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Private Loans vs. PLUS Loans. Presented By: Michael McFarlane, Charter One/Citizens Bank Cheryl Barnes, Discover Student Loans

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private loans vs plus loans
Private Loans vs. PLUS Loans

Presented By:Michael McFarlane, Charter One/Citizens Bank

Cheryl Barnes, Discover Student Loans

Julie Rehder, ELM ResourcesKathleen Koch, Seattle University, School of LawJamie Shrode, Univ. of CA Berkeley, Haas School of BusinessWASFAA 2013, Phoenix, AZ

why do i need to know this

Dispel Myths

    • Gain greater understanding of the industry
    • Empower your office with new knowledge
  • Help Students
    • Comprehensive loan counseling
    • Provide access to financing options

Why do I need to know this?

WASFAA Presentation 2013

the private student loan market

Fact about Today’s Market Originations

  • Did you Know?
  • 93% of all new student loans are originated by the federal government? ($114 billion –Page R-15 Dept. of Ed Budget)
  • Private lenders only originate 7% of today’s loans equal to $7 to $8 billion

The Private Student Loan Market

WASFAA Presentation 2013

slide4

Myth versus Fact

  • MYTH:
  • Government loans are always less expensive for borrowers than private loans.
  • FACT:
  • When measuring the true cost of credit through an APR comparison, private loans often compare favorably to unsubsidized federal loans, particularly Graduate PLUS Loans.

WASFAA Presentation 2013

slide5

Myth versus Fact

MYTH:

Private student loans are all variable products with extremely high interest rates.

FACT:

Most lenders offer students the choice of fixed-rate or variable-rate products.

WASFAA Presentation 2013

slide6

Myth versus Fact

  • MYTH:
  • Private student loans can pose more risk for borrowers than federal student loans.
  • FACT:
  • Federal loans, in contrast to private student loans, are provided without the most basic consumer protection – a determination of the borrower’s ability to repay.

WASFAA Presentation 2013

slide7

Myth versus Fact

  • MYTH:
  • Students and families do not receive adequate information about private student loan terms before borrowing.
  • FACT:
  • Lenders provide three notices containing 18 disclosure items about private loan terms at three different times before a private loan is made. These disclosures are required by law. The Federal Reserve conducted extensive consumer testing before establishing these new disclosure requirements, which have been in effect since February 2010.

WASFAA Presentation 2013

private vs plus

Private vs. PLUS

WASFAA Presentation 2013

private vs plus1

Private vs. PLUS

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private vs plus2

Private vs. PLUS

WASFAA Presentation 2013

what are other schools doing

Providing objective comparisons

  • Encouraging students to make the best choice for their particular situation
  • Issuing RFP’s
  • Publishing Preferred Lender Lists
  • Ceasing to auto-package Grad PLUS
  • Providing disclaimers on financing options

What are other schools doing?

WASFAA Presentation 2013

school reference 1 seattle university school of law

School reference #1 – Seattle University School of Law

Insert Screen Shots

WASFAA Presentation 2013

seattle university school of law
Seattle University School of Law

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seattle university school of law1
Seattle University School of Law

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seattle university school of law2
Seattle University School of Law

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school reference 2 university of california berkeley haas school of business

School reference #2 – University of California Berkeley, Haas School of Business

WASFAA Presentation 2013

uc berkeley haas school of business
UC Berkeley HaasSchool of Business

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university of mississippi ole miss

University of Mississippi (Ole Miss)

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university of mississippi ole miss1

University of Mississippi (Ole Miss)

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university of mississippi ole miss2

University of Mississippi (Ole Miss)

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university of mississippi ole miss3

University of Mississippi (Ole Miss)

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university of mississippi ole miss4

University of Mississippi (Ole Miss)

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texas christian university

Texas Christian University

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texas christian university1

Texas Christian University

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school texas christian university

School Texas Christian University

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school reference 5 university of maine

School reference #5 University of Maine

http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf

WASFAA Presentation 2013

university of maine

University of Maine

http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf

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slide29

Loan Comparison Tools

  • Many vendors in the marketplace:
  • ELM Select 2.0
  • Fast choice (Great Lakes)
  • These platforms provide students and schools:
  • Comparison Tools
  • Data Management
  • Compliance

WASFAA Presentation 2013

how can i help my students

Educate them to become savvy consumers

  • Provide them with the best available consumer information and financing options
  • Network with colleagues at pair institutions
  • Meet with lender partners to review their loan products
  • Attend FSA conferences/review conference materials that pertain to private loans and PLUS loans

How can I help my students?

WASFAA Presentation 2013

references

References

Thank you to the following schools and organizations:

CBA Education Funding Committee

www.cbanet.org/Advocacy/Issues/Student_Lending_Facts_Archive.aspx

Seattle University School of Law

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UC Berkeley Haas School of Business

www.haas.berkeley.edu/MBA/finaid/loans/private-loans.html

University of Mississippi (Ole Miss)

www.olemiss.edu/depts/financial_aid/CreditBasedLoan.html

Texas Christian University

www.fam.tcu.edu/loans_ugrd_loan_compare.asp

University of Maine

http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf

WASFAA Presentation 2013

clfe mission

CLFE Mission

As a diverse coalition of industry participants, CLFE  engages in activities that improve and preserve the quality and integrity of education financing products and services delivered to California students, parents and schools.  We are a non-profit mutual benefit corporation that represents lenders, servicers, secondary markets and guarantors that provide free resources including collaborative training, legislative updates that supports local and regional associations.

WASFAA Presentation 2013