Here are some facts regarding Key Bank's student loan activities:
- Key Bank was the #20 originator of FFELP loans in 2007-08 with $488.7 million in guarantees, according to Dept. of Education data
- Key Bank exited the private student loan market in October of 2008 given their inability to tap the securitization markets
- Key Bank is the second major FFELP lender to exit in the last month. U.S. Bank, the 7th largest FFELP originator in FY08, ceased originations of FFELP loans in late September.
- Key Bank is one of three leading players in the tuition payment plan business. Here is a link to an interview with Craig Lockwood, an executive at Key Education Resources.
Here is the press release, which provides further details about the timing of their exit:
KEY EDUCATION RESOURCES TO EXIT FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP)
KeyBank to focus on payment solutions for educational institutions and students
CLEVELAND,
Ohio, October 8, 2009 — Key Education Resources (KER), the education
payment and financing arm of KeyBank, announced today that it will
discontinue offering Federal Family Education Loan Program (FFELP)
products and will focus on the growing demand from schools for
integrated, simplified billing, payment and cash management solutions.
This
two-part decision takes advantage of Key’s strong cash management
services and 50-year history delivering educational payment plan
solutions to schools and families.
“In
light of the future of the Federal Family Education Loan Program
(FFELP), our product offerings for higher education will change,” said
Steven Dodd, president, KER. “It
is important to note that our commitment to the education sector is
expanding. We continue to build our relationships with colleges and
other educational institutions by offering solutions that help schools
improve their education payment process and cash flow. New and enhanced
solutions will be introduced over the coming months.”
Beginning
December 5, 2009, KeyBank will suspend origination activity of new
FFELP loans. All new FFELP loans must be set for disbursement by
5 p.m. on December 4, 2009. This means that the completed application
must be guaranteed, school certified, credit approved and have a valid
Master Promissory Note on file by this date and time.
For
loans that were school certified prior to the October 8, 2009
announcement, Key will honor scheduled funding including second
disbursements. Loans that are school certified after October 8, 2009,
but on or before the December 4 deadline, must be fully disbursed by
March 31, 2010.
Key’s
decision to exit FFELP and education lending is consistent with its
strategy to focus on core relationship businesses and follows similar
actions taken to exit other lending categories in recent years. It is
also consistent with Key’s commitment to serve its client needs and
liquidity management, in particular, is critical for educational
institutions in the current economic environment. Key’s cash management
solutions help to improve cash flow forecasting, payables and
receivables, thereby maximizing liquidity.
Cleveland-based
KeyCorp (NYSE: KEY) is one of the nation's largest bank- based
financial services companies, with assets of approximately $98 billion.
Key companies provide investment management, retail and commercial
banking, consumer finance, and investment banking products and services
to individuals and companies throughout the United States and, for
certain businesses, internationally. For more information, visit https://www.key.com.
Comments