan portfolio, based on information provided in their third quarter earnings announcement.  Student Loan Xpress is no longer originating student loans. 

• Credit Quality -- Consumer Segment
  
  • Net charge-offs in the Consumer segment were $30 million, essentially flat with the prior quarter, and primarily reflect losses in the private student loan portfolio.

• 60+ day owned delinquencies were up ($6 million) to 5.10%, from 4.98% last quarter. Non-performing assets increased to $191 million from $167 million last quarter. These increases are due to the private student loan portfolio.

• Credit reserves for the Consumer segment were increased by $16 million during the quarter to $220 million at September 30, 2008, relating to private student loans.

• Consumer Reports weighs in on private student loan crunch

• Encourages students to take into account school costs in their school selection process (see lead story in this post):  "High tuition can result in a large debt burden when you graduate, so rethinking your choice of school may be wise."

• Boston University President discusses impact of economic troubles on the institution in Boston Globe story.

• George Washington University exploring new financial aid strategies in light of economic downturn reports student newspaper.  

• Answers to questions regarding 529  Plans in this Washington Post article.  

• Pennsylvania State Board of Education to host hearings on college affordability.  Here are the questions that will be discussed:
  • Do students feel overly burdened by the amount of money they must borrow to cover educational costs?
  • Do concerns about student loan debt impact the choice of college major or career choice?
  • How widespread is the practice of students and their families borrowing funds from private sources such as home equity loans, credit cards, etc., to pay for college?