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Slide 1© Student Lending Analytics, LLC Student Lending Analytics Flash Survey: FFELP and Direct Lending July 27, 2009
Slide 2© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Background Situation: The Student Aid and Fiscal Responsibility Act recently passed the House Committee on Education and Labor and is expected to pass the House this week. The Act would eliminate the FFEL program and move all federal loans to the Direct Loan program. Survey Goals –Identify the steps (if any) that FFELP schools are taking to transition to Direct Lending –Determine the degree to which college administrators are getting involved in the decision-making process about Direct Lending –Identify the software programs used by financial aid offices to the extent that this could impact implementation
Slide 3© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Methodology ed flash survey on July 23, 2009 with due date of July 24, 2009 In addition to demographic questions, the survey asked respondents the following questions: –Please indicate the financial aid system currently used by your financial aid office. –Please select the choice which best describes your institution's plans for the academic year (Direct Lending or FFELP or some variation). –CHECK ALL THAT APPLY. 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 : –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.
Slide 4© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Methodology (Cont.) Responses were normalized for following reasons: – addresses that did not correspond with an educational institution were excluded –Several schools provided multiple responses; only one response was analyzed –Responses that included demographic data but incomplete answers to main survey questions were excluded Overall, there were 453 survey responses analyzed
Slide 5© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Summary The top four financial aid systems (Banner, DataTel, PowerFAIDS and PeopleSoft) have almost 80% market share among survey respondents –Only 7% reported having a home-grown system with 13% using a non-top four systems provider –Banner is #1 system among both DL and FFELP participants In terms of their institutions plans for the federal loan program for : –56% of respondents reported that the would remain in FFELP –19% reported that they would continue in Direct Lending –8% reported a shift from FFELP to Direct Lending –7% were FFELP participants undecided about –4% provide both FFELP and Direct Lending to students –6% indicated Other In terms of preparing for the potential need to convert to Direct Lending in 2010, the top five sources of information for FFELP schools are: –Peer schools –Dept. of Education website –Conference seminars –Webinars
Slide 6© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Summary While 1/3 of FFELP schools have set up electronic accounts with Direct Lending, almost 1 in 4 respondents (23%) indicated that they had not taken any of the steps listed to prepare for this potential conversion –Almost 2 in 3 respondents strongly agreed (29%) or agreed (34%) with the statement that their institutions administration was interested in seeing a contingency plan to transition to Direct Lending For Direct Lending participants, loan processing received their highest satisfaction scores with value-added services, such as financial literacy and default prevention scoring lowest –These results are consistent with earlier SLA Flash Surveys on this topic Direct Lending respondents also highlighted areas of improvement for the program, which are described in detail on slides #14 and #15
Slide 7© Student Lending Analytics, LLC Flash Survey: FFELP and Direct Lending Profile of Survey Participants
Slide 8© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending Overall- Financial Aid Systems Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and Poise Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 9© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending By Loan Program Type: Financial Aid Systems Survey question: Please indicate the financial aid system currently used by your financial aid office. Note: Others include CampusVue, CARS, Jenzibar and Poise among others Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 10© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending Federal Student Loan Plans for Survey question: Please select the choice which best describes your institution's plans for the academic year (Direct Lending or FFELP or some variation). Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 11© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending Steps To Prepare For Direct Lending 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 Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 12© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending College Administration Involvement 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)
Slide 13© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending Direct Lending Satisfaction Scores 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 activities Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)
Slide 14© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending 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.
Slide 15© Student Lending Analytics, LLC SLA Flash Survey: FFELP and Direct Lending Improving Direct Lending Website 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.
Slide 16© Student Lending Analytics, LLC Thank You Thank you again for your participation! Please contact Tim Ranzetta if you have any additional comments or questions regarding this survey –Send to –Phone: Look for more upcoming SLA Flash Surveys in the future –Please provide us with topics that matter to you! For more information on Student Lending Analytics, proceed to the final six slides
Slide 17© Student Lending Analytics, LLC Student Lending Analytics Background Founded in 2007 Independent Research and Advisory Service with NO lender affiliations Mission: Find best lenders for students through an analytically rigorous, unbiased and comprehensive process Services –RFI Management of FFEL and Private Loans –Research Successes to Date –Managed RFI process at institutions with over one billion dollars 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 –Dozens of Schools Linking To Private Loan Options and SLAs 2009 Private Loan Guide which provides students and financial aid offices with an objective and focused list of lenders –SLA Student Satisfaction Surveys measures student satisfaction with lenders
Slide 18© Student Lending Analytics, LLC Unlocking the Mysteries of Private Student Loans Student Lending Analytics: Resources Available SLA Private Student Loan Ratings 2009 SLA Private Loan Series –2009 SLA Private Loan Guide Paying For College Blog Student Satisfaction Surveys Coming Soon: Private Loan Quiz
Slide 19© Student Lending Analytics, LLC Unlocking the Mysteries of Private Student Loans Private Student Loan Ratings Available at Featured on front page of New York Times BusinessNew York Times Business Focused on evaluating eight lenders that appeared most frequently on over 700 school lender lists that SLA researched Includes the following factors in ratings: –Expected loan cost –Borrower benefit savings –Fee structure –Flexibility of repayment options –Customer service –Financial stability SLA receives no compensation from any lenders on this list New Service: Private Loan Insights to capture real-time information about interest rates and approvals
Slide 20© Student Lending Analytics, LLC Unlocking the Mysteries of Private Student Loans 2009 SLA Private Loan Series Most popular post: Shopping for Private Student Loans Makes a Difference!Shopping for Private Student Loans Makes a Difference! –Results from 6 student loan applications yields interest rates between 7% - 12% Before You Apply for a Private Student Loan –Provides checklist of items to complete prior to considering a private student loan What About Credit UnionsWhat About Credit Unions? –Explores the increasing role that credit unions are providing in the private student loan market "Miss A Payment On Your Private Student Loan, You Could See Your Interest Rate Rise" –Highlights two lenders that have clauses in promissory notes which could result in 2% increases in interest rates triggered by one late payment Borrower Benefits on Private Student Loans –Provides examples of savings opportunities available to private loan borrowers What Ingredients Go Into the "Secret Sauce"? –Insights into the factors that lenders consider in making their credit decisions Does It Make Sense To Shop Around For Private Student Loans? –Provides details on new Fair-Isaac policy about the impact of applying for multiple student loans on your credit score (hint: it helps student borrowers) The Promissory Note –Highlights the key terms to be aware of when evaluating lender promissory notes What is the Meaning of "Instant Credit Response"? –Reviews the on-line application process and analyzes the speed of lender credit reviews Private Loan Fee Structure –Benchmarks most common fees assessed by private lenders for both origination and servicing of loans
Slide 21© Student Lending Analytics, LLC The Student Lending Analytics Process RFI Management
Slide 22© Student Lending Analytics, LLC Student Lending Analytics Research Services Inform financial aid offices on industry developments (implications for their lender lists and relationships) –Student Lending Analytics BlogStudent Lending Analytics Blog Key resource for thousands of professionals in the student lending industry Timely insights to developments in student lending industry –Alerts Legislation, lender exits, earnings calls, industry insight –Monthly newsletters –Webinars December 2008 – A Conversation about FFELP and Direct Lending May 2009 – Unlocking the Mysteries of Private Student Loans –Surveys (summaries available on our website)website FFEL vs. Direct Lending RFI Practices Implementing Increased Federal Stafford loan limits Availability of Alternative Loans –Legislative and regulatory updates –White papers –Help Line to answer questions/resolve issues throughout the year
Slide 1© Student Lending Analytics, LLC Student Lending Analytics Direct Lending Transition Process May 19, 2010.
Slide 1© Student Lending Analytics, LLC Student Lending Analytics Flash Survey: Financial Aid Counseling June 22, 2009.
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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