The Student Loan Crisis The Perfect Storm

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The Student Loan Crisis The Perfect Storm
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The Student Loan Crisis - The Perfect Storm

• Students Need Loans More Than Ever Before
• Understanding the Basic Economics of FFELP
• The One-Two Punch of CCRA the Credit Crisis
• Why College Lender Interests Are Aligned We
  Are In This Together!
• The Solution To Ensuring Loan Access for All

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The Cost to Achieve a Higher Education is Rising
and the Demand for Loans is Increasing!
Annual Cost of Higher Education (thousands)(1)
Federal Student Loan Origination Volume
(billions)(2)
(1) Source College Board academic years,
average published tuition, fees, room and board
charges at four-year institutions
(enrollment-weighted). (2) Source U.S.
Department of Education, The College Board,
National Center for Education Statistics,
Octameron Associates
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Student Loan Cost of Funds
Source Nelnet, JPMorgan Securities
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HR 5715 / DOE to the Temporary Rescue
Source Nelnet, JPMorgan Securities
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Why the Industry Should Care
Asset Backed Commercial Paper Outstanding
The credit markets are still severely distressed

• 90 of All Student Loans Are Funded in the ABS
  Markets Long-Term
• ABS issuance is down 75 in the US ABCP off by
  an astonishing 425 bn
• 60 Billion of FFELP and 20 Billion of Private
  Loans are needed annually by our nations
  students
• The capital markets simply cannot absorb the
  volume at this time
• The direct loan program cannot handle the speed
  of growth

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The Simple Solution

• Make the DOE Put Facility Permanent!!!
• The credit market will have a permanent liquidity
  source for loans.
• The lenders will never put in order to retain
  servicing.
• The government will rarely have to fund loans and
  would have to anyway under Direct.
• Will add no new costs to the Federal Budget.
• Lenders will lend to All students thereby truly
  Ensuring Loan Access to All.