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Slide 1 © Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or legal advice and should not be relied upon as such.

Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

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Page 1: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 1© Student Lending Analytics, LLC

In The Trenches:What Financial Aid Administrators Think

This presentation does not constitute formal policy or legal advice and should not be relied upon as such.

Page 2: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 2© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Agenda

Federal Student Loans

Private Student Loans

Financial Literacy programs

Financial Aid Counseling

Perkins Loan Program

Page 3: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 3© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Federal Student Loan Plans for 2009-1056%

19%

8% 7%4%

6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Staying inFFELP

Staying inDirect

Lending

Switching toDL in 2009-10

FFELP ButUndecided for

2009-10

Offer DL andFFELP

Other

Per

cen

tage

of

Res

pon

den

ts

Survey question: Please select the choice which best describes your institution's plans for the 2009-10 academic year (Direct Lending or FFELP or some variation).Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 4: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 4© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Steps To Prepare For Direct Lending46%

42%

37%35%

33%

12% 11%

23%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Peer Schools Dept.Website

Conferences Webinars Set UpElectronicAcct. With

DL

Create aTeam

SoftwareVendor

None of theAbove

Per

cen

tage

of

Res

pon

den

ts

Survey question: My institution (either myself or other staff members) has taken the following steps to prepare for Direct Lending should that become the platform for loan origination as well as servicing in 2010-11.Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 5: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 5© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

College Administration Involvement

29%

34%

10%

6%

21%

0.0%

10.0%

20.0%

30.0%

40.0%

Strongly agree Agree Moderatelydisagree

Strongly disagree Not sure

Per

cen

tage

of

Res

pon

den

ts

Survey question: COMMENT ON THIS STATEMENT. The administration at my institution is interested in having a contingency plan prepared to implement Direct Lending by the proposed July 1, 2010 start date.Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 6: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 6© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Overall- Financial Aid Systems

14%

7%

12%

20%20%

28%

0.0%

10.0%

20.0%

30.0%

Banne

r

Power

FAIDS

DataT

el

Peopl

eSof

t

Hom

e-G

rown

18 O

ther

s

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and PoiseSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 7: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 7© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

By Loan Program Type: Financial Aid Systems

33%

14% 15% 15%13%

11%

28%

22% 22%

11%

4%

14%

0.0%

10.0%

20.0%

30.0%

40.0%

Banne

r

DataT

el

Power

FAIDS

Peopl

eSof

t

Hom

e-gr

own/L

egac

y

Oth

er

Per

cen

tage

of

Tot

al R

esp

ond

ents

FFELPDirect Lending

Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and Poise among othersSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 8: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 8© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Direct Lending Satisfaction Scores

4.5 4.4 4.3 4.3 4.3

3.8

0.0

1.0

2.0

3.0

4.0

5.0

Loan Processing Reconciliation Service to FAOffice

Implementation Service toCustomers

Value-addedservices

Deg

ree

of S

atis

fact

ion

(V

ery

Sat

isfi

ed =

5.0

)

Survey question: Describe your level of satisfaction with the Direct Lending program for each of the factors described below. Note: Value-added services include financial literacy and default prevention activitiesSource: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

Page 9: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 9© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Improving Direct Lending

PLUS Loan Process:– “The PLUS loan process whereby DL would notify the borrower to e-sign

instead of printing prom notes or have the prom note available to download on their web site similar to FFELP lenders.

– “PLUS Loan processing, would like DL to offer some automation, so parents could apply online with them.”

Modifying internal systems/processes:– “Overall, I would say the ED's processes are fine; the complicated part has

been modifying our internal systems and processes.”

Creating testing environment:– “I'd like to have more testing opportunities to make sure the process flow is

working well. Currently, we have to set up our systems with assistance from the DL program, but there is no opportunity to test the electronic process flow to ensure that everything is working correctly. It's just "turn it on and hope it works right" currently.”

Page 10: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 10© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Improving Direct LendingWebsite enhancements

– “Students should be able to do the MPN and entrance counseling on the same website. Also, the precise way a student must enter their school on the MPN site is not user friendly. How about some type of good-old-fashion drop-down list?”

– “The DL Servicing Website needs to be more user-friendly. It needs more financial literacy material, advice about borrowing, and calculators that are easier to locate.”

Default prevention and service to students:– “Default Prevention, there does not seem to be many materials or much available.

Students exit and that is it.”– “Improve customer service to students.”

