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

© 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

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Federal Student Loan Plans for 2009-10 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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 2010-11. Source: SLA Flash Survey: FFELP and Direct Lending, July 2009 (453 respondents)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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)

© 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.

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think 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.

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think The Geography of FFELP program Thirteen 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

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think The Legislative Process From Here H.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 Committees 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

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Whos 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 didnt take out any federal Stafford loans that year

© 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

© 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

© 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?

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Degree of Concern Regarding Private Student Loans 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Prevalence of Lender Lists for Private Loans 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think SLAs Private Student Loan Ratings Launched 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 PrintStudents 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.htmlwww.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

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Lender Selection Process for 2009-10 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Lenders On Private Loan Lists 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Strategies For Challenging Times 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)

© 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.

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think SLA Outlook for 2009-10 Top 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 DetailsSLA Blog

© 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.

© 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 siteSorted.org.nz

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Increased Interest in Financial Literacy Programs 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Prevalence of Financial Literacy Programs 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Financial Literacy Topics Survey question: What are the topic(s) covered by your financial literacy training? Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Content Delivery for Financial Literacy Programs Survey question: How does your institution administer the financial literacy program? Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Content Delivery for Financial Literacy Programs 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Assessment of Existing Financial Literacy Programs Survey question: How would you rate the current financial literacy program at your institution? Source: SLA Flash Survey: Financial Literacy, September 2008 (200 respondents)

© 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 Techs Red to Black Program –University of Georgia –University of Wisconsin-Madison –Virginia Tech Media –Magazines: Money, Kiplinger –Online: Motley Fool, CNN Money

© 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

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Increase in Numbers Counseled 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Prevalence of Topics Discussed in Counseling Families 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)

© 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, FSA Conferences, 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)www.youcandealwithit.com –College Board Financial Aid Institute

© 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"!!!

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Perkins Loan Proposal in SAFRA New 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.

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Importance of Perkins Loans To Overall Aid 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Annual Change in Perkins Loans 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Perkins Loan Outsourcing 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Outsourced Activities 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Market Share For Perkins Loan Providers 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)

© Student Lending Analytics, LLC In The Trenches: What Financial Aid Administrators Think Willingness Of Institution To Reduce Cost of Perkins Loans 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)

© 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 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 SLAs 2009 Private Loan Guide provides students and financial aid offices with an objective and focused list of private lenders

© Student Lending Analytics, LLC Student Lending Analytics Research 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

© Student Lending Analytics, LLC Student Lending Analytics Contact Information For more information about SLA contact us at: Tim Ranzetta Student Lending Analytics LLC 650-218-8408 tranzetta@studentlendinganalytics.com www.studentlendinganalytics.com

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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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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