Student Lending Analytics Blog

U.S. Bank Lowers Rates On Private Student Loans

U.S. Bank has lowered the interest rate ranges on their private student loans effective as of November 1, 2010.  The new range of interest rates offered by U.S. Bank now stands at 3.45% to 10.95%, compared to their previous range of 4.20% to 12.20%.  As a result of this change, SLA has upgraded the rating on the U.S. Bank product to 3 1/2 stars.  U.S. Bank's last pricing change occured in April when they lowered their minimum rate from 5.20% to 4.20% while leaving their maximum rate unchanged. 

Here are the details provided in a recent email:

Discover Provides Additional Details on Acquisition of Citibank's Student Loan Business

From Discover's 3Q Conference Call on September 20, 2010 (thanks to Seeking Alpha for their transcript):

What are some additional details on the private loan portfolio that Discover is purchasing from Citibank?

• Terms of the deal:  "We plan to acquire The Student Loan Corporation for $600 million or $30 per share, subject to a post closing adjustment pay between Citi and Discover. 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. We will then acquire $4.2 billion of private student loans and related assets at an 8.5% discount, along with assuming $3.4 billion of SLC’s existing asset-backed securitization debt funding against these private loans.  We expect to receive approximately $150 million from Citibank under the purchase price adjustment agreement. The ABS funding has had attractive rates and maturities represented by the trust identified in our 8-K. So funding is largely in place."

Rates They Are A Changing...

With peak lending season upon us, six lenders have recently changed the margins on their private student loans with the overall trend being down (four of the six reduced margins).  Here is a table (sorted alphabetically) showing both the current rates and the previous rates:

		Current				Previous
			Max.				Max.
Lender name	Low	High	Fees		Low	High	Fees
Chase	4.14%	9.79%	0%		3.76%	8.76%	0%
Citibank	3.63%	11.38%	3%		4.13%	11.88%	3%
Citizens	3.35%	11.60%	0%		3.35%	13.35%	0%
Sallie Mae	2.88%	11.25%	0%		2.88%	10.25%	0%
SunTrust	4.13%	11.63%	0%		4.13%	11.88%	0%
Wells Fargo	3.50%	9.99%	0%		4.25%	11.24%	0%

Looking For A Private Student Loan Resource For Your Students?: SLA Updates And Improves Private Loan Options Site

For those looking for a neutral, timely and comprehensive private loan lender list, SLA created Private Loan Options with the following features:

• Lists sixteen major lenders, including credit unions, regional and national lenders
• Details interest rate ranges and fees for each loan product
• Provides timely updates when changes occur to lender margins or interest rate indices (LIBOR or Prime Rate)
• Identifies and provides links to 16 states with alternative loan programs providing your students with fixed-rate alternatives
• Generates dynamic list of lenders each time page is refreshed
• Provides borrowers with standard application and solicitation disclosures to help them compare private loans
• Lists borrower benefits, cosigner release terms and whether lenders require payments while student is in school
• Provides upfront statement encouraging borrowers to seek federal loans first
• Describes common loan terms with a borrower glossary

Here is just a sampling of the colleges currently linking to SLA's Private Loan Options site:

Is There Really A Private Student Loan Available With A 1.78% Interest Rate? (Update)

Update (October 20, 2010):

The Maine Loan now has a fixed rate of 7.75% and a 4% guarantee added to principal at the time of disbursement. 

The starting interest rate on the North Dakota DEAL loan program (for ND residents and those attending ND institutions) adjusted to 1.79%, with is effective through December 31, 2010. 

Update (July 14, 2010):

The starting interest rate on the North Dakota DEAL loan program (for ND residents and those attending ND institutions) adjusted to 2.04%, which is the effective rate through September 30, 2010.  

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With peak lending (and borrowing season) upon us, I thought it would be useful to update my previous post on state alternative loan programs. 

Disclaimer:  Private student loans should be considered as a "last resort" only.  Students and parents should access all other available forms of aid, including scholarships, federal grants (e.g., Pell) and federal loans (with names like Stafford and PLUS) before considering a private student loan.

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I thought that headline might get your attention.  First the caveats:  The DEAL loan administered by the Bank of North Dakota, a state-run bank, is a variable-rate loan, so as interest rates increase it will too [DEAL also has a fixed-rate option which you will see described below].  Second, that 1.78% rate is available only if you are a resident of North Dakota OR attend an eligible institution in that state.  If you attend an institution or your legal residence is in South Dakota, Minnesota, Montana, Wyoming or Wisconsin, then the starting interest rate is 2.78%.  

Here is a spreadsheet with links to each of the websites for these state loan programs (please feel free to redistribute this list if you think it will be useful for your students):  Download State_Private_Loan_Programs_2010_11

Here are some attributes of these loans that are worth repeating again:

Disclaimer:  Private student loans should be considered as a "last resort" only.  Students and parents should access all other available forms of aid, including scholarships, federal grants (e.g., Pell) and federal loans (with names like Stafford and PLUS) before considering a private student loan.

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I thought that headline might get your attention.  First the caveats:  The DEAL loan administered by the Bank of North Dakota, a state-run bank, is a variable-rate loan, so as interest rates increase it will too [DEAL also has a fixed-rate option which you will see described below].  Second, that 1.78% rate is available only if you are a resident of North Dakota OR attend an eligible institution in that state.  If you attend an institution or your legal residence is in South Dakota, Minnesota, Montana, Wyoming or Wisconsin, then the starting interest rate is 2.78%.  

Here is a spreadsheet with links to each of the websites for these state loan programs (please feel free to redistribute this list if you think it will be useful for your students):  Download State_Private_Loan_Programs_2010_11

Here are some attributes of these loans that are worth repeating again:

Bank of America Exiting Federal Student Loan Program

Bank of America, the largest U.S. bank based on asset size, announced today that they will be exiting the Federal Family Education Loan Program, or FFELP, in December.  Here is a copy of their announcement to their school customers:  Download Bank of America Student Lending Announcement 11.6.09

Here are some details from their announcement:

Someone's Thinking About Preferred Lender Lists...

Yes, I know if seems early, but I saw this news on NASFAA News earlier this week, which came from a Harvard release:

Graduate & Professional Student Loan Programs Request for Proposal (RFP) from Lenders Offering Non-Federal Student Loans

BOSTON, October 27, 2009 -- Harvard University is seeking proposals from lenders offering non-federal student educational loans for the 2010-2011 academic year through a Request for Proposal (RFP) process. This request seeks one loan product for all our domestic and international graduate and professional students enrolled at least half-time. It does not concern Federal Stafford or PLUS loans.

With more than ten years of private lending experience and a total portfolio in excess of $350 million, Harvard's domestic and international graduate and professional student borrowers have shown an exceptionally low private loan default rate.

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If you are interested in discussing what changes are in store for 2009-10 for preferred lender lists, drop me a line at tranzetta@studentlendinganalytics.com and we can schedule a time. 

SLA 2009-10 Private Loan Lender List Penetration Report

So, who is showing up most frequently on school lender lists for private student loans?  We thought you might like to know. 

Here were the top eight lenders based on the frequency that they appeared on the lender lists of the 425 schools that were analyzed in this study (no other lender appeared on more than 10% of the lists analyzed):

Lender	Penetration
Chase	77%
Wells Fargo	72%
Sallie Mae	69%
Citibank	65%
Discover	36%
US Bank	28%
SunTrust Bank	24%
PNC Bank	21%

Go to SLA Private Loan Ratings for an independent evaluation of the private loan products offered by each of these lenders.  

SLA Updates Private Student Loan Ratings Based on Lender Changes

There was a flurry of recent changes announced by lenders, leading to changes to the SLA Private Student Loan Ratings: 

What Should I Communicate To First-Time Parent PLUS Borrowers Now?

With award letters hitting mailboxes over the next few weeks, a question that has come up frequently within the financial aid community is: 

• How should I communicate with first time Parent PLUS borrowers that they will need to wait to apply until the dust settles on the PLUS auction process (winners should be announced prior to April 24th)?