Post-Annual Meeting Resources

Even though the 2012 NAICU Annual Meeting is history, you can continue to benefit and learn from the many presentations and speeches that were offered, and are now available on line.

User Login

Forgot Password?

Not a user? [Sign Up]

NAICU Follow-up Survey on the Impact of the Credit Crunch on Student Loans at Independent Colleges and Universities

Read the news release, including comment by NAICU President David L. Warren 

 Click here for the PDF version of this report

September 2008

Introduction
Synopsis
Finding Highlights
Survey Questions and Responses
Appendix

Introduction

In September 2008, NAICU surveyed its 953 member institutions on the effects of the credit crunch on student loan availability for the beginning of the 2008-09 academic year.  NAICU's September survey had a response rate of more than 50 percent, with 504 colleges and universities participating.  Data collection was during the period of September 10-30, 2008. 

The survey was a follow-up to a similar study conducted by NAICU in March 2008, examining the availability of capital for student loans.  The first survey found that a number of private colleges and universities reported a significant reduction in student lenders and loan benefits.  The results served as a warning flare on the potential impact of the credit crisis on student loans.  Congress found the results from the March 2008 survey useful in developing and approving emergency legislation that gave the Department of Education authority to provide liquidity to federal student lenders this summer. 

Synopsis of the September Follow-Up Survey

While there was no widespread student loan crisis through September, there were multiple instances of students taking time off of school, switching to part-time status, and turning to alternative forms of financial support than reported in NAICU's March survey.  There was a considerable amount of behind-the-scenes scrambling by private colleges to keep loan capital flowing to their students.

The long-term effects of the credit crunch on student loans are yet unknown.  Many survey respondents predicted that more FFELP and private label lenders will leave the student loan business in the coming months.  The outlook for the nation's - and higher education's - financial and economic situation has further eroded since the majority of survey responses were received by NAICU in September.  NAICU will continue to closely monitor the impact of the credit crunch and economic slowdown on institutional budgets, family financial need, and student choices for the coming semester and the next academic year.

Finding Highlights

Student Aid Demand 

• Three-quarters of institutions responding experienced an increase in demand for student aid for this academic year.

Enrollment Impact 

• Sixty-seven percent of respondents reported no negative impact on enrollment as a result of the credit crunch. Eighteen percent of respondents reported that fewer previously enrolled students returned than expected, and 19 percent of respondents reported that there was a smaller incoming freshman class than expected.

Federal Loans (Family Education Loan Program (FFELP) 

• Eighty-five percent of the 448 respondents that participate in FFELP lost FFELP lenders due to the credit crunch. Of these respondents, 10 percent found the process of locating new FFELP lenders difficult or extremely difficult.

• Of the respondents that participate in FFELP, 20 percent reported that they experienced significant delays in FFELP disbursements. 

• Responding institutions expressed that the recent expansions in federal grant and loan programs (e.g., Stafford Loans, Pell Grants, PLUS, ACG or SMART Grants, etc.) eased the burden on students.

Private Student Loans 

• Almost 90 percent of the 485 respondents that use private label student loans lost private student lenders as a result of the credit crunch. Of these respondents, 27 percent found the process of locating new private lenders difficult or extremely difficult.

• According to 74 percent of these respondents, students with private loans were subjected to tighter eligibility criteria due to the credit crunch. 

• Forty-three percent of respondents had no or fewer than 11 students who were unable to secure a private loan for this academic year; 46 percent of respondents had 11 to 50 students who were unable to secure a private loan for this academic year; and 11 percent had more than 50 students who were unable to secure a private loan for this academic year.

• More than half of respondents (56 percent) reported that the lack of a cosigner was the main reason that students were unable to secure a private loan. 

• According to respondents, those students denied private loans were using a variety of strategies to cover their financial needs:

• 46 percent of respondents said that at least some of these students were taking time off of school or switching to part-time status
• 38 percent of respondents stated that some of their students were working more
• 34 percent of respondents stated that some of their students were selecting to pay with credit cards.

• Some students unable to secure private loans were asking their parents to make a greater financial contribution to their education:

• 49 percent of respondents reported that at least some of their students were asking parents to borrow federal parent PLUS loans 
• 18 percent of respondents stated that they had students who were asking parents to tap into their line of credit/home equity 
• 14 percent of respondents stated that some of their students were using their parents' retirement savings. 

• Fifty-three percent of respondents reported that some of their students were turning to the institution's tuition payment plans, when unable to secure private loans.

• Twenty-nine percent of respondents reported that some students denied private loans were receiving additional institutional aid. 

• For those respondents offering additional institutional aid to students, funds came from multiple sources.

• 20 percent of respondents stated that funds came from increased revenues, which included tuition and fundraising



• 17 percent of respondents reported cutting institutional budgets in other areas, re-directing these funds into student aid
• 11 percent of respondents reported drawing more from their endowments.

Parent PLUS Loans 

• Thirty-two percent of responding institutions saw an increased number of parents apply for PLUS loans.

• Twenty percent of respondents saw an increased number of parents who had used PLUS in the past, but were rejected this yea