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People Capital Weekly Briefing
April 26, 2010 |
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| News and insight from the world of higher education, student loans and peer-to-peer lending. To learn more about People Capital and how it is revolutionizing education finance please visit us on the web at www.people2capital.com and learn more about how credit risk assessments, based on a student's Human Capital Score™ underpin a cutting-edge peer-to-peer lending platform. |
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News about People Capital
Message from Founder & CEO, Tom Shelton
Over the
last 2 years, People Capital has made great strides in developing innovative
and critical solutions for the student loan marketplace. This week, I am
excited to update you on the developments of our relationship with Access to Money, Inc. (OTC Bulletin Board:
AEMI) ("ATM"). They are a cash management company (with over
13,000 ATM's) and service provider to hundreds of credit unions and
banks. They have a particular focus on the college market and developed
extensive relationships to provide private student loans to college students.
Last month, we
signed a "private label" service agreement where People Capital will
provide our technology platform to ATM to originate and service the private
student loans transacted through their services. Through this relationship, we
will provide our loan origination technology to ATM, who will use it to offer
new private loan options to credit unions and community banks with a focus on
college students. Together, this partnership brings together both the students
AND the committed funding partners. People Capital will focus on the
technology and operations while ATM will leverage their business development
and relationship skills. The platform will go live very shortly.
ATM will
also leverage our proprietary Human
Capital Score™, an alternative
credit risk metric for students and young adults developed and launched in 2009
by People Capital. Built on rigorous academic research by leading labor
economists, the Human Capital Score helps lenders assess student loan risk by
using academic merit data such as GPA, standardized test scores, college and
major, along with traditional demographics data and metrics, to provide insight
into their future earnings potential and ability to repay a loan.
I am
excited that we have been able to develop a technology solution that can be
fitted for a variety of private label needs. This agreement will enable ATM to
offer a full suite of loan origination options to financial institutions, while
allowing us to explore new private label options in other market sectors.
We have a
lot of work ahead of us in developing and growing this channel but I am
confident that our relationship with ATM will allow us both to address the
funding needs of a whole generation of students.
Read the press release
Learn more about our private label solutions
Tom
Shelton
CEO & Founder
People Capital
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Industry News and Trends
Listed below is a weekly compilation of Industry updates. The major highlights include:
Citi's
Student Loan Corporation 1Q Earnings Disappoint- Higher
Ed Organizations Urge Support for House Bill to Allow Private Loans to Be
Discharged in Bankruptcy
- Sallie
Mae to Cut 2,500 Jobs
- Pell Grants
Surge 60% in Third Quarter
- Georgia
Senate OK's Bill Limiting Loans at Colleges
- Canadian P2P CommunityLend Taps Broker Market
Citi's
Student Loan Corporation 1Q Earnings Disappoint; Loan Losses Rise and Private
Loan Originations Drop 49% (Student Lending Analytics)
Student
Loan Corporation reported their 1Q earnings. The
market reacted negatively with STU touching their 52 week lows of $31.11 before
closing at $31.59. In short, the high costs of the company's new Credit
Agreement overshadowed positive increases in the company's interest income.
Meantime the long term driver of company value, private loan originations, fell
49% and the company's allowance for loan losses increased $24 million as
expectations for materially higher losses starting in the 4Q 2010 loom out
there.
Higher
Ed Organizations Urge Support for House Bill to Allow Private Loans to Be
Discharged in Bankruptcy (NASFAA)
NASFAA joined a broad coalition of
24 groups representing students, consumers, institutions of higher education,
and civil rights and public policy organizations to urge lawmakers to support
the Private Student Loan Bankruptcy Fairness Act of 2010 (H.R. 5043). The bill
would reverse the special bankruptcy protections for private student lenders
included in the 2005 bankruptcy law and allow most private loans to be
discharged in bankruptcy. Before changes were made to the bankruptcy code in
2005, only federal student loans and private loans where substantially all of
the funds were provided by a nonprofit institution were non-dischargeable in
bankruptcy.
Sallie
Mae Profit Trumps Market; to Cut 2,500 Jobs (Reuters)"Sallie Mae
posted a quarterly profit trumping analysts' expectations, but the largest U.S.
student loan provider said it will cut 2,500 jobs as the company was forced to
restructure its operations," Reuters reports. "Congress recently approved a bill
to end the 45-year-old Federal Family Education Loan Program (FFELP), which has
supported private student lending with federal subsidies. As a result, the
company lost a key business, and had to realign its business model completely,
making massive job cuts inevitable." Pell Grants
Surge 60% in Third Quarter; $11.4 Billion Quarter Highest on Record (Student
Lending Analytics)
SLA updated the Pell Grant table based on new data on the Federal Student Aid site.Overall,
Pell grants rose 60.4% to $11.4 billion driven by a 36% increase in recipients
and a 17% increase in the size of the average grant. SLA is now
estimating Pell Grants for the 2009-10 academic year at $29 billion, an $11
billion increase over 2008-09 levels. Based on 2006-07 Pell Grant levels of
$12.8 billion, these 2009-10 estimates represent a 127% increase over the past
three years.
Georgia:
Senate OK's Bill Limiting Loans at Colleges (Associated
Press)Under a bill that passed the Georgia Senate 31-17, proprietary colleges must be operating in the state 14 years before
students can get loans from the Georgia Higher Education Assistance Corp. State
law now requires institutions to have been open 10 years. The bill, which passed the House in February, now goes to the
governor's desk. House Higher Education Committee Chairman Seth Harp says the
bill will help prevent cuts to the state's student loan system, which hasn't
been immune to the state's budget crisis.
(Read more)
CommunityLend Taps Broker Market (P2P-Banking)
CommunityLend, Canada's only online Peer-to-Peer lending service, is exploring a number of different
marketing options to spread the word about its services and to recruit
good quality borrowers looking for more competitive rates for small
unsecured loans. "We are excited by the opportunity to work with one
of Canada's leading software providers to the Mortgage industry," noted
Michael Garrity, CEO of CommunityLend. "We understand the important
role of Mortgage Brokers in helping their clients to find the best
rates on loans to meet their needs. ..." MorWEB brokers will now be able to seamlessly refer clients directly to CommunityLend to arrange unsecured loans from private investors. This will provide another value added service to customers of mortgage brokers using MorWEB. Phase one of this novel integration is now available on the MorWEB platform with a more comprehensive integration scheduled for later this year.
(Read more)
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The People Capital Team
Info@people2capital.com
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