First to provide some context, here are the six top sources of student aid in 2009-10 representing over 90% of student aid (includes graduate and undergraduate aid sources which in total amounted to $199.2 billion for 2009-10):
Federal loans ($96.8 billion) or 49% of total aid
Institutional grants ($33.4 billion) or 17% of total aid
Pell grants ($28.2 billion) or 14% of total aid
Federal grants other than Pell ($13.1 billion) or 7% of total aid
Private and employer grants ($10.6 billion) or 5% of total aid
Federal Student Aid has posted an update to their website today (thanks to Mark Kantrowitz for the heads-up). The total disbursements for Stafford, Parent PLUS and GradPLUS loans for the 2009-10 academic year came to almost $96 billion [this figure excludes Perkins Loans which are typically about $1 billion]. When comparing them to the 2008-09 data now up on the FSA Data Center site, this amounts to a 12.5% increase (or almost $11 billion). Please note that these numbers are updated frequently, which might explain why $75 billion was the number announced for 2008-09 last year by the Dept. of Education and is close to the $77 billion listed in the FSA Strategic Plan vs. the $85.1 billion that SLA calculated for 2008-09 on the FSA site this evening.
Thanks to Mark Kantrowitz for making me aware of his analysis, which is available here on FinAid.org. It shows that the growth in FAFSA (Free Application for Student Aid) filings has decelerated this year to 1.3%, having grown 17.5% in the first quarter and 12.3% in the second quarter. Since this is a seasonally slow quarter,(the first quarter is typically the strongest with volumes dropping each quarter thereafter), the year-to-date FAFSA filings are still up 11.8%. FAFSA filings by independent students only grew by 0.3%, while filings for independent students grew by 1.7%.
Wondering about growth on a state-by-state basis? Here are the FAFSA filed through the first three quarters of 2010 with states in the western US (Nevada, Arizona, Utah and Idaho) having the top four spots:
Or at least that is what one investor, New Enterprise Associates, seems to think. They recently invested $11 million in EverFi in a Series A round of financing. Here is what TechCrunch had to say in early September:
Military families are heavily in debt to credit card issuers, with over one in four respondents reporting more than $10,000 in credit card debt.
One in four servicemembers with checking accounts reported overdrawing their accounts, which typically incurs significant fees.
More than one in five (21 percent) servicemembers used high-cost, non-bank borrowing such as payday or auto title loans in the last five years.
Over half of enlisted personnel and junior non-commissioned officers reported that in some months, they made only the minimum payment on their credit cards.
Only 50 percent of military respondents have a "rainy day" fund for unanticipated financial emergencies.
Company completed their strategic review which included evaluating whether or not to sell the FFELP portfolio (while retaining the servicing rights)...and the company chose to (drumroll, please)....keep the FFELP portfolio: "So maybe there's another way of just saying that you are not going to see any dramatic balance sheet actions from the company at least anytime soon." It seems that as long as they serviced the assets, they would need to keep them on their balance sheet.
Wondering how profitable it is to service FFELP loans? Answer: Very profitable, as in 90% cash flow margins. "Our securitized FFELP portfolio generated $444 million in excess cash to the company in the third quarter and to put that into some perspective, our FFELP servicing costs in the quarter were $52 million."
The Project on Student Debt released their Student Debt and Class of 2009 Report today. Here are some of their key findings (go to report for footnotes):
2009 graduates saw 6% increase in overall student debt...: "We estimate that college seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up six percent from the previous year.1 The six percent increase in average debt at the national level is similar to the average annual increase over the past four years, despite the recent economic downturn. It is likely that the Class of 2009 took out the bulk of their student loans before the recession began. Additionally, many colleges made concerted efforts to increase or maintain need-based grant aid when the economy faltered, so that students could afford to stay in school.2
In findings that mirrored the results of an SLA flash survey last December, only 1 in 7 survey respondents created a private loan lender list for 2010-11 through a formal selection process. The most popular strategy: listing all lenders that students have used in the last 3-5 years, which certainly will not make life easy for new entrants into the marketplace. Almost 1 in 3 of the survey respondents are not providing a list to students. Here are various lender list strategies with the frequency they were selected by survey respondents:
Lender List Strategy
School is listing all private student loan lenders used by students in the last 3-5 years (that are still making loans)
34.1%
School is NOT providing a list of private loan lenders
30.6%
School created private loan lender list through a formal selection process
15.4%
School IS providing a list of private loan lenders by linking to a third party website
Here is some of the feedback provided by the financial aid community on the new regulations requiring students to complete a self-certification form prior to receiving a private student loan. The original intent of the form was to inform students about federal loan options before they took out a private loan and to limit overborrowing by having the student complete information on their total cost of attendance and estimated financial assistance. The form carries this warning should the student seek to borrow more than the difference between their COA and est. financial assistance: "WARNING: If you borrow more than the amount on line C, you risk reducing your eligibility for free or lower-cost federal, state, or school financial aid."
The suggestions from the financial aid community about self-certification fit into a few buckets:
