News about People Capital
As the academic year is almost upon us, we are finishing up the final testing of our lending platform. Watch this space for more details about our launch strategy in the coming weeks. In the meantime, this past week saw coverage of our Human Capital Score in Today's Campus (formerly The Greentree Gazette) ... Student loan risk is
typically calculated looking from the present into the past. Present
earnings. Present indebtedness. Past payment history. For many
college students, the credit present is fresh, and the past is not at
all meaningful. So People Capital is promoting usage of a Human Capital Score (read more) |
 Industry News and Trends
Listed below is a weekly compilation of Industry updates. The
major highlights include:
- Continued growth in the peer-to-peer lending space.
- Federal agencies increasing their spending on student loan
repayment programs for employees.
- Pennsylvania budget impasse may affect college grants.
-
Demand For Private Student Loan ABS remains weak.
- Moody's report says that students are more likely
to default on Direct-to-Consumer loans.
P2P
Lending Companies Show Strong Growth - Aug. 09
(wiseclerk)
P2P lending services continue to grow. In some markets the speed of growth
has even accelerated.
P2P-Banking.com ranks the listing services by loan volume funded in the past 6 months.
(Read more)
Federal Agencies Ramp Up
Student Loan Repayments (Government Executive)
Federal agencies increased their spending on student loan
repayment programs for employees by 22 percent from 2007 to 2008. During 2008, 35 federal agencies provided
6,879 employees with $51.6 million in student loan repayments. For fiscal 2007,
33 agencies participated in the program, distributing $42.2 million in loan
repayments to 6,619 employees ... The program has grown substantially since
fiscal 2002, when agencies were first able to offer student loan repayments as
an incentive for employees to stay in government ... Agencies can contribute as
much as $10,000 annually, and $60,000 total, per employee; in return,
recipients must to commit to three years of federal service.
(Read more)
Pennsylvania: Budget Impasse May Cut College Grants (Philadelphia
Inquirer)
For the first time since the 1970s, the state may fail to pay out
need-based grants for students to attend Pennsylvania colleges and universities
for the fall semester. The money crunch
developed when Gov. Rendell put the brakes on $386 million in grants
for 172,000 students across the commonwealth - about a quarter of them in the
Philadelphia area. It was part of $12.9 billion in spending that Rendell has
held up because the state has yet to adopt a budget.
(Read more)
Demand For Private Student Loan ABS Remains Weak (Student Lending
Analytics and WSJ)
Private student loans are long assets and are typically
floaters, which makes finding investors more difficult because the
floating-rate investor base segment of the market took the largest hit when
this market faced a virtual shutdown last year. While the data shows improvement in pricing, as one industry expert noted
"this is still well off from anything close to "normal" as
compared to deals done prior to the credit crunch at LIBOR + 30 to
40bp."
(Read more)
Students Are More Likely
to Default on Direct-to-Consumer Loans, Moody's Says (The Chronicle of Higher
Education)
Securities backed by student loans that are marketed directly to consumers
carry more investment risk than those backed by loans marketed through
student-aid offices, according to a new report by Moody's Investors Service. In the report, Moody's analyzed the
performance of a sample of private loans that have been securitized since 2004
and determined that students who borrowed directly from lenders were more
likely to default than those who borrowed through their institutions. The
report attributes the difference to the fact that 'school channel' loans,
unlike loans marketed directly to students, are certified by colleges.
Certification - which typically involves verifying a student's enrollment
status, grade level, and graduation date - can reduce overborrowing and ensure
that the loan is used for educational purposes.
(Read more)
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