Student Lending Analytics Blog

The Jobs Issue: Help Me With The Math

With Sallie Mae town convening another round of town hall meetings (for round 1 details and a further exploration of the jobs issue, see this post) in Florida and Indiana highlighting the potential job losses at their loan servicing centers in those states, I thought it would be useful to revisit an earlier jobs announcement that Sallie Mae made in April of this year. 

In early April, Sallie Mae announced to much fanfare that they would be bringing 2,000 jobs that they had offshored back to the United States.  Whether the move was motivated by patriotism, a failed offshore strategy or the requirements of the Direct Lending contract, I won't make any conjecture.  Accompanying Sallie Mae executives for the announcement was Rep. Paul Kanjorski who stands to gain 600 jobs at the Sallie Mae loan servicing center in his Congressional district in Pennsylvania (in case you were wondering, he was one of four Democrats who did vote against SAFRA).  So, hold that thought for a moment, a net 2,000 new jobs returning to the United States.

Center For American Progress Calls For Office of Consumer Protection in Education

After my recent posts about the need for "Truth in Educating" disclosures and the need for greater transparency in the education market (see Minnesota example that I blogged about here and my concept of a warning label here), it was nice to see some validation of these ideas in this memo from the Center for American Progress. 

Here are the highlights from the piece by Louis Soares:

Ask A Simple Question...

It's a question that I get asked all the time: How well are borrowers in the Direct Lending program being served today?  So, on August 20th, I emailed the Department of Education the following FOIA request:

"The performance ratings that the Department of Education has collected in the evaluation of the current DL servicer, ACS."

Seems kinda simple, right?  I got my answer this week, which included the following paragraph (FOIA's version of the dreaded "Dear John" letter): 

Aargh...Income-Based Repayment Off To Slow Start; Technical Glitch May Be Responsible

The Chronicle of Higher Education reports that a technical glitch may be responsible for the low number of students who have applied for the new income-based repayment plan since it took effect on July 1st.  The glitch (which I might even call a snafu, since the law creating this program passed in October of 2007) is that the Department's account repayment website doesn't include "Income-Based Repayment" as an option in their drop-down menu [Borrowers can download the form on the site and mail it in].  Hmmm..is it any surprise then that only 14,000 borrowers had applied (with 4,500 approvals) for the program.  At a time when defaults are rising, IBR, which sets borrower payments based on income levels, was expected to provide some needed relief.  With many recent graduates having difficulties in the job market and with many loans entering repayment in November, it sure would be nice to have that drop-down menu option added sooner rather than later. 

As for the reason for this delay: 

How Is Senate Student Loan Reform Bill Different From House Bill?

The Chronicle of Higher Education reports the following differences (the draft of a Senate bill is expected to be released next week, a bit later than the September 30th mark-up date for the HELP committee that had been reported earlier):

• Senate version has larger minimum Pell Grant
• Senate version has more money going to states and colleges; $4.25 billion vs. $3.0 billion for College Access and Completion Innovation Fund.  
• Distribution method for Perkins Loans differs:
  • House version would make of the award based on graduation of Pell recipients and keeping tuition increases to a minimum.
  • Senate version awards funds based on need and reduces the size of the Perkins awards based on institutions' failure to hit targets for enrolling and graduating Pell Grant recipients.  
• Draft Senate bill also includes 5% match requirement for Perkins loans which could be reduced if student borrowing was limited. 

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Here is an undated draft of the Senate bill:  Download Senate Bill_Draft   Please note that this version is probably already outdated so read the 284 pages with caution. 

I Called To Find Out About Getting A Student Loan...

As the Federal Reserve noted in the consumer research about private education loans, students and parents like to talk to someone before making the purchase decision:

"However, some are uneasy with the Internet being the only source and want to speak with a live person due to the complexity and magnitude of the financial commitment. They also find it more difficult to judge a bank’s credibility online."

SLA wanted to assess the quality of information that students or their parents might receive from the call center operations of student lenders.  We placed over 140 calls from June to September of this year to eight top lenders, including Wells Fargo, SunTrust, Sallie Mae, PNC, Chase, Discover, Citizens Bank and Citibank.  Each of these lenders provide both federal student loans and private loans.  Our caller requested general information about finding a student loan which helped us understand the degree to which lenders assess each caller's needs.  As the call progressed the caller would then ask for details about federal and private loan programs which allowed us to determine the quality and depth of information provided. 

What Does the Agenda For NASFAA's Upcoming Annual Conference Tell Us About The Forces Shaping Financial Aid

Given all the changes that we have seen in the last twelve months in the regulatory, legislative, economic and capital markets spheres, I thought it would be interesting to analyze how the agenda for the 2009 NASFAA Annual Conference (starting July 12th in San Antonio) differs from the 2008 Conference Agenda. 

Here are the number of sessions indicated for each of the tracks (or topic areas) for the respective conferences along with the change: 

Tracks 2009 2008 Change Department of Education 32 32 0 Reauthorization/Legislative 11 0 11 Research 10 12 -2 Loans 10 9 1 Technology 10 6 4 Prof. Development 9 7 2 Management 8 13 -5 Customer Service 8 3 5 Regulatory 7 10 -3 Grad/Prof. Issues 6 9 -3 Student Access & Diversity 6 6 0 Financial Literacy 4 4 0 Enrollment Mgmt. 3 3 0 Philosophical 2 3 -1 Other Resources 2 3 -1 Taxes 1 3 -2 Generational 1 2 -1 Ethics 0 4 -4 TOTAL 130 129 1

A few observations:

SLA Flash Survey on Financial Aid Counseling: Students and Families In Search of "Free Money"

Given the current state of the economy, I thought it would be worthwhile to understand what financial aid administrators are experiencing on the front lines today.  By counseling students and families, financial aid administrators gain insights as to what matters to their "customers."  The list below indicates that families are focusing on "free money" first by asking about scholarships/grants and work study/job opportunities. 

Here is a summary of a recent SLA Flash Survey on Financial Aid Counseling (Download available here:  Download SLA_Flash_Financial_Aid_Counseling_062209.)  Results are based on responses from 178 financial aid administrators in mid-June:

Student Loan Corp. Amended Servicing Contract Has Lower Performance Standards for 2009

After perusing the Student Loan Corporation 10-K earlier today, I came across an amendment to their Education Loan Servicing Agreement with Citibank.  Curious about some performance standards that they had in the 2009 amendment, I thought it would be interesting to compare these standards with those in place in 2008.  Since the economics of the FFEL program have changed, many in the financial aid community have become concerned about the service levels for students and financial aid administrators. 

U.S. Bank Converting Loan Servicing to ACS from SLFC

This press release in June of 2008 indicated that ACS had been awarded the contract by Student Loan Finance Corporation (SLFC) to provide education loan servicing for SLFC's federal and private loan portfolios.  Importantly, the article indicates that ACS would be keeping some of SLFC's staff to manage the operation in Aberdeen, South Dakota:  "ACS said that the company has opened a loan-servicing centre in Aberdeen, South Dakota, USA and will add approximately 130 SLFC employees to staff that centre."