Student Lending Analytics Blog

What Keeps GC's Up At Night? It Must Be Risk Factors

Risk factors are those pesky disclosures you see appearing in more and more company filings with the SEC.  These are the "what could possibly go wrong" disclosures to prevent shareholder suits should any of those events occur.  Investors tend to discount them for that very reason, that companies often put together laundry lists of ALL the possible events that could have a negative impact on the company and its stock price.  I like to look at how companies modify the risks they identify in this section.    Rarely will they take risks off the table; rather you typically will just see them add new risk factors.  This provides a window into what is keeping the general counsel up at night.  

SLA Estimates $5.8 - $7.1 Billion Drop in Private Lending Capacity (Update 3)

Time to update these numbers from this earlier post from August: 

It's crunch time!  Students are returning to school.  College bills have been sent and are coming due.  In a recent SLA survey, 73% of financial aid respondents indicated that school bills were not due until after August 15th so any impact will be felt in the weeks ahead.  With EFP, Campus Door, CLC and My Rich Uncle recently ceasing or curtailing their private loan originations, over $1.5 billion has left the market in just the last three weeks alone.  Students and their parents are notoriously last minute when it comes to arranging for college financing as this MEFA survey from 2007 confirms.  

The table below, compiled by SLA, provides an updated estimate (as of 11/7/08) of $5.8 - $7.1 Billion of private loan capacity which has left the market, or about 31-37% of the $19.1 billion dollar market (College Board data for 2007-08).  These figures will likely prove conservative as they do not take account of any of the lost volume from Wachovia's exit nor the numerous smaller players who have left the market.

Register for SLA Webinar: Managing Lender Lists in Time of Financial Turmoil

Student Lending Analytics is pleased to announce that Tim Ranzetta, founder of SLA, will be hosting a complimentary webinar on “Managing Lender Lists in a Time of Financial Turmoil” on Thursday, November 13, 2008 at 1:30 Eastern Time. Click here to register.

Recent Citibank Decision to Disburse Private Loans Through EFT; Comments?

This question came from a financial aid administrator at a large four-year public institution: 

"Just wondering what type of feedback or reluctance you are getting from schools on Citi's new plan to provide CitiAssist exclusively through Citi EFT, thus bypassing ELM and creating more complex processes for schools when it comes to receiving funds from multiple sources and difficulties brought on when attempting to have funds returned or make changes?"

Feel free to post your comments below. 

First Marblehead Slashes 24% of Workforce; Earnings Released Later Today

Here is the contents of the press release from the company. 

"The First Marblehead Corporation (NYSE: FMD) today announced it has reduced its full-time employee population by approximately 24% in a continued effort to reduce costs.

This represents another phase in the company's cost reduction plan and it will affect staff at its corporate headquarters in Boston and processing center in Medford, Massachusetts."

Old News...Campus Door No Longer Originating Loans For Partners as of October 31st

Here is a blurb from the Access Group October 2008 newsletter: 

CampusDoor has informed us that they will no longer accept private loan applications from
Access Group borrowers after October 31, 2008. Through the October 31 cut-off date,
CampusDoor will continue to consider all applications for approval as they are received.
In addition, CampusDoor remains committed to funding all approved applications; however,
as previously announced, all final disbursements must be completed by January 31, 2009.
We hope our ability to provide access to private loans during this challenging time has
been helpful. Please be assured that we are exploring other private loan funding options for
the future.

Penn Invites Lender Responses to International Student Loan RFP

With the recent decision in mid-October by Citibank to discontinue their custom loan programs, many schools who benefited from this program are now searching to find a solution to access loans for international students without a U.S. co-signer.  As the Penn press release on NASFAA News indicates:

Obama and College Affordability

A few hours after Barack Obama's historic victory and acceptance speech, I thought it would be interesting to review his policy statements on education and specifically college affordability.  Here is a link to the policy statement on his website.  Here are the major components of his plan:

SLA Student Loan Index Declines 29.0% in October to 27.9

SLA Student Loan Index, an equally weighted index of five publicly traded student lenders, declined by 29.0% to 27.9 in October of 2008 (from 39.3 in September 2008), as the financial crisis continued to weigh on the sector.  As the chart below indicates, several lenders saw significant stock price declines (MRU, STU and FMD), while two others (SLM and NNI) managed to outperform the overall stock market in October.  The benchmark S&P 500 declined 16.8% for the month.

Here is how the individual companies performed:

DTC Lender, Astrive Suspending Private Loan Program

Here is the message on the Astrive website: 

Attention Students

Like many other private student loan programs, the Astrive Student Loan Program has been affected by the turbulent financial markets.  As a result, the Astrive Student Loan Program is unable to accept new student loan applications as of November 3, 2008.  We sincerely apologize for this necessary lending suspension. 

The site then goes on to describe how they can help manage college cost concerns in other ways: