I was struck by the recent wave of stories about the sharp declines in college endowments, which are suffering in line with major market indices. Here are just a sampling of stories I recently came across:
New York Times cites a 23% average drop in endowments in the five month period ended November 30, 2008 which is the worst since the 1970s.
Associated Press reflects on how the top 5 endowments have been impacted by the economic crisis.
Bloomberg article highlights losses at several colleges and also delves into the issue of the tradeoff between alternative investments and liquidity.
Here is a link to the report titled "Private Education Loans: Time for a Re-Education." Note that you may need to set up an free account on Fitch.com in order to access the report. The report provides timely information about the current credit quality of private loan portfolios, the expected impact of recent federal legislation on the sector and the potential need for new private loan structures.
Here is the summary of the report which closes with ominous overtones that credit quality and funding issues "could result in negative rating action for student lenders."
More details have surfaced recently regarding the private loan program being implemented through a public/private partnership between the state of Connecticut and credit unions which I had first posted about in mid-November.
The press release from Governor Rell's office which appeared on the StamfordPlus.com site on January 26th provided the following highlights:
OK, I have an admission to make: I love newspapers. Yes, the kind where the ink gets all over your hands. I trace my affinity with newspapers back to my first job; the newspaper route that I managed between the ages of 12 and 14. I would get home from school, pick up the newspapers and run house to house to deliver my 40 papers so I could get to the baseball field or basketball court before sides were chosen. I had my first taste of responsibility (and my first source of income) and remember the number of folks who would be standing by the door anxious to read the evening edition of the Bergen Record.
In case you haven't heard, newspapers are a dying business. Here is an article in this month's Atlantic Monthly which will get you plenty depressed if you are a newspaper fan. What made me think of this? It was while I was picking up my Monday Wall Street Journal this morning off our doorstep that it struck me. The paper seemed different, very different to me as I picked it up outside our door. It was thin, I mean really thin. 16 pages to Section A, 8 pages to Section B and 6 pages in Section C. Only one advertisement in Section C (ETFs from State Street). The end may be closer than I expected. I better get used to reading the on-line version. I will miss that smudgy ink though!
December 2008 servicing reports came out today for First Marblehead private loan trusts. I wanted to see what I could glean by looking at trends over the past year. I focused on the 11 trusts starting with 2005-1 through 2007-4 (FMD has not completed a private loan securitization since September of 2007 which marked the beginning of the credit crunch) representing over $9 billion in private loan principal. The standard profile for these trusts which consisted of loans originated by Bank of America, Chase and RBS Citizens and others:
This story about the state I grew up in. It starts this way: "New Jersey is America's secret treasure-house of culture" and goes on to highlight the contributions of such Jerseyites as Springsteen, Tony Soprano, Whitman and Sinatra.
Here is a totally unscientific sample of undergraduate programs reporting application data over the past few days. It would appear top public universities and well-endowed elite private schools are showing strong growth in applications. In addition, not surprisingly more students are applying for financial aid.
Here are the highlights of the earnings announcement for Student Loan Corporation, in which Citigroup has an 80% interest. STU does not do conference calls so we will have to wait until their 10-K is filed in February to get more answers to the questions that I pose below.