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Students and Consumer CreditManagementWFAA Conference 2018 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Agenda Private credit within the student loan ecosystemand compared to other consumer assets Credit Reports - what is in it and what you needto know Tools available for borrowers, to help thembetter understand their credit and debtobligation Final Thoughts2 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Private student loans represent a small portion ofthe pie Private loans represent 9% of neworiginations annually Private loans represent 8% of studentloan outstanding 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Federal vs. private student loans –a world of differenceFederalPrivateObjectiveProvides accessMeet a consumer financial needScreening (Dependent)ParentParent & StudentUnderwrittenNoYesObligationStudentParent & ServicerMultiple ContractorsUsually lenderCollectorOutsourcedUsually lenderBankruptcy dischargeNoNoConsumer Reporting Exposure 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Student loans vs. other consumer assetsSecured LoanUnsecured LoanStudent LoanExamples Auto LoanMortgage Credit CardPersonal Loan FederalLoan Type Asset backed General purpose Need-basedUnderwriting Consumer creditreports combinedwith asset valuation Consumer creditreport centric Private-Consumercredit report centricRisk Mitigants Asset collateralprotects the loanDown payment formore security Limit amountborrowedLimit repaymentperiod Little to no riskmitigants Extended loancommitment Long repaymentterm 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Student loan lenders sign up for the burden ofresponsibility Must maintain the highest standards for PSL Major debt obligation at early stage in life Deals with inexperienced credit users Hazard of financing an incomplete experienceMust constantly reinforce the obligation to pay 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
What do students know about credit? 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Agenda Private credit within the student loan ecosystemand compared to other consumer assets Credit Reports - what is in it and what you needto know Tools available for borrowers, to help thembetter understand their credit and debtobligation Final Thoughts8 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Every student should understand what acredit report is Your personal credit reportincludes a record of yourfinancial accounts andobligations and the identificationinformation associated with them This report is sometimes calleda credit file or a credit history Credit reporting companies collect andorganize data about your credit historyfrom your creditor's and public records 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Every student should understand why a creditreport is importantWhy a credit report is important Lenders use credit reports and credit scores to gauge thelikelihood that you will pay back a loan Reports are also used in other non-lending situations –employment checks, apartment rental applications,utilities, cellular phones, etc. Your credit report serves as your financial references tocompanies with whom you want to do businessA strong credit history enables you to obtain acredit card, home and auto loans and othervaluable credit services, and can affect the amountthat you pay for those services 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Every student should know what’s includedin a credit ic t report 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Every student should know what a credit score is Valuable risk management tool used to determine an individual’s risk ofdefaulting on a loan Many different models, with many different scales available from manydifferent sources There is no “One Score” Credit scores are notpart of a credit report780513 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.657824456
Every student should knowwhat factors influence a credit scoreVantageScore 3.0 credit scoreAvailable credit, 3%Recent credit, 5%Depth of credit,21%Payment history,40%Balances, 11%Utilization, 20% 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
2017 State of Credit by ExperianEach year, Experian publishes research on the state of creditin the nation Average Vantage Score in 2017: 675– Highest since 2012– Gen Z average: 634– Gen Y average: 638 More Americans have super high credit scores than verylow credit scores– 22.3% have super prime credit scores (scores between 781-850)– 21.2% have deep subprime credit scores (scores below 600)Source: Experian 2017 State of state-of-credit/ 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
2017 Vantage Score by StateSource: Experian 2017 State of state-of-credit/ 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.Highest Credit Scores:North DakotaSouth ermontNew HampshireLowest Credit ppiAlabamaGeorgiaSouth CarolinaWest Virginia
2017 Credit Snapshot of the NationWashington:Average Vantage Score: 693Average # of credit cards: 2.99Average balance on credit cards: 6,592Source: Experian 2017 State of state-of-credit/ 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Experian’s 2017 Credit Snapshot by Generation 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Agenda Private credit within the student loan ecosystemand compared to other consumer assets Credit Reports - what is in it and what you needto know Tools available for borrowers, to help thembetter understand their credit and debtobligation Final Thoughts18 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Education resources on the webFree annual FACT Act credit report www.annualcreditreport.comAccess to free report from each of the three creditreporting companiesExperian www.experian.com/crediteducationAsk Experian advice column, sample consumer report,frequently asked questions it trends and information to inspire consumers touse credit wisely www.experian.com/consumereducationElectronic versions of published materials, samplecredit report, videos, PowerPoint presentations withtalk notes and more 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS z
Tips for Building and Improving Credit2018 Tips for all consumers: Revolvers, pay down your balanceThe single biggest step you can take immediately to improve your credit score is to pay your bills andpay down your credit card balances. Credit utilization – the amount of debt you hold relative to yourcredit card limits – is a major factor in your score. Work hard to get that utilization rate below 30%. Use your tax cut to pay down debtIf you are lucky enough to benefit from the tax cuts, some of which began to show up with February2018 paychecks, don’t spend that windfall. Instead, consider taking that money and use it to paydown credit card balances. Be careful taking out new creditYou might still be struggling to make ends meet, but if you are tempted to open a new credit cardaccount, do so judiciously. A new card might have a short-term negative impact on your score, if youpay it off regularly and use only a small portion of the credit limit, it can help your score long-term. Pay off debt rather than moving it aroundAlso, don’t close unused cards as a short-term strategy to improve your credit score. Owing thesame amount but having fewer open accounts may lower your credit score. Building your credit and improving your credit score takes time; there are no shortcuts.Source: Experian 2017 State of Credit 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Agenda Private credit within the student loan ecosystemand compared to other consumer assets Credit Reports - what is in it and what you needto know Tools available for borrowers, to help thembetter understand their credit and debtobligation Final Thoughts21 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Start the journey wisely Credit is not something that will beautomatically ready for you when youneed it. It has to be built, carefully andthoughtfully over time. Understand that credit is a privilege. Withproper credit knowledge anddemonstrating good credit behaviors, youwill reap the rewards of a stellar credithistory and score. 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Final thoughts: 6 easy stepsto help your students & families1. Educate yourself – done!2. Remember that credit is starting for your studentsat the doorstep of your institution3. Have conversations about the impact of debt onyour students’ future4. Discuss the benefits of making monthly paymentswhile in school5. Sample Credit Report – use a sample credit reportto talk to your students about what’s on it. s/credit-educator/experian-samplereport.pdf6. Use the tools made available to you through JumpStart, credit bureaus, etc. 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
Thank YouCiel SenechalHead of Campus Development – West Coastcsenechal@collegeave.com562-826-7636 2018 COLLEGE AVE STUDENT LOANS. PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED.
2017 Credit Snapshot of the Nation. Washington: Average Vantage Score: 693. Average # of credit cards: 2.99. Average balance on credit cards: 6,592. . Private credit within the student loan ecosystem and compared to other consumer assets Credit Reports - what is in it and what you need