Implementation assistance– “I would like to see the Department provide some more training opportunities.”– “Better coordination of contact for FAA with COD/Direct Loan Origination. Better

interface/instructions for set up on COD and Direct Loan Servicing site. It's not intuitive.”

Stability of servicers– “Keeping the same contractors for the servicing. It seems that every few years a new

contractor takes over and it takes a while for everything to move smoothly after each transition.”

Page 11: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 11© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Who’s Going Direct?

2007-08School City, State FFEL VolumeNew York Institute of Tech. New York, NY $138,100,000Auburn University Auburn, AL $110,564,411University of Connecticut Storrs, CT $109,898,958University of Louisville Louisville, KY $90,847,216Middle Tennessee State Murfreesboro, TN $86,700,000Stony Brook University Stony Brook, NY $86,632,833Azusa Pacific University Azusa, CA $77,000,000CSU-Sacramento Sacramento, CA $69,702,474CSU-Long Beach Long Beach, CA $67,116,543Lesley University Cambridge, MA $64,193,033

Source: SLA research, May 2009

Page 12: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 12© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

The Geography of FFELP programThirteen states had at least 90% of the institutions within their state participating in the FFEL Program in 2007-08:

– West• Alaska• Hawaii• Montana• New Mexico• Utah• Wyoming

– Midwest• Nebraska• North Dakota• South Dakota

– East• Pennsylvania• New Hampshire• Vermont

– South• Mississippi

Page 13: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 13© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

The Legislative Process From HereH.R. 3221 Debated in House of Representatives

– Most analysts expect the bill to pass the House after August recess

Senate Committee on Health, Education, Labor and Pensions (HELP) to introduce their own legislation

Senate debates and votes on Senate Committee’s bill

Differences between Senate and House bill to be resolved by Conference Committee

Legislation will be reported to respective Budget Committees by October 15, 2009

House and Senate vote on respective budget bills

Differences between House and Senate resolved by Conference Committee

House and Senate vote on final budget bill

Page 14: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 14© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Agenda

Federal Student Loans

Private Student Loans

Financial Literacy programs

Financial Aid Counseling

Perkins Loan Program

Page 15: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 15© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Who’s Taking Out Those Private Student Loans?

From Project on Student Debt Analysis of NPSAS Data:– Percentage of all undergraduate students who borrowed private student

loans jumped from 5 percent in 2003-04, to 14 percent in 2007-08. – At proprietary (for-profit) colleges and universities, the percentage of

students who took out these loans skyrocketed from 13 percent in the 2003-04 school year, to 42 percent last year.

– One in four private student loan borrowers in 2007-08 didn’t take out any federal Stafford loans that year

Page 16: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 16© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

How Has The Supply of Private Student Loans Been Impacted by Credit Crunch?

Supply of private loans declined rapidly in August-September 2008…– Lenders representing 31-37% of private loan market stopped lending

• Credit line pulled: College Loan Corp., Education Finance Partners

• Parent company afflicted by sub-prime issues: Wachovia, CampusDoor

• Inability to access ABS market: Key Bank, Bank of America (TERI)

While incumbents have not picked up the slack…– Securitization markets have been relatively dormant since 2007

• Recent Sallie Mae deals have been done at extremely high prices

– Concerns over credit quality has plagued student loans• Sallie Mae expected to write-off over $1 billion in private student loans in 2009

– Limited access to capital

And new entrants have not added much new supply into market– Discover entered market in 2007– Credit unions starting to increase their market presence– Peer-to-peer lenders, Fynanz and GreenNote, met with limited success

Page 17: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 17© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

How Have Students Adjusted To The Decline in Availability of Private Loans?

While traditional funding sources to finance a college education have been whacked…

– Home equity has plummeted given nationwide declines in home prices– 529 plans have suffered in the bear market which reduced equity values over

50%

Students turning to federal loans in record numbers– According to the Department of Education, federal loans have seen 20.8%

growth through the end of February for the 2008-09 academic year• Stafford unsubsidized loans increased by $2,000 in July 2008• 10% increase above trend in federal loan borrowings amounts to about $7

billion in incremental borrowing– Parent PLUS loan growth appears to be flat

• Sallie Mae, the largest FFELP lender, saw 57% growth in Stafford volume in their internal brands for 2008 while Parent PLUS volume was flat over the same timeframe

Leading indicator, FAFSA filings, are up 20.8% in first quarter, so expect this trend of increased federal loan borrowings to continue

Page 18: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 18© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Student Concern About Transparency

Selected comments from SLA Private Student Loan Ratings survey:

“While the interest rate was not disclosed on the website after being approved without a cosigner, I called the customer service line and they were very helpful: they told me what my rate was, which was prime plus 2 or 3%. I asked if I could get a lower rate with a cosigner and they said I could try, so I did and got a much lower rate.”

