Student Lending Analytics Blog

Financial Literacy In The News

• SLA is the midst of their 2010 Financial Literacy Survey which closes on Friday.  Ping me at tranzetta@studentlendinganalytics.com if you would like to participate.  We have almost 200 responses already. 

• Elizabeth Warren, director of the Consumer Financial Protection Bureau, spoke to student journalists earlier this week about financial literacy:  

What's New With Lender Lists?

Knee-deep into my annual analysis of school lender lists and the prevalence of lenders on those lists, I thought I would come up for air and highlight some interesting observations:

• Western Michigan University used results from a student survey to rate their alternative lenders.  The five survey questions focused on application process, value, customer service, would student recommend to friend and overall satisfaction.  Almost 20% of their student borrowers responded to the survey.  With a top possible score of 20, the scores for the seven lenders varied from 12.97 to 15.85. 
  
  • Please contact me at tranzetta@studentlendinganalytics.com if you are interested in implementing a similar survey tool at your school (at no cost!)

College Board Report on Student Aid: Federal Aid and Federal Loans Up , Private Loans Down

The College Board released their Trends in Student Aid 2010 today.  Here were their key findings:

• First to provide some context, here are the six top sources of student aid in 2009-10 representing over 90% of student aid (includes graduate and undergraduate aid sources which in total amounted to $199.2 billion for 2009-10):
  
  • Federal loans ($96.8 billion) or 49% of total aid
  • Institutional grants ($33.4 billion) or 17% of total aid
  • Pell grants ($28.2 billion) or 14% of total aid
  • Federal grants other than Pell ($13.1 billion) or 7% of total aid
  • Private and employer grants ($10.6 billion) or 5% of total aid
  • State grants ($8.7 billion) or 4% of total aid

Federal Student Loans Rise To $95.7 Billion in 2009-10

Federal Student Aid has posted an update to their website today (thanks to Mark Kantrowitz for the heads-up).  The total disbursements for Stafford, Parent PLUS and GradPLUS loans for the 2009-10 academic year came to almost $96 billion [this figure excludes Perkins Loans which are typically about $1 billion].  When comparing them to the 2008-09 data now up on the FSA Data Center site, this amounts to a 12.5% increase (or almost $11 billion).  Please note that these numbers are updated frequently, which might explain why $75 billion was the number announced for 2008-09 last year by the Dept. of Education and is close to the $77 billion listed in the FSA Strategic Plan vs. the $85.1 billion that SLA calculated for 2008-09 on the FSA site this evening.

A few highlights:

Growth in FAFSA Filings Slows To 1.3% In 3Q

Thanks to Mark Kantrowitz for making me aware of his analysis, which is available here on FinAid.org. It shows that the growth in FAFSA (Free Application for Student Aid) filings has decelerated this year to 1.3%, having grown 17.5% in the first quarter and 12.3% in the second quarter.  Since this is a seasonally slow quarter,(the first quarter is typically the strongest with volumes dropping each quarter thereafter), the year-to-date FAFSA filings are still up 11.8%.  FAFSA filings by independent students only grew by 0.3%, while filings for independent students grew by 1.7%. 

Wondering about growth on a state-by-state basis?  Here are the FAFSA filed through the first three quarters of 2010 with states in the western US (Nevada, Arizona, Utah and Idaho) having the top four spots:

There's Gold In Them Thar Financial Literacy Games

Or at least that is what one investor, New Enterprise Associates, seems to think.  They recently invested $11 million in EverFi in a Series A round of financing.  Here is what TechCrunch had to say in early September:

B of A Made $62 Million In Payments To Colleges For Credit Cards in 2009: Federal Reserve

Here is a link to the report released today by the Federal Reserve.  Here are the highlights:

This Week in Financial Literacy

Highlights from the week in financial literacy:   

• Survey of military personnel by FINRA Foundation provided the following highlights about the financial capability of servicemen and women (link to survey here):
  
  • Military families are heavily in debt to credit card issuers, with over one in four respondents reporting more than $10,000 in credit card debt.
  • One in four servicemembers with checking accounts reported overdrawing their accounts, which typically incurs significant fees.
  • More than one in five (21 percent) servicemembers used high-cost, non-bank borrowing such as payday or auto title loans in the last five years.
  • Over half of enlisted personnel and junior non-commissioned officers reported that in some months, they made only the minimum payment on their credit cards.
  • Only 50 percent of military respondents have a "rainy day" fund for unanticipated financial emergencies.

Highlights Of Sallie Mae's 3Q Earnings Announcement

HIghlights from Sallie Mae's earnings announcement earlier this week (sources for this summary include 3Q earnings supplement and conference call transcript from Seeking Alpha):

• Company completed their strategic review which included evaluating whether or not to sell the FFELP portfolio (while retaining the servicing rights)...and the company chose to (drumroll, please)....keep the FFELP portfolio:  "So maybe there's another way of just saying that you are not going to see any dramatic balance sheet actions from the company at least anytime soon."  It seems that as long as they serviced the assets, they would need to keep them on their balance sheet.  

• Wondering how profitable it is to service FFELP loans?  Answer:  Very profitable, as in 90% cash flow margins.  "Our securitized FFELP portfolio generated $444 million in excess cash to the company in the third quarter and to put that into some perspective, our FFELP servicing costs in the quarter were $52 million." 

2009 College Grads Saw Student Debt Rise to $24,000; Unemployment Rate Spikes to 8.5%: Project on Student Debt Report

The Project on Student Debt released their Student Debt and Class of 2009 Report today.  Here are some of their key findings (go to report for footnotes):

• 2009 graduates saw 6% increase in overall student debt...:  "We estimate that college seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up six percent from the previous year.1 The six percent increase in average debt at the national level is similar to the average annual increase over the past four years, despite the recent economic downturn. It is likely that the Class of 2009 took out the bulk of their student loans before the recession began. Additionally, many colleges made concerted efforts to increase or maintain need-based grant aid when the economy faltered, so that students could afford to stay in school.2