Excerpt from: Higher Education Perspectives
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| December 12, 2008 | | While concerns about the state of the education finance industry persist, the commitment shown by the remaining lenders provides hope for the future. | Overture attended the Consumer Bankers Association (CBA) Student Lending Conference last week, which provided me with an interesting perspective on the current student lending environment. As you might imagine, the conference was a lot smaller than in the past. With the large number of well-documented withdrawals from the industry, this was no surprise, but it was still a bit jarring to see the extent of the downsizing in physical terms. The exhibitor area was much smaller than in the past, and the conference general sessions were in the room previously occupied by the exhibitors.
The mood permeating the conference was gloomy, as the sessions on securitization and investor confidence reflected a very difficult environment for liquidity. The fear of a deepening recession spurred concerns of increasing borrower defaults. All in all, the outlook reports were pretty glum.
The interesting silver lining in the midst of the current turmoil was the lenders’ take on this news. While many lenders have exited the business, the ones that remain are committed to student lending and are looking for ways to continue supporting schools and students. The lenders were proud of their efforts to ensure that every student who needs a Federal loan under FFELP receives one. Schools still overwhelmingly support FFELP, although the FFELP participants have been a relatively silent majority in recent months. Additionally, some lenders are still providing private loans for students who need them.
It was encouraging to witness the lenders’ commitment to helping students fulfill their higher education dreams. Hopefully this optimism will be rewarded as the current and incoming administrations work to stabilize our economy. Given that higher education is a key driver of our future success as a country, it is imperative for state and federal government to support higher education now and going forward. I expect to see the banking community standing alongside to provide a lending hand.
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