© 2013 PASFAA Private Loans vs. PLUS/Grad PLUS Loans Keri Neidig, Sallie Mae Julie Rehder, ELM Resources Heather Sperratore, PNC Bank (East) Patricia Peterson, PNC Bank (West) Heather Vincent, Citizens Bank PASFAA Spring Training 2013

© 2013 PASFAA Dispel Myths To gain greater understanding of the industry To empower your office with new knowledge Help Students and Parents Develop an understanding of all financing options available so they may choose the product that best suits their individual circumstances By providing comprehensive loan counseling By providing access to financing options Why do I need to know this?

© 2013 PASFAA Myth vs. Fact – Heather Vincent, Citizens Bank

© 2013 PASFAA Facts about Today’s Market Originations Did you Know? 93% of all new student loans are originated by the federal government? ($114 billion –Page R-15 Dept. of Ed Budget) Private lenders only originate 7% of today’s loans equal to $7 to $8 billion The Private Student Loan Market

© 2013 PASFAA MYTH: Government loans are always less expensive for borrowers than private loans. FACT: When measuring the true cost of credit through an APR comparison, private loans often compare favorably to unsubsidized federal loans, particularly Graduate PLUS Loans. Myth vs. Fact

© 2013 PASFAA MYTH: Private student loans are all variable products with extremely high interest rates. FACT: Most lenders offer students the choice of fixed-rate or variable-rate products. Myth vs. Fact

© 2013 PASFAA MYTH: Private student loans can pose more risk for borrowers than federal student loans. FACT: Federal loans, in contrast to private student loans, are provided without the most basic consumer protection – a determination of the borrower’s ability to repay. Myth vs. Fact

© 2013 PASFAA MYTH: Private loans do not offer forgiveness for death/disability and do not offer forbearance options. FACT: Private lenders do offer loan forgiveness for death/disability. Some lenders offer forbearance options for their borrowers. Myth vs. Fact

© 2013 PASFAA MYTH: Students and families do not receive adequate information about private student loan terms before borrowing. FACT: Lenders provide three notices containing 18 disclosure items about private loan terms at three different times before a private loan is made. These disclosures are required by law. The Federal Reserve conducted extensive consumer testing before establishing these new disclosure requirements, which have been in effect since February Myth vs. Fact

© 2013 PASFAA Private Loans vs. PLUS/Grad PLUS – Keri Neidig, Sallie Mae

© 2013 PASFAA Private vs. PLUS/Grad PLUS FeaturesPrivate Student Loan (Most Major Lenders) PLUS/Grad PLUS Fixed Interest RateAs low as 5.75% (Check Rates)7.90% Variable Interest RateAs low as 2.25% (Check Rates)Not available FeesUsually 0%4% TermUp to 25 years10 years Borrower Benefits0.25% % IRR for ACH and or on- time payments; Graduation Rewards 0.25% IRR for ACH FAFSA RequirementNoYes SAP RequirementVaries by LenderYes Primary BorrowerStudent (w/co-signer) or Grad. StudentParent of student/Grad. Student

© 2013 PASFAA Private vs. PLUS/Grad PLUS FeaturesPrivate Student Loan (Most Major Lenders) PLUS/Grad PLUS Credit EligibilityLoan approval is based on credit. Students without sufficient credit are encouraged to apply with qualified cosigners. Student must not be in default on a federal student loan. No adverse credit (90 days or more delinquent on any debt). < than ½ time attendance Sometimes YesNo School Certification>95%Yes Past Due BalanceVaries by LenderNo Choice of repayment options Yes: Deferred, Interest only, full Principal & Interest Yes: Deferred or full Principal and interest

© 2013 PASFAA Private vs. PLUS/Grad PLUS FeaturesPrivate Student Loan (Most Major Lenders) PLUS/Grad PLUS Forbearance Options LimitedLiberal Loan ForgivenessThe loan will be forgiven in the unfortunate event of the student borrower’s death or permanent and total disability The loan will be forgiven in the unfortunate event of the student borrower’s death or permanent and total disability Debt Forgiveness for service in low income communities NoYes IBR, Graduated Repayment Varies by lenderYes

© 2013 PASFAA Let’s Hear from Some Schools – Heather Sperratore, PNC Bank (East) Patty Peterson, PNC Bank (West)

© 2013 PASFAA What Other Schools are Doing – Julie Moreno Rehder, ELM Resources

© 2013 PASFAA Providing objective comparisons Encouraging students to make the best choice for their particular situation Issuing RFP’s (although not required) Publishing Preferred Lender Lists Ceasing to auto-package PLUS/Grad PLUS Providing disclaimers on financing options What are other schools doing?

© 2013 PASFAA  University of Mississippi: itBasedLoan.html itBasedLoan.html  Texas Christian University: re.asp re.asp  University of Maine:  -Lender-List-UMO9.pdf -Lender-List-UMO9.pdf What Other Schools Are Doing

© 2013 PASFAA  Some vendors in the marketplace: ELM Select 2.0 – new version provides greater interactivity for borrowers.  These platforms provide students and schools: Comparison Tools Data Management Compliance Loan Comparison Tools

© 2013 PASFAA Educate them to become savvy consumers Provide them with the best available consumer information and financing options Network with colleagues at pair institutions Meet with lender partners to review their loan products Attend FSA conferences/review conference materials that pertain to private loans and PLUS loans How can I help my students?

© 2013 PASFAA Thank you to the following schools and organizations: CBA Education Funding Committee : PA Spring Training West: Linda Anderson – Carnegie Mellon University, Joanna Hastings – Slippery Rock University, Janet Kaercher – Carnegie Mellon Tepper School of Business PA Spring Training East: Tom Stewart – Thomas Jefferson University, Chris Mowl – Elizabethtown College, Bernard McCree – Kutztown University Schools outside of PA: University of Mississippi (Ole Miss), Texas Christian University, University of Maine  References