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Student Lending Analytics
Flash Survey: FFELP and Direct Lending
July 27, 2009
© Student Lending Analytics, LLC
Slide 1
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
© Student Lending Analytics, LLC
Slide 2
Flash Survey: FFELP and Direct Lending
Methodology
Emailed 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
2009-10 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
2010-11:
– 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.
© Student Lending Analytics, LLC
Slide 3
Flash Survey: FFELP and Direct Lending
Methodology (Cont.)
Responses were normalized for following reasons:
– Email 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
© Student Lending Analytics, LLC
Slide 4
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 institution’s plans for the federal loan program for 2009-10:
–
–
–
–
–
–
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 2009-10
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
© Student Lending Analytics, LLC
Slide 5
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 institution’s 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
© Student Lending Analytics, LLC
Slide 6
Flash Survey: FFELP and Direct Lending
Profile of Survey Participants
School Type
School Ownership
50%
40%
30%
20%
10%
0%
60%
50%
40%
30%
20%
10%
0%
4-Year Private 4-Year Public 2-Year Public
Other
Private
Other
School Region
Cost of Attendance
40.0%
30%
20%
10%
0%
30.0%
20.0%
0
0.0%
Midwest
South
Northeast
West
O
ve
r
$4
0,0
0
00
01
-$
40
,0
00
$3
0 ,0
01
-$
30
,0
00
© Student Lending Analytics, LLC
$2
0 ,0
$1
5 ,0
01
-$
15
,0
01
$1
0 ,0
-$
20
,0
00
0
10.0%
$1
0,0
0
Un
de
r
Public
Slide 7
SLA Flash Survey: FFELP and Direct Lending
Overall- Financial Aid Systems
Percentage of Total Respondents
30.0%
28%
20%
20%
20.0%
14%
12%
10.0%
7%
18
O
th
er
s
ro
wn
eG
om
H
Pe
op
le
So
ft
at
aT
el
D
ID
S
er
FA
Po
w
Ba
nn
er
0.0%
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
Slide 8
Percentage of Total Respondents
SLA Flash Survey: FFELP and Direct Lending
By Loan Program Type: Financial Aid Systems
40.0%
33%
30.0%
28%
22%
22%
20.0%
15%
14%
15%
11%
13%
14%
11%
FFELP
Direct Lending
10.0%
4%
th
er
O
n/
Le
ga
cy
H
om
egr
ow
Pe
op
le
So
ft
ID
S
Po
w
er
FA
at
aT
el
D
Ba
nn
er
0.0%
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
Slide 9
SLA Flash Survey: FFELP and Direct Lending
Federal Student Loan Plans for 2009-10
60.0%
56%
Percentage of Respondents
50.0%
40.0%
30.0%
19%
20.0%
8%
10.0%
7%
4%
6%
0.0%
Staying in
FFELP
Staying in
Direct
Lending
Switching to
FFELP But Offer DL and
DL in 2009-10 Undecided for
FFELP
2009-10
Other
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
Slide 10
SLA Flash Survey: FFELP and Direct Lending
Steps To Prepare For Direct Lending
50.0%
46%
42%
37%
Percentage of Respondents
40.0%
35%
33%
30.0%
23%
20.0%
12%
11%
Create a
Team
Software
Vendor
10.0%
0.0%
Peer Schools
Dept.
Website
Conferences
Webinars
Set Up
Electronic
Acct. With
DL
None of the
Above
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
Slide 11
SLA Flash Survey: FFELP and Direct Lending
College Administration Involvement
40.0%
34%
Percentage of Respondents
30.0%
29%
21%
20.0%
10%
10.0%
6%
0.0%
Strongly agree
Agree
Moderately
disagree
Strongly disagree
Not sure
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
Slide 12
SLA Flash Survey: FFELP and Direct Lending
Direct Lending Satisfaction Scores
5.0
Degree of Satisfaction (Very Satisfied = 5.0)
4.5
4.4
4.3
4.3
4.3
3.8
4.0
3.0
2.0
1.0
0.0
Loan Processing
Reconciliation
Service to FA
Office
Implementation
Service to
Customers
Value-added
services
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
Slide 13
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.”
© Student Lending Analytics, LLC
Slide 14
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.”
© Student Lending Analytics, LLC
Slide 15
Thank You
Thank you again for your participation!
Please contact Tim Ranzetta if you have any additional comments
or questions regarding this survey
– Send email to [email protected]
– Phone: 650-218-8408
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
© Student Lending Analytics, LLC
Slide 16
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
–
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RFI Management of FFEL and Private Loans
Research
Successes to Date
–
–
–
–
–
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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 SLA’s 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
© Student Lending Analytics, LLC
Slide 17
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
© Student Lending Analytics, LLC
Slide 18
Unlocking the Mysteries of Private Student Loans
Private Student Loan Ratings
Available at http://www.studentlendinganalytics.com/ratings.html
Featured on front page of New 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
© Student Lending Analytics, LLC
Slide 19
Unlocking the Mysteries of Private Student Loans
2009 SLA Private Loan Series
Most popular post: 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 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
© Student Lending Analytics, LLC
Slide 20
The Student Lending Analytics Process
RFI Management
© Student Lending Analytics, LLC
Slide 21
Student Lending Analytics
Research Services
Inform financial aid offices on industry developments (implications for their
lender lists and relationships)
– Student 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)
• 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
© Student Lending Analytics, LLC
Slide 22

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