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People Capital Weekly Briefing
December 14, 2009 |
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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
We are excited to announce the private beta launch of the People Capital student loan platform.
We invite you to use the link below to register on the site and start the process to obtain a private student loan for your education. During the beta launch period we will be waiving the registration fee for the first 50 registrants.
Register now!
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 Industry News and Trends
Listed below is a weekly compilation of Industry updates. The major highlights include:
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A look at the many
options a student has for loan repayment. -
An increase in enrollment
creates a Pell shortfall. -
Finance related issues
are the leading cause of college dropouts. -
A tightened supply of
financial aid.
Paying Off Student Loans Requires Smart Decisions (Los Angeles Times)
Last June's college graduates face a tough choice this month. That's
when the automatic six-month deferment on their student loans expires, forcing
them to start repaying the money or beg for additional time.
Never have students been so deep in debt and so unprepared to pay.
The average student is carrying a record debt load of more than $23,000,
according to a just-released report by the Project on Student Debt. Meanwhile,
unemployment among college graduates ages 20 to 24 is the highest in recorded
history, at 10.6%.
"With debt and unemployment at record levels, college graduates may
feel stuck between a rock and a hard place," said Lauren Asher, president
of the Institute for College Access and Success in Berkeley, a nonprofit
advocacy group that is affiliated with the Project on Student Debt.
Graduates do have options that could make the debt more manageable, she
added. But figuring out the best option with student loans, particularly loans
with special bells and whistles, can be mind-boggling, said Lynn O'Shaughnessy,
who writes the College Solution blog.
(Read More)
Tough Economy Squeezes Pell Grant Program (Associated Press)
An unexpected surge in college enrollment has created an $18 billion
shortfall in the Pell Grant program, the biggest in its history.An
administration official told The Associated Press the program will cost $18
billion more than Congress and the White House had anticipated over the next
three years. The official, who was not authorized to speak publicly about the
budget, spoke on condition of anonymity.
"The administration is working with Congress to fill the gap, and
we are committed to making sure the U.S. has an educated work force able to
fill the jobs of the 21st century," said the official.
The red ink probably won't affect students and parents, but it will
affect the federal government, which must find a way to come up with the extra
dollars.
Shortfalls and surpluses are common in the Pell Grant program, which
forms the foundation for federal college aid. Anyone who is eligible gets a
grant, making it difficult for the government to anticipate how many people
will apply. Pell Grants typically go to families earning less than $40,000, and
about 6.3 million students received Pell Grants last year.
(Read More)
Majority of College Dropouts Cite Financial Struggles as Main Cause
(The Washington Post)
The No. 1 reason many young adults drop out of college is an inability
to juggle school and work, according to a report released Wednesday morning.
When choosing between a degree and going to work, paying rent, buying
groceries or supporting family members, many students are forced to drop out,
said Jean Johnson of Public Agenda, a nonpartisan public policy research firm
that conducted a telephone survey of more than 600 people ages 22 to 30 for the
report.
The research reflects a "very, very different reality" than
the common image most people have of college as "a place where a young
person goes and they become an adult," Johnson said. "So many of them
are already assuming adult responsibilities."
Although strides have been made in increasing access to higher education
for low-income and minority students, many of them are leaving school without a
degree or certificate, Johnson said. Each fall, 2.8 million students enroll in some
form of higher education, but fewer than half of students who start school
graduate within six years, according to the U.S. Education Department. At
public community colleges, only 20 percent of students graduate within three
years.
The report is the first of three funded by the Bill & Melinda Gates
Foundation to examine access to college and college success.
(Read More)
The Financial Aid Squeeze Is Getting Worse (Smart Money)
College students and their parents should brace themselves for a
tumultuous financial aid season. With declining revenue at private
universities, financial aid for the 2010-11 academic year could be hard to come
by.
Although most universities won't announce their new financial aid budgets
until February, schools are clearly nervous. For the current academic year,
private institution spending on aid jumped a median 9.3%, while tuition rose by
a median of just 4.1%, according to an October survey by Moody's. That leaves a
gap. How big? Moody's says nearly 30% of private institutions are projecting a
decline in net tuition and fee revenue for fiscal year 2010. That is up
significantly from recent years, when less than 10% of institutions anticipated
drops in revenue.
What's more, many private university endowments - which impact how
universities subsidize their operating budgets were hit hard by the market
downturn earlier this year and still haven't fully recovered. This month,
Dartmouth announced that its endowment fell by $835 million, more than 20%,
during the 2009 fiscal year. And according to news reports, impending budget
cuts may affect the university's financial aid program. A Dartmouth
representative wasn't available for comment.
(Read More)
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The People Capital Team
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