Student Lending Analytics Blog

I Sense A Trend..Moderate Increases in Tuition, Large Increases in Financial Aid

Elite institutions are keeping tuition increases to a minimum while increasing financial aid by double digits.  Here were just a few of the announcements over the past few days:

• Georgetown to increase tuition by 2.9% for 2009-10, financial aid to rise by 18% to $88 million
• University of Pennsylvania tuition to rise 3.75%, financial aid to increase 15% to $137 million
• Northwestern University will increase tuition, room and board by 3.6%, while increasing financial aid by 10% to $86 million
• Stanford University to increase tuition, room and board by 3.5% while increasing need-based scholarships to $110 million, a 47% increase over 2007-08 figures

Related articles:

• New York Times:  To keep students, colleges cut anything but aid

Today in Student Loans

Continued fallout from the Obama budget plan to eliminate FFELP was felt in the student loan market:

Symbol	Last Trade		Change		Volume	Intraday	Related Info
SLM	4:01PM ET	4.60	1.20	20.69%	32,143,526		Chart, Messages, Key Stats, More
NNI	4:01PM ET	5.10	0.19	3.87%	1,014,161		Chart, Messages, Key Stats, More
STU	4:01PM ET	37.72	3.79	9.13%	132,063		Chart, Messages, Key Stats, More
FMD	4:07PM ET	0.95	0.03	3.06%	393,179		Chart, Messages, Key Stats, More

JP Morgan Chase To Fund Student Loans for Int'l Students at Harvard Grad Schools

Here are the details on the program which appeared in both the Harvard Gazette and Harvard Crimson:

24 Hours Later...10 Questions About Obama's Direct Lending Plan

Well, now that the shock has worn off somewhat, I thought it would be interesting to think about the major questions raised by President Obama's budget blueprint which details a shift to direct lending by the 2010-11 academic year.  Remember that this blueprint needs to work its way through Congress, and as such, is subject to change.  Since few details are available at this time, I thought it would be more useful to think about questions raised by this announcement. 

Is Financial Literacy Education Effective?

Just to be provocative here are two recent papers that answer that question with a resounding "no." 

Financial Aid Directors in the News

Here is a smattering of what financial aid directors are saying these days:

Obama Budget: Pell Grant To Be Indexed To Inflation, Aid Application Process To Be Simplified

Here is the section in the budget blueprint under the Department of Education pertaining to Pell Grants:

Expands Pell Grants and Puts the Program on Sure footing.
Because the Administration is committed to making college affordable for all Americans, the 2010 Budget builds on the recovery Act by supporting a $5,550 Pell Grant maximum award in the 2010-2011 school year. But it is not enough just to make Pell Grants more generous and to put on a short-term patch. Fourteen times since 1973, the maximum Pell Grant has failed to increase even in nominal dollars. To make sure that we have a highly-educated workforce and that the opportunity to go to college is not determined by how much money you have, we need to put the Pell Grant program on sure footing. The Administration will index Pell grants to the Consumer Price Index plus 1 percent in order to address inflation. In addition, the Administration proposes to make the Pell Grant program mandatory to ensure a regular stream of funding and eliminate the practice of “backfilling” billions of dollars in Pell shortfalls each year. Finally, while expanding student aid, the Administration will also simplify the student aid application process. 

Obama Budget Envisions Move to Direct Lending in 2010 (Update 3)

The description of the FY2010 budget for the Department of Education includes the following section: 

Stabilizes the Student Loan Program for Students and Saves Billions of dollars for Taxpayers.
Right now, the subsidies in the Government-guaranteed student loan program are set by the Congress through the political process. That program has not only needlessly cost taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil in the financial markets. The President’s Budget asks the Congress to end the entitlements for financial institutions that lend to students. The Administration will instead take advantage of low-cost and stable sources of capital so students are ensured access to loans, while providing high-quality services for students by using competitive, private providers to service loans. The approach in the Budget, originating all new loans in the direct lending program, saves more than $4 billion a year that is reinvested in aid to students. The Budget also makes campus-based, low-interest loans more widely available through a new modernized Perkins Loan program, overhauling the inefficient and inequitable current Perkins program.
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Dept. of Education to Review Programs Supporting FFELP Lenders

New York Times reports that Department of Education officials will be reviewing the arrangements made in the waning days of the Bush administration to support the FFELP student lenders.

Here were a few notable items in the article:

Fitch Warns on Private Student Loan ABS

Fitch noted the following concerns regarding private student loan asset-backed securities (ABS):

• Weak job market: 
  
  • Student loan borrowers are graduating into a dreadful job market and co-borrowers are not immune to the wave of unemployment filings.