Student Lending Analytics Blog

SLA 2010 Financial Literacy Survey Finds 49% Of Colleges Offer Financial Literacy Program; Budgeting, Credit Cards, Loan Repayment Are Top Subject Areas

Full results for the SLA 2010 Financial Literacy Survey are available here (view 2009 results here). 

Here are the highlights:

• Prevalence of programs:  48% of the 230 respondents indicated that their school is currently offering a financial literacy program.  For those schools that don't currently offer a program, 51% expect to start one over the next 12-18 months.
  • 66% of schools with a financial program did not have any budget monies set aside for this purpose; 16% had a budget less than $5,000.

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:

Discover Acquires Citi's Private Student Loan Business; Sallie Mae To Take Federal Loans

Here are some of the details:

From Discover Press Release:

"Discover Financial Services (NYSE:DFS) today announced that it has reached an agreement to acquire The Student Loan Corporation (“SLC”) for $600 million, or $30 per share. Separately and immediately prior to the closing of Discover’s transaction, SLC will sell $28 billion of assets to Sallie Mae and $9 billion of assets to Citibank. Discover will acquire $4.2 billion of private student loans and related assets at an 8.5% discount, along with $3.4 billion of SLC’s existing asset-backed securitization debt funding. The amount to be paid by Discover for the private student loan assets is subject to a post-closing purchase price adjustment between Discover and Citibank, which owns 80% of SLC’s outstanding common stock.

Financial Literacy In The News

• SF Chronicle tackles question of how consumers learn about money (interesting that no one talked about how they learned about this in school):
  • Family:  "The individuals I interviewed frequently cited money advice they had learned from a parent or partner -- or a poor parental role model whose financial behavior they vowed not to repeat."
  • Early job experience:  "Many people I spoke with said their first insights about money came through a job they had as a child or young adult."
  • Some basic truths learned along the way:  "Much of the money wisdom that people shared with me came down to some basic truths: pay yourself first (i.e., put away part of your paycheck in savings); don't spend more than you make; money does not grow on trees; money doesn't always buy happiness."

New Credit Card Rules Take Effect Monday

The Associated Press noted how the new credit card regulations will impact students (also see this CNN Money article which also focuses on the difficulty that many young adults will now face in getting credit):

Discover Grows Federal Loan Business By $1.1 Billion and Private Loans By Almost $500 Million In Last Year

To provide some context, in last year's 4Q conference call, Discover's student loan product was mentioned all of once..."Our total loan portfolio grew 6% year-over-year to $51 billion with Discover personal loans and Discover student loans contributing about 2% points to that growth."  Now with credit card loans declining, student loan growth have helped to offset some of this decline: 

Before diving into the conference call, I thought I would wade into their supplement to their earnings call (Oh no!  I am having flashbacks to my time as an investment analyst and creating those earnings models!).  The supplement shows how their guaranteed student loan business grew by over $1 billion and private loans by almost $500 million in the past twelve months (or about a 5% share in an $11 billion private loan market).  Figures shown below are loan balances at quarter end expressed in thousands of dollars):  

One Word To Describe U.S. National Financial Capability Study: "Unsettling"

"This study has given us a wealth of important—and in some cases, unsettling—data that we can use to help Americans better manage their finances and plan for their futures."

Rick Ketchum, Chairman and CEO, FINRA prepared remarks delivered on December 15, 2009

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Skimming through the National Financial Capability Study released today by FINRA Investor Education Foundation.  I like the fact that it is taking a more expansive view on the issue which shows in the title of the study.  Those who created this survey see financial literacy as only one component of financial capability.  I like the multi-dimensional approach they seem to be taking to this issue, rather than just focusing on specific knowledge:

"Financial capability cannot be measured simply by looking at one indicator, such as demonstrated knowledge of specific terms or concepts. Instead, financial capability encompasses multiple aspects of behavior relating to how individuals manage their resources and how they make financial decisions (including the factors they consider and the skill sets they use). It is a multi-dimensional concept that requires looking at individual behavior from various angles."

Getting Your Credit Score For Free...And 8 Myths of Credit

Some believe that your credit score, rather than your GPA, is the most important score that you graduate with.  Here are two recent articles that can help students better understand how to manage their all-important score:

This Man Don't Like Debt (And He Has Millions of Followers)

I had heard of Dave Ramsey after the SLA flash survey on financial literacy when a few respondents talked about his program in glowing terms.  I found out more about Dave Ramsey after reading this article in the Atlantic Monthly "Lead Us Not Into Debt":

Here is an excerpt:

Federal Reserve Proposes New Rules For Credit Cards

The Federal Reserve today provided proposed new credit card rules to "protect consumers who use credit cards from a number of potentially costly practices."  This is the second of three new sets of rules that will amend Regulation Z (Truth in Lending) for credit cards.  Here are the proposed changes in the regulations which incorporates the provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009: