Student Lending Analytics Blog

What Were People Reading On the SLA Blog During the Month of March?

Top 10 stories for the month of March (you might find a common theme running through many of the posts):

1.  Who Are Top 10 Originators of Federal Student Loans?

2.  Chase Suspending Origination Of New Federal Student Loans In Mid-April

3.  Details on Student Aid Bill Emerge

4.  Almost 3 Out of 4 Schools Committed To DL For 2010-11, Based On Results From SLA Flash Survey

5.  House Passes Senate Health Care Bill and Reconciliation Bill That Will Transform Student Lending

6.  The Day After...Changes Coming After The Student Loan Reform Bill

7.  Reactions To Passage of Student Loan Reform Bill

8.  Where Will Sallie Mae Jobs Be If FFELP Is Eliminated?

9.  Will Student Loan Reform Proposal Survive?

10.  Why I Have Never Been More Worried About Student Loan Defaults

Want To Learn More About Your Credit Score....

A hearing was held last Wednesday by the Subcommittee on Financial Institutions and Consumer Credit Hearing.

Title:  Keeping Score of Credit Scores:  An Overview of Credit Scores, Credit Reports and Their Impact on Consumers

So, What Will A Pell Grant Buy You In 2019?

From the College Board:  "In 2007-08, the $4,310 maximum Pell Grant equals 32 percent of the average published price at four-year public institutions and 13 percent at the average four-year private college or university."

	2007-08		2018-19
Pell Grant	$4,310		$5,995
4-Year Public	$13,469		$25,568
4-Year Private	$33,154		$62,936
Pell Grant as %age
4-Year Public	32%		23%
4-Year Private	13%		10%

Purveyors of Private Student Loans Breathe A Sigh of Relief

The student aid reform bill that President Obama signed today, while spelling the end of new originations of federal student loans by private student lenders, may also give providers of non-federal (or private loans) a sense that they have dodged a bullet (for now at least). 

Why?  The earlier SAFRA bill called for a significant $5 billion expansion of the Perkins loan program, which is a 5% loan provided to lower income students.  While there were still some significant unanswered questions about the program including the degree to which schools might participate, an expansion of this low-interest loan program would have had a significant impact on reducing demand for private student loans. 

Reactions To President Obama's Signing Student Loan Reform Into Law

Here are reactions from across the media spectrum:

• President Obama had this to say at the signing ceremony at Northern Virginia Community College (from New York Times, here is transcript of the comments):

"Mr. Obama portrayed the overhaul of the student loan program as a triumph over an "army of lobbyists," singling out Sallie Mae, the nation’s largest student lender, which he said spent $3 million on lobbying to stop the changes. "For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks,"he said. The money, he said, “was spent padding student lenders’ pockets."

Financial Literacy In The News

• Should financial literacy efforts focus more on a "train the trainer" model?  Mint.com survey finds parents have strongest influence on teen's financial behaviors (of course, most probably are not being taught this in school which may explain the low count for teachers):   

"The poll asked some 1,500 teenagers nationwide about their financial role models, which included friends, family, celebrities and teachers. Sixty-eight percent of respondents said their parents had the most influence over their spending or saving habits. Sixteen percent were inspired by friends, while 14 percent turned to TV, magazines, books, radio or celebrities. Only 24 individuals said their teachers influenced their spending habits."

How Can Federal Student Loans Be Discharged?

As I was perusing the playbook for student loan collection agencies a few weeks back, I came across these five school-based criteria for which a student loan can be discharged.  This got me wondering about how frequently these discharges might occur.  Just to set the context, the total federal student loans outstanding today are north of $620 billion. 

Here are descriptions of each of the five criteria:

SLA To Host Webinar on "Using Third-Party Websites As A Resource For Private Student Loans"

Just a reminder to join me on Thursday for this timely webinar on  "Using Third-Party Websites As Resources For Private Student Loans" on Thursday, April 1, 2010 at 1:30 p.m. Eastern Time. Click here to sign up for this free event.

The webinar will provide answers to such questions as:

• How are financial aid offices responding to the new preferred lender regulations?
• What is the Department of Education's stance on third-party websites and preferred lender arrangements?
• What are the criteria parents and students use in selecting a private student loan?
• What are the features and benefits of the current private student loan websites hosted by SLA?

Just a reminder to join me on Thursday for this timely webinar on  "Using Third-Party Websites As Resources For Private Student Loans" on Thursday, April 1, 2010 at 1:30 p.m. Eastern Time. Click here to sign up for this free event.

The webinar will provide answers to such questions as:

• How are financial aid offices responding to the new preferred lender regulations?
• What is the Department of Education's stance on third-party websites and preferred lender arrangements?
• What are the criteria parents and students use in selecting a private student loan?
• What are the features and benefits of the current private student loan websites hosted by SLA?

What Are Financial Aid Officers Saying About The Move To Direct Lending?

• If you waited until the last minute...this isn't good news (from the Spartanburg Herald Journal):  "With about five federal agencies expected to handle the flood of communication that will come with the "mass exodus" of schools leaving their private lenders, Sullivan [Allison Sullivan, director of financial aid at the University of South Carolina Upstate] said she was told by the Department of Education that financial aid offices like hers will be provided a list of 800 numbers, and that "it could be 10 days before anyone gets back to us."  But by starting the process early, Sullivan said "we'll be prepared for it."

• Someone likes the increase in Pell Grants (from Newark Star-Ledger):  "I’m very much in favor of the bill," said Jean McDonald-Rash, financial aid director at Rutgers University in New Brunswick. "Moving money into grant aid, which doesn’t have to be paid back, is a positive for students."

Department Provides Answers On New Federal Loan Servicing Arrangements

Here are the highlights of their Electronic Announcement released on Friday:

Question:  How are borrowers who are split between multiple servicers in the FFEL purchased loan process being handled?

Answer:  "Due to the nature of the FFEL Purchased Loan process, the assignment of a borrower’s federally-owned loans to the same servicer has not automatically occurred for all borrowers. In time, assignment of borrower’s federally-owned loans to the same servicer will become standard operating procedure. When this does not occur automatically, we will work to resolve situations in which a borrower’s federally-owned loans are assigned to two or more federal loan servicers. Resolution will involve transferring the borrower’s loans from one servicer to another."