1 private student lending 101 may, 2013. 2 ihelp provides private student loans for undergraduate...
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Private Student Lending 101
May, 2013
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iHELP provides Private Student Loans for undergraduate and graduate school, and
consolidation loans for graduates who want to simplify and reduce repayment.
3Source: US Department of Education President’s 2013 budget
Private Student Loans comprise 2% of all funding
Source: US Department of Education, President’s 2013 Budget
Family Con-tributions
46%
Grants and Scholarships
27%
Federal Student Loans26%
Private Student Loans
2%
Total Cost of Education, $436 billion
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One of the fastest growing and most attractive consumer loan markets is also one of the youngest
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Demand for Student Lending is increasing at faster rate than other consumer loans
Source: Quartz | qz.com
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Driven by rising tuition and flat federal loan levels, demand for Private Student Loans is projected to continue to increase
Source: College Board
2003-2004
2004-2005
2005-2006
2006-2006
2007-2008
2009-2010
2010-2011
2011-2012
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
Private 4-Year Published Tu-ition, Fees, Room and Board
Public 4-Year Published Tuition, Fees, Room, and Board
Average Federal Loans per Full-Time Student
Source: College Board
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iHELP Private Student Loans fill a critical gap between the cost of college and other forms of financial aid
Family Resources $8,000
Scholarships $2,500
Federal Loan $5,500
Private Student Loan $9,000
TOTAL COST: Tuition and Room & Board
$25,000
Sample Worksheet of College Financing
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Student Lending Levels: More than 70% of Student Debt is $25k or below; 87% is $50k or below
Source: Federal Reserve Board of New York
Breakdown of Student Debt Levels by Amount
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Families with higher incomes take out higher levels of Private Student Loans; these are often a Community Bank’s best customers
UP TO $30000 UP TO $60000 UP TO $100000 MORE THAN $100000
$21,200
$29,800$32,700
$38,400
Source: The College Board “Who borrows most?” 2010
Family Income Levels
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Community Bank customers have had to turn to large financial institutions and Credit Unions for their Private Student Lending
“The fastest growing loan category for Credit Unions in 2012 was Private Student Loans, which jumped 35.6% for the year.”
“Sallie Mae Reports Private Student Loans up 22%”
“Private Student Loans increased $431 million from the prior year.”
“Wells Fargo is the 2nd largest provider of Private Student Loans”
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Private Student Loans can open the door to providing other banking needs
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The Value of Education: Obtaining a college degree is still the most important factor in determining an individual’s financial success
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Since 2008, 2 million new jobs for college graduates; 200,000 fewer jobs for those with high school diploma
College Graduates earn $1.5 million more than those with a high school degree
high school some college college degree $0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
high school some college college degree-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
College graduates earn more and have higher employment than those with a high school degree
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Investing in college delivers a return of 15.2% a year, even factoring earnings students forgo while in school
“This is more than double the average return to stock market investments since 1950, and more than five times the returns to corporate bonds, gold long-term government bonds, or homeownership.”
Source: The Hamilton Project, Brookings Institution
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Through iHELP, Community Banks can help customers reach their educational and financial goals
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While providing access to a safe, profitable, and insured product
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Made to nonprofit colleges & universities
Credit scored
Co-signed
100%+ insured (principal and interest)
iHELP Private Student Loans are low risk
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Traditional Private Student Loans with cosigners perform the best
Based on profile of loan performance rates at largest Private Student Loan provider, Sallie Mae
TRADTIONAL LOAN WITH A COSIGNER
TRADTIONAL LOAN WITHOUT A COSIGNER
NON TRADTIONAL LOAN WITHOUT A
COSIGNER
NON TRADTIONAL LOAN WITHOUT A
COSIGNER
0.00%2.00%4.00%6.00%8.00%
10.00%12.00%14.00%
1.60%4.50%
6.90%
11.90%
95% of iHELP Loans are Traditional with Cosigner
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With iHELP, Community Banks can bring customers back
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Originating Lender
Participating Bank
Referral Partner
Community Banks can participate in the iHELP Program in one or more of 3 profitable ways:
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An Originating Lender: • Helps market the program • Is the lender of record • Owns legal title to the loan• Can sell the economics of a loan to a participating bank
Originating Lenders generate fee income
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A Participating Bank:
• Helps market the program• Provides capital to the Originating Lender • Owns the economics of the loans in which it participates
Participating Banks generate margin income
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A Referral Partner: • Helps market the program• Refers applicants to an Originating Lender that will
make the loan
Referral Partners generate fee income
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iHELP Supporting Partners: Insurance
► ReliaMax Surety Company Provides insurance coverage of 100% of principal and interest on
the loans
Specializes in private student loan insurance, default prevention and default collection
Highly regulated and backed by A rated reinsurance companies
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iHELP Supporting Partners: Loan Administration & Servicing
► Student Finance Loan Corporation (SLFC) Performs all of the underwriting and loan origination functions
Manages all aspects of loan servicing and collections
Assures regulatory compliance
Supports borrower education through RightChoice.net
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1. Contact iHELP to sign on as an Originating Lender, Participating Bank or Referral Partner
2. Learn how to market iHELP to your customers and community
3. Follow loan performance through iHELP reports
4. Celebrate each graduate’s success
Get Started Today
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Timing Matters: Applications for Private Student Loans spike in Spring - Summer
Typical Monthly Application Trends
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• Complex loan administration and regulatory compliance provided by an ICBA Preferred Service Provider
• Acquire an insured asset with a solid return• Loans can be insured for 100% of principal and
interest by an experienced surety provider
• Participate in a growing and attractive market without adding any staff
iHELP Private Student Lending creates a path for Community Bank growth
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Questions?
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Kevin Moehn
office: 571.313.1307
www.iHELPloan.com
For more information: