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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

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Private Loans vs. PLUS Loans

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. Private vs. PLUS WASFAA Presentation 2013

  9. Private vs. PLUS WASFAA Presentation 2013

  10. Private vs. PLUS WASFAA Presentation 2013

  11. 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

  12. School reference #1 – Seattle University School of Law Insert Screen Shots WASFAA Presentation 2013

  13. Seattle University School of Law WASFAA Presentation 2013

  14. Seattle University School of Law WASFAA Presentation 2013

  15. Seattle University School of Law WASFAA Presentation 2013

  16. School reference #2 – University of California Berkeley, Haas School of Business WASFAA Presentation 2013

  17. UC Berkeley HaasSchool of Business WASFAA Presentation 2013

  18. University of Mississippi (Ole Miss) WASFAA Presentation 2013

  19. University of Mississippi (Ole Miss) WASFAA Presentation 2013

  20. University of Mississippi (Ole Miss) WASFAA Presentation 2013

  21. University of Mississippi (Ole Miss) WASFAA Presentation 2013

  22. University of Mississippi (Ole Miss) WASFAA Presentation 2013

  23. School reference #4 - Texas Christian University WASFAA Presentation 2013

  24. Texas Christian University WASFAA Presentation 2013

  25. Texas Christian University WASFAA Presentation 2013

  26. School Texas Christian University WASFAA Presentation 2013

  27. School reference #5 University of Maine http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf WASFAA Presentation 2013

  28. University of Maine http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf WASFAA Presentation 2013

  29. 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

  30. 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

  31. 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 Insert LInk 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

  32. 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

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