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Private Loans vs. PLUS/ Grad PLUS Loans

Private Loans vs. PLUS/ Grad PLUS Loans. Keri Neidig , Sallie Mae Julie Rehder, ELM Resources Heather Sperratore , PNC Bank (East) Patricia Peterson, PNC Bank (West) Heather Vincent, Citizens Bank PASFAA Spring Training 2013. Dispel Myths To gain greater understanding of the industry

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Private Loans vs. PLUS/ Grad PLUS Loans

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  1. Private Loans vs. PLUS/Grad PLUS Loans Keri Neidig, Sallie Mae Julie Rehder, ELM ResourcesHeather Sperratore, PNC Bank (East) Patricia Peterson, PNC Bank (West) Heather Vincent, Citizens Bank PASFAA Spring Training 2013

  2. Dispel Myths • To gain greater understanding of the industry • To empower your office with new knowledge • Help Students and Parents • Develop an understanding of all financing options available so they may choose the product that best suits their individual circumstances • By providing comprehensive loan counseling • By providing access to financing options

  3. Myth vs. Fact – Heather Vincent, Citizens Bank

  4. Facts 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

  5. 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.

  6. 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.

  7. 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.

  8. MYTH: Private loans do not offer forgiveness for death/disability and do not offer forbearance options. FACT: Private lenders do offer loan forgiveness for death/disability. Some lenders offer forbearance options for their borrowers.

  9. 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.

  10. Private Loans vs. PLUS/Grad PLUS – Keri Neidig, Sallie Mae

  11. Let’s Hear from Some Schools – Heather Sperratore, PNC Bank (East) Patty Peterson, PNC Bank (West)

  12. What Other Schools are Doing – Julie Moreno Rehder, ELM Resources

  13. Providing objective comparisons • Encouraging students to make the best choice for their particular situation • Issuing RFP’s (although not required) • Publishing Preferred Lender Lists • Ceasing to auto-package PLUS/Grad PLUS • Providing disclaimers on financing options

  14. University of Mississippi: http://www.olemiss.edu/depts/financial_aid/CreditBasedLoan.html Texas Christian University: http://www.fam.tcu.edu/loans_ugrd_loan_compare.asp University of Maine: http://umaine.edu/stuaid/files/2010/03/Graduate-Lender-List-UMO9.pdf

  15. Some vendors in the marketplace: • ELM Select 2.0 – new version provides greater interactivity for borrowers. • These platforms provide students and schools: • Comparison Tools • Data Management • Compliance

  16. 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

  17. Thank you to the following schools and organizations: CBA Education Funding Committee : www.cbanet.org/Advocacy/Issues/Student_Lending_Facts_Archive.aspx PA Spring Training West: Linda Anderson – Carnegie Mellon University, Joanna Hastings – Slippery Rock University, Janet Kaercher – Carnegie Mellon Tepper School of Business PA Spring Training East:  Tom Stewart – Thomas Jefferson University, Chris Mowl – Elizabethtown College, Bernard McCree – Kutztown University Schools outside of PA: University of Mississippi (Ole Miss), Texas Christian University, University of Maine

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