“They want you to sign the promissory note before you know what the interest rate is. The interest rate is not part of the promissory note. I had to call their customer service department to find out that my rate would be prime + 1/2%. Why do they expect us to sign a promissory note before we know what the interest rate is?”

Page 19: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 19© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Degree of Concern Regarding Private Student Loans

14%

44%

17%

52%

6%

38%

4%

31%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Very Concerned Somewhat Concerned

Per

cen

tage

of

Tot

al R

esp

ond

ents

Overall

4-year private

4-year public

2-year public

Survey question: How concerned are you about the availability of PRIVATE loans for your students for the 2009-10 academic year?Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Page 20: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 20© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Prevalence of Lender Lists for Private Loans

56%

34%

10%

69%

21%

10%

42%

54%

4%

12%

65%

23%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Yes No Not Sure

Per

cen

tage

of

Tot

al R

esp

ond

ents

Overall

4-year private

4-year public

2-year public

Survey question: Is your institution planning to provide students with a lender list for private loans for the 2009-10 school year?Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Page 21: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 21© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

SLA’s Private Student Loan RatingsLaunched in May 2009

Independent, objective ratings of leading lenders of private student loans

Site updated on a regular basis to capture changes in lender interest rates and fees

Rate lenders based on variety of measures, including:– Expected cost– Fee structure– Repayment options

Featured in NY Times in May– Students’ First Lesson: Beware the Fine Print

Dozens of schools currently provide a link to this site as a resource for their students

– Available free to schools– Link to www.studentlendinganalytics.com/ratings.html

Thousands of visitors have flocked to the site since its launch

Named “One of Six Best College Sites” by CBS MoneyWatch

Page 22: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 22© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Lender Selection Process for 2009-10

35%

32%

12%

8%

14%

0.0%

10.0%

20.0%

30.0%

40.0%

Formal RFI Keep List from08-09

All Lenders Last3-5 Yrs

Informal Process OtherPer

cen

tage

of

Res

pon

den

ts W

ith

Len

der

Lis

t fo

r 20

09-1

0

Survey question: Please describe your institution's process for developing a lender list for private student loans.Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Page 23: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 23© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Lenders On Private Loan Lists

0%

17%

48%

24%

12%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1 2 to 3 4 to 5 5 to 7 Over 8

Per

cen

tage

of

Res

pon

den

ts W

ith

Len

der

Lis

t fo

r 20

09-1

0

Survey question: How many lenders does your institution plan to have on your lender list for private loans for the 2009-10 academic year? Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Page 24: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 24© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Selection Criteria for Private Lenders

23%

18%15%

13%

10%8%

5% 5%4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Loan C

ost

Loan A

pprova

l Rat

es/T

erm

s

Custo

mer

Serv

ice

Technolo

gy

Lender

Bac

kgrou

nd

Borro

wer B

enef

its

Transp

aren

cy

Default

Initi

ativ

es/ L

itera

cy

Direct

-to-C

onsu

mer

Mar

keting

Ave

rage

Wei

ghti

ng

Source: Survey of SLA Clients, June 2009

Page 25: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 25© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Strategies For Challenging Times

73% 77%

60%

16%

78% 73%

54%

25%19%

3%

16%

50%

15%

51%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Paren

t PLUS

Co-sig

ner

Tuitio

n Rep

aym

ent P

lans

Couns

eling

State

pro

gram

s

Insti

tutio

nal

Multi

ple Len

ders

Credi

t Unio

ns

Per

cen

tage

of

Tot

al R

esp

ond

ents

Aug-08

Jun-09

Survey question: What are your current strategies to help students find private, nonfederal loans for the 2009-10 school year?Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Page 26: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 26© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Other

Strategies/Observations“Reach out to lenders who may be coming out with new loan programs that have favorable terms.”

“We're only recommending private loans to foreign students who will need to provide a co-signer. Although we're not recommending PELs [Private Education Loans] to other types of students, we are leaving it up to them providing counseling on good and bad points of PELs vs federal loans.”

“We package students with a PLUS or Grad/PLUS loan, those seeking alternative loans [must] request [one] or are due to PLUS denial.”

“The issue is not availability. The banks keep raising their interest rates and fees. We are a grad business school only and even our students who have excellent scores are getting high rates. If students get co-signers, they get much better rates.”

Page 27: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 27© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

SLA Outlook for 2009-10Top two lenders, Sallie Mae and Citibank, saw reductions in their private loan originations in the most recent June quarter of 57% and 30%, respectively

Interest rate margins continue to rise with only a few exceptions– Wells Fargo reduced the floor on their index by 1.5%

Expect to see more activity from credit unions seeking to fill the gap– Credit Union Student Choice now has over 70 credit union participants– State of Connecticut partners with credit unions

State private loan programs remain important and have demonstrated an ability to access the capital markets

– NJCLASS: $450 million– Minnesota: $100 million– Maine: $54 million– Connecticut: $30 million

See SLA Blog post: The Incredible Shrinking Private Student Loan Market for Additional Details

Page 28: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 28© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Agenda

Federal Student Loans

Private Student Loans

Financial Literacy programs

Financial Aid Counseling

Perkins Loan Program

Page 29: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 29© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Financial Literacy Research

Negative trends at the high school level– The financial literacy of high school students has fallen to its lowest level

ever, with a score of just 48.3 percent.

College students score 30% higher than high school students– Scores increase by each grade level in college

In terms of their topical strengths and weaknesses:– Strengths: Income and Spending– Weaknesses: Money Management and Saving

College student test results question efficacy of high school courses in personal finance or money management– May not be appropriate until students care (situation specific)

Simulations/Interactive exercises seem particularly effective Source: The Financial Literacy of Young American Adults, by Lewis Mandell, Ph.D.

Page 30: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 30© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

$3.0 Billion College Access and Completion Innovation Fund

Proposed in 2010 budget with $3.0 billion commitment over 5 years

Current House bill has 50% of fund allocated to State Innovation Completion Grants with activities including:– Financial literacy, education and counseling – Programs to help students reduce amount of loan debt

Recent credit card bill also may spur literacy programs– Education/Treasury/Office of Financial Literacy to study current activities– Looking into funding these programs through credit card transaction fees

Expect an explosion of online financial literacy programs– College Foundation, Inc. – NSLP– USA Funds

Check out Sorted.org.nz to see what New Zealand has accomplished with a centralized “cradle to grave” site

Page 31: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 31© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Increased Interest in Financial Literacy Programs

63%

37%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Yes No

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: Have you seen an increased interest in financial literacy by the students at your institution?

Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

Page 32: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 32© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Prevalence of Financial Literacy Programs

39%

59%

33%

26%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Overall 4-year public 4-year private 2-year public

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: Does your institution currently offer a financial literacy program beyond standard entrance and exit loan counseling to your students?Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

Page 33: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 33© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Financial Literacy Topics

88%

74% 73%

57%53% 51%

41% 38% 35%31%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Budget

ing

Loan R

epay

men

t

Credit

Cards

Protec

ting P

rivac

y

Credit

Repor

t

Schola

rship

/Gra

nts

Balancin

g Chec

kbook

Findin

g Loa

ns

Earnin

gs P

oten

tial

Inve

sting

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: What are the topic(s) covered by your financial literacy training?

Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

Page 34: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 34© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Content Delivery for Financial Literacy Programs

82%

46%43%

30%

18%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

In-person groupworkshops

Handouts Reference page onwebsite

Online tutorials Other

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: How does your institution administer the financial literacy program?

Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

Page 35: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 35© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Content Delivery for Financial Literacy Programs

77%

26%

9%5%

23%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Financial AidOffice

Guarantor Lender Students Other Dept.

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: Who is responsible for conducting the financial literacy workshops? Please select ALL that apply.Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

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In The Trenches: What Financial Aid Administrators Think

Assessment of Existing Financial Literacy Programs

17%

38%

30%

15%

0.0%

10.0%

20.0%

30.0%

40.0%

Poor Good Very Good Excellent

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: How would you rate the current financial literacy program at your institution?

Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

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Slide 37© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Recommended Financial

Literacy Sources

Student groups – Students in Free Enterprise (SIFE) association

Schools– Brigham Young University– James Madison University– Midwestern University– Montgomery College– Texas Tech’s Red to Black Program – University of Georgia – University of Wisconsin-Madison– Virginia Tech

Media– Magazines: Money, Kiplinger– Online: Motley Fool, CNN Money

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Slide 38© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Recommended Financial

Literacy Sources (cont.)

