Presidential Candidates on College Affordability

With Election Day right around the corner, most Americans have made up their minds on who they want to vote for. Behind all of the rhetoric and talking points, both the Obama and McCain campaigns have detailed plans and policies ranging from the struggling economy to the war in Iraq. But what about their platforms for affordable higher education?

USA Today on 10/13 of this year compiled the content in the chart below outlining the two candidates’ positions:

Barack Obama

John McCain

1. Supported a 2007 law that raised the maximum Pell Grant for low-income college students from $4,050 to $5,400. 2. Would eliminate Federal Family Education Loan program, which subsidizes private lenders that offer government backed loans. 3. He'd strengthen the federal Direct Loan program, which requires loans to be provided directly by the government. 4. Obama also proposes a $4,000 tax credit for tuition and fees. To get the credit, students must put in 100 hours of public service.

1. Supported a 2007 law that raised the maximum Pell Grant for low-income college students from $4,050 to $5,400. 2. McCain wants to expand the Federal Family Education Loan program, which gives subsidies to private lenders that offer government backed loans. 3. He'd simplify federal financial aid, saying "too many programs and a complicated application process deter many eligible students from seeking student aid." 4. He'd also simplify the tax benefits of families paying for college.

Issues concerning education probably will not make or break either campaign, but if you’re a student, it would probably be in your best interest to examine the platforms of each campaign. More information can be found at the following websites:

New York Times: Candidates’ Positions on Student Loans Reflect Experience and Market Views

The Dartmouth: Candidates Stress College Affordability

johnmccain.com: John McCain’s Higher Education Policy

barackobama.com A World Class Education

A Whirlwind of Credit Issues

Several months ago, around the time that Bear Sterns was bought by JP Morgan, there were signs of a waning economy on a significant scale. Now, there are strong indications that this “credit crunch” has begun to shift from speculation to reality.

An article published today by Doug Lederman in Higher Ed News, titled Surprising Impact of Student Loan Crunch, cuts through generalizations by analyzing a survey of 500 colleges:

When asked how the affected students were bridging the financial gap, survey respondents cited a range of responses, including participating in an institutional tuition repayment plan (52.6 percent of institutions), asking their parents to borrow federal PLUS loans for parents (48.8 percent), or paying with credit cards (34.3). But a staggering 45.8 percent of private colleges said that at least some of their students were “stopping out of school or switching to part-time status,” a finding that conflicts with the widely held notion that students had not, by and large, been seriously deterred from pursuing their studies. (Another 38.3 percent said they were working more, which, depending on the situation, can obviously also have a deleterious effect on academic performance and college completion.)

Higher Ed has published articles in the past where financial aid officers braced for an impending crisis that seemingly did not occur. Apparently, this issue is still unfolding for students across America. Students should not have to resort to paying their outstanding balance by using high interest credit cards, as opposed to lower interest student loans.

There is also indisputable evidence in other sectors, such as the automobile industry, that credit requirements are sharply tightening. Car dealerships are complaining that “the credit crunch will crush them,” according Jennifer Lawinski for Fox News. General Motors reported last week that it will only be offering auto loans to only those customers with a 700 credit score, and even these people will need to have 20% down payment.

The effect of the credit crunch on the student’s wherewithal to continue school has yet to be fully understood. What does seem clear now is that late summer indications of the threat being hyped and overblown, may now need to be revisited as the crisis extends into the winter and spring borrowing seasons. Many lenders are only now wrapping up their final disbursements before exiting the industry. While increased Federal lending limits have helped, they cannot make up for the loss of over 40 private lenders in the last year alone. These lenders often helped student’s bridge the gap between the federal lending limit, tuition costs, and the student’s ability to pay the difference out of pocket.

Fynanz Adds More States

Fynanz this week has extended states to lend in this week by including Colorado, Connecticut, North Dakota, South Carolina