FastWeb Student Loan Survey Shows High Rejection Rates for Private, PLUS Loans

FastWeb recently reported results of their Student Loan Survey (click to see full survey results) conducted in October and November of 2008. While the survey was included in regular FastWeb newsletters sent to more than 6 million college students and more than 1 million parents of college students, it received only 1,202 responses (a 0.02% response rate, indicating the difficulty of getting students to respond to any survey!)

Here were the results that I was struck by:

• The number one reason that students took out private loans, despite their parents being eligible for Parent PLUS loans was "Parents already have too much debt (23.1%)".  This is further evidence of how heavily leveraged consumers are and their diminished appetite for taking on additional debt.

• A high percentage of applicants are being denied Private, PLUS loans and HELOC (home equity lines of credit) as the table below indicates, further evidence of both deteriorating consumer credit scores (PLUS loans) as well as stricter underwriting standards from lenders:

  Loan Type	Percent Applying	Of Applicants Percent Denied
  Private Student Loan	17.6%	44.7%
  Parent PLUS Loan	11.8%	55.6%
  Home Equity Loan	6.5%	53.8%

• Close to 50% of respondents did not complete the FAFSA (48.1%); the top two reasons given for not completing it included:
  • Didn't think would qualify (59.3%)
  • Not a U.S. Citizen or National (25.8%)

• Among dependent students, most students indicated that their parents would be contributing to their child's education
  • 65.5% indicated parents were helping with college costs
    
  • 12.6% said parents were not helping with college costs
    
  • 21.9% answered maybe/depends to this question, which I would presume means that their parents will be contributing.