Listed below is a weekly compilation of Industry updates. The
major highlights include:
- A Barron's article details the benefits of the peer-to-peer lending market.
- Prosper
has expanded its lending capabilities to now include the states of
Louisiana and Missouri. They are now lending in 23 states.
- An update on the streamlining of the Free Application for Federal Student
Aid (FAFSA).
- A record number of college students are appealing financial aid decisions.
- Sallie
Mae CEO reaffirms the need of the FFELP loan program to Wilkes
Barre, PA.
- Bank Lending standards are expected to remain tight through the second half of 201.
- US News & World Report publishes their 2010 rankings of America's Best College.
- Secretary
of Education believes that, as the cost of college tuition climbs, students/families will turn to institutions who creatively reduce
tuition costs.
A Booming Loan Market (Barron's)
When
73-year-old Bill Smith and his wife Ginger hit simultaneous jackpots on
a recent cruise-ship vacation, they knew exactly what to do with the
$3,300: put it on the street. Smith had wanted to try peer-to-peer
lending since reading "At Last, a Bank of Your Own" in Barron's in
January of 2008. "I told myself that if I ever get some unexpected
gift money or a tax refund, I'd give it a try," says the Florida
retiree. "Upon returning home from the cruise, I made my first Prosper
loan for $50." Prosper is a loan-auction site.
(Read More)
Prosper Adding States at a Good Clip (P2PLending News)
Prosper announced that they are welcoming lenders from Louisiana and
Missouri. This comes a little more than a week after the social
lender's announcement that they are available to investors from
Connecticut, Idaho, New Hampshire, and Oregon. The progress in opening
up states to new lenders has come at a reasonably good clip, adding 9
new states since Prosper's relaunch a month ago in mid-July, for a
total of 23 states.
Help for Forms and Repaying Loans (U.S. News & World Report)
Applying
for financial aid is about to get a little less annoying, and loan
repayment will get more affordable for some students, thanks to recent
initiatives from the U.S. Department of Education. "In June, the department announced that it would
streamline the electronic version of the 109-question, six-page Free
Application for Federal Student Aid. For many years, the FAFSA has been
the subject of insults and curses from parents and politicians of all
types. But government officials kept making it longer and more
complicated to qualify students for specific scholarships and prevent
parents from hiding income.
A Harsh Lesson in College Math (The Washington Post)
College
students are appealing financial aid decisions this summer in
unprecedented numbers, an outpouring of need that underscores how
layoffs and pay cuts have battered household budgets in the past year. Appealing for more aid was a little-known
and seldom-advertised option in higher education until this year. U.S.
Education Department officials wrote to financial aid administrators in
the spring, when most aid decisions are made, urging them to 'reach out
to your students ... particularly those who seem to have hit a rough
patch, to make sure that they know there may be ways that you can
help.' Because of lost income, thousands of students across the
Washington area qualify for more aid this fall than they were awarded
this spring. Aid formulas project a student's 2009 needs based on 2008
earnings.
Sallie Mae: No Government Takeover of College Loans (Times-Leader.com)
The
chief executive officer of Sallie Mae said that he has concerns about his firm's
future, but the company is committed to its Wilkes-Barre operations and
he expects to add jobs here. Al Lord
addressed most of the 900 employees at the Hanover Township facility,
asking them to sign a petition, contact their elected representatives
and become energized in the face of Obama administration plans to shift
all student loans into the government-backed direct lending program ...
If the legislation passes, even with the servicing contract, 'We would
be about half of our size,' Sallie Mae spokeswoman Martha Holler was
quoted as saying in a news story.
Bank Lending Standards May Remain Tight Through Second Half Of 2010 (Student Lending Analytics)
Kiplinger's Personal Finance provided some
statistics about FICO cutoffs to show how challenging it has become: Once,
"good" meant a FICO score of at least 680, says Mark Kantrowitz, of
FinAid.org. Now, lenders look for a score of at least 680 for the
student, and 700 to 720 for the cosigner,
says Kevin Walker, of SimpleTuition.com.
Meanwhile, Sallie Mae has stated publicly a goal to have cosigners on 90% of their SmartOption loans. For
those seeking improvement in the lending practices of banks, the Wall
Street Journal is reporting that you may have to wait quite a while
longer:
Most
banks reported that they expected their lending standards across all
loan categories would remain tighter than their average levels over the
past decade until at least the second half of 2010, the Fed report said. On
the consumer front, banks reported a shortage of creditworthy
borrowers: They also cited fewer borrowers with good credit as a
factor for the drop in lending.
(Read more)
Harvard and Princeton lead the national universities in U.S. News' 2010 college rankings. (US News & World Report)
For
the second year in a row, Harvard University tops the U.S. News &
World Report rankings of America's Best Colleges, but this time it has
company. By edging up slightly in the 15 indicators of academic
excellence that U.S. News uses to compile the rankings, Princeton
University tied Harvard for first place on the list of national
universities. Among the liberal arts colleges, Williams College edged
out Amherst College.
(Read More)
Education Secretary Criticizes Steep Rise in College Costs (New York Times)
Secretary of Education, Arne Duncan, predicts that as tuition continues
to rise, students will increasingly turn to schools that are 'smarter
and more creative' about lowering the cost of a college education. Mr. Duncan also describes the Obama
administration's efforts to make a college education more accessible,
including more money for Pell grants, Perkins loans and tuition tax
credits.
(Read more)