Guarantors– TGSLC – Positive Balance– NSLP – Financial Literacy Online– NY HESC– USA Funds Life Skills– EdFund– MGSLP

Non-Profits/Associations– NASFAA– National Endowment for Financial Education (NEFE) – Cashcourse.org

WASFAA Spring Training 2008 – Developing and Delivering Financial Literacy Program

Page 39: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 39© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Agenda

Federal Student Loans

Private Student Loans

Financial Literacy programs

Financial Aid Counseling

Perkins Loan Program

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Slide 40© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Increase in Numbers Counseled

1% 2% 2%

11%

38%

29%

19%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Over 20%decline

Between 10and 20%decline

Between 1and 9%decline

No change Between 1and 10%increase

Between 11and 20%increase

Over 20%increase

Per

cen

tage

of

Res

pon

den

ts

Survey question: Estimate the annual change in the number of students/families counseled by financial aid staff at your institution. Source: SLA Flash Survey: Financial Aid Counseling, June 2009 (178 respondents)

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Slide 41© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Prevalence of Topics Discussed in Counseling Families

51%32%

23% 30%21% 17% 25% 18% 15% 17% 21%

43%

53%58% 49%

48%44%

36%42% 43% 39% 30%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Schola

rship

s/Gra

nts

Wor

k Stu

dy/Job

opps.

Profes

sional

Judgm

ent

Feder

al an

d Priv

ate L

oans

Impa

ct of

Sch

olar

ship

s on A

id

Appea

l EFC

FAFSA

No Par

enta

l Suppor

t

Change

in A

wards i

n Futu

re

Privat

e Loa

n

Aid's

Impac

t on A

dmiss

ions

Per

cen

tage

of

Tot

al R

esp

ond

ents

Frequently

Very Frequently

Survey question: Indicate the frequency with which each of these issues is discussed in counseling sessions with students and families.Source: SLA Flash Survey: Financial Aid Counseling, June 2009 (178 respondents)

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Slide 42© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Counseling Resources Identified To Assist Financial Aid Staff

Most commonly cited resources– Experienced staff leading in-office training

• Some indicated that junior staff sat in on counseling sessions with more seasoned staff

• Mock counseling sessions• Cross-training to understand other services provided on-campus

– Internal workshops run by College staff to generate ideas on improving customer service

– Local/regional/national conferences by financial aid administrator organizations(NASFAA and local chapters)

– Federal resources: IFAP, Guide to Federal Student Aid, FSA Coach, FSAConferences, FSA University (online)

– State agencies, guarantor and lender workshops and seminars• Guarantors mentioned specifically: USA Funds, EdFund, PHEAA, TG, NSLP

Other resources mentioned– Academic Impressions' video/webinar featuring a financial aid director and a

psychologist on how best to cope with anxiety and anger – www.youcandealwithit.com (AES website for debt management)– College Board Financial Aid Institute

Page 43: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 43© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Success Stories – Representative Quotes“Nothing beats helping students and families achieve the dream and goal of college.”

“Having more students and families complete the FAFSA.”

“Luckily, because I'm at an affordable 2-yr public, our greatest achievement is convincing students and families that an education is obtainable. There is sufficient federal assistance available to cover tuition and fees for any student, regardless of the family's income.”

“We make all students apply for federal aid before we will process any private loan. Sometimes there is resistance, but they usually comply and many times they receive federal aid.”

“I always think it is a success when the parent or student actually owns the information/process when I am finished counseling them (they show that they really understand).”

“Family's realization of ability to afford the University after financial aid is awarded.”

A simple "Thank You" or "I appreciate it"!!!

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Slide 44© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Agenda

Federal Student Loans

Private Student Loans

Financial Literacy programs

Financial Aid Counseling

Perkins Loan Program

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Slide 45© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Perkins Loan Proposal in SAFRANew name: Federal Direct Perkins Loan program

Funding: To increase from $1 billion to $6 billion

Interest rate subsidy to be discontinued– Terms and conditions similar to unsubsidized Stafford loans

Allocation Method:– ½ based on self-help need of institution– ¼ based on low tuition incentive– ¼ based on ratio of Pell Grant recipients completing degrees

Schools to pay unspecified matching funds for the purpose of providing loan benefits to borrowers

Options with existing Perkins loans:– Continue to collect outstanding loans and return the ¾ federal share to ED, minus an

administrative fee of 0.5 percent of outstanding principal and interest – Assign the loans to ED and receive payments of the ¼ institutional share from ED.

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Slide 46© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Importance of Perkins Loans To Overall Aid

11%

4%2%5%6%

27%

45%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.0%

- 1.9

%

2.0%

- 3.9

%

4.0%

- 5.9

%

6.0%

- 7.9

%

8.0%

- 9.9

%

Ove

r 10%

Do Not

Know

Per

cen

tage

of

Tot

al R

esp

ond

ents

Survey question: What percentage of federal student aid was represented by Perkins Loans for the last academic year at your institution?Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

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Slide 47© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Annual Change in Perkins Loans 27%

15%

12%

26%

12%

2% 1%

5%

0.0%

10.0%

20.0%

30.0%

Over 20%decline

Between10 and20%

decline

Between 1and 9%decline

No change Between 1and 10%increase

Between11 and20%

increase

Over 20%increase

Do NotKnow

Per

cen

tage

of

Res

pon

den

ts

Survey question: What was the annual change in loan volume for your Perkins Loan program over the past academic year? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

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Slide 48© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Perkins Loan Outsourcing

83%

14%

3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Yes No Not Sure

Per

cen

tage

of

Res

pon

den

ts

Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

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Slide 49© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Outsourced Activities

83%79%

42%37%

34%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Collections Loan Servicing Compliance Exit Counseling Prom. Note

Per

cen

tage

of

Res

pon

den

ts

Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

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Slide 50© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Market Share For Perkins Loan Providers

31%

23% 23% 23%

0.0%

10.0%

20.0%

30.0%

40.0%

ECSI UAS Campus Partners ACS

Per

cen

tage

of

Res

pon

den

ts

Survey question: Identify the name of the vendor(s) utilized to manage your Perkins Loan program. Source: SLA Flash Survey: Perkins Loan Program, July 2009 (205 respondents named at least one provider)

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Slide 51© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think Willingness Of Institution To Reduce Cost of

Perkins Loans

25%

51%

20%

3% 2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Definitely Not Probably Not Maybe Probably Definitely

Per

cen

tage

of

Res

pon

den

ts

Survey question: Would your institution consider providing funding to reduce the costs of Perkins loans to students? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

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Slide 52© Student Lending Analytics, LLC

In The Trenches: What Financial Aid Administrators Think

Questions

????

Page 53: Slide 1© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think This presentation does not constitute formal policy or

Slide 53© Student Lending Analytics, LLC

Student Lending AnalyticsBackground

Founded in 2007

Independent Research and Advisory Service with NO lender affiliations

Mission: Find best lenders for students through an analytically rigorous and comprehensive process

Services– SLA Private Student Loan Ratings– RFI Management of FFEL and Private Loans– Consulting practice – Research

Successes to Date– Managed RFI process at institutions with over $1 billion in loan volume– Inside Student Lending, our monthly newsletter, reaches over 5,000 financial aid

administrators– Student Lending Analytics Blog has become the go-to source for breaking

developments and analysis on the student lending industry– SLA Flash Surveys have included the insights from over 1,500 financial aid

professionals on a variety of timely topics– Private Loan Options and the SLA’s 2009 Private Loan Guide provides

students and financial aid offices with an objective and focused list of private lenders

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Slide 54© Student Lending Analytics, LLC

The Student Lending Analytics ProcessRFI Management

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Slide 55© Student Lending Analytics, LLC

Student Lending AnalyticsResearch Services

Inform financial aid offices on industry developments – Student Lending Analytics Blog

• Timely insights on new developments in student lending industry– Monthly newsletter– Webinars

• June – Uncovering the Mysteries of Private Student Loans• April – Lessons Learned in Trenches of Lender Selection Process• September – HEOA and Lender Lists• December – Conversation about FFEL and Direct Lending Programs

– Surveys (summaries available on our website)• FFEL vs. Direct Lending• RFI Practices• Implementing increased Federal Stafford loan limits• Private loan availability• Private Loans for International Students

– Legislative and regulatory updates and implications for financial aid offices– Help Line to answer questions/resolve issues throughout the year

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Slide 56© Student Lending Analytics, LLC

Student Lending AnalyticsContact Information

For more information about SLA contact us at: Tim Ranzetta

Student Lending Analytics LLC

650-218-8408

[email protected]

www.studentlendinganalytics.com