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People Capital Weekly Briefing
October 26, 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
Please check out The Human Capital Score College Planning Tool our scenario analysis version of the Human Capital Score.
The tool can help students decide
whether it is worth the money spent to go to one school as compared to
another, based on the income potential from the academic choices they
make. This tool can also be used by college planning
consultants and high school guidance counselors with a professional
version available for their consulting needs.
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 Industry News and Trends
Listed below is a weekly compilation of Industry updates. The major highlights include:
- Despite a national recession, college costs continue to steadily rise.
- A group of start-up officials band together to make their innovative credit ideas heard in Washington.
- After approving expanded oversight of private student loans, Congress has still left some questions unanswered.
- Why college cost continue to soar.
College Costs Still Rising (The Washington Post)
The economic slump has not slowed the upward spiral of college costs,
the College Board reported Tuesday. Tuition and fees now average $26,273 at
private colleges and $7,020 at public four-year institutions, with prices
rising faster in the public sector.
Compared with the past school year, tuition and fees rose 6.5 percent at public
four-year colleges and 4.4 percent at private, nonprofit, four-year
institutions, according to the report. Those were steeper rates of increase
than in previous years, after adjusting for inflation. Over the past decade,
annual increases have averaged 4.9 percent at public colleges and 2.6 percent
at private colleges.
In this climate, higher tuition "comes as no surprise," said
Molly Corbett Broad, president of the American Council on Education, an
association of higher education institutions based in the District. As state
budgets continue to shrink, Broad said, she is concerned that "we may soon
face a period where significant tuition increases may be necessary to
counterbalance the current fiscal instability."
(Read More)
Financial Start-ups Form 'Coalition for New Credit Models'
(Prosper Lending Review)
Amid historic regulatory reforms being considered by the new
administration and lawmakers on Capitol Hill, the Coalition for New Credit
Models announced its formal launch today as its representatives descended upon
Washington. The Coalition is made up of non-profit, for-profit, and social
enterprises using new technologies, products and business models to provide
credit and information to millions of consumers and small and midsized
businesses. These models serve as innovative alternatives to existing banking
and financial institutions and are backed by venture and social capital to
stimulate the economy, shore up financial markets, and enhance local
communities. They have a special focus on bringing transparency, fairness,
durability, and accountability to consumers and to our credit markets.
Chris Larsen, Chief Executive Officer and Co-founder of Prosper, America's
largest peer-to-peer lending marketplace,said,"This country has been in an
energy crisis for years and we are now in a financial crisis. America's
economic future depends on new and alternative credit models being embraced in
the same way green technologies are being nurtured by policy leaders to help
solve the energy crisis. We are at risk of being suffocated by rigid
regulations that threaten rather than embrace new technologies and
models."
(Read More)
House Panel Approves Expanded Oversight of Private Student Loans
(The Chronicle of Higher Education)
A Congressional panel voted today to expand federal oversight over
private student loans, but refused to clarify that institutional "gap
loans" would be covered.
By a vote of 33 to 35, the U.S. House of Representatives Financial Services Committee rejected an amendment to legislation
(HR 3126) to create a new Consumer Financial Protection Agency that
would have put loans made by for-profit institutions under the agency's
purview. Consumer advocates have warned that the loans, called gap
loans because they cover the difference between federal aid and the
cost of college, could be exempt under language that was added to the
bill to protect small businesses.
"I believe we have an obligation to ensure that these schools are
not allowed to continue to prey on students," said Rep. Maxine Waters,
a Democrat of California, the amendment's sponsor, in prepared remarks.
"By subjecting these schools to CFPA's authority, the quality of the
student loans these schools provide will improve."
For-profit institutions had urged lawmakers to reject the amendment,
arguing that their loans already would be regulated under new "Truth in
Lending" rules that take effect in February. They asked lawmakers to
wait and see if the new rules worked before adding a new layer of
oversight.
(Read More)
Inflation Might Be Tame, But College Costs Keep Soaring (CNBC.com)
The cost of attending a four-year nonprofit private college increased 4.3
percent in the 2009-2010 academic year compared to a year ago, bringing the
average annual price to $35,636, according to an educational trade group.
"What you see is that over the past decade, public four-year colleges have
increased in cost," says Sandy Baum, an analyst at the College Board.
"They get less money per student from the state. Tuition is replacing
money from the state." That may be but it only partly explains why the rise
in college costs continues to outpace that of general inflation. Over the past
12 months, for instance, the consumer price index is down 1.3 percent.
Another reason for price increases: colleges
and universities are building new facilities like gymnasiums,
dormitories and science centers to attract students and stay
competitive.
"They're constantly upgrading themselves," says Katherine Cohen, CEO
and founder of IvyWise and ApplyWise, which advises students on how to
get into schools. "They have to keep up with the other colleges in
their category."
(Read More)
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The People Capital Team
Info@people2capital.com
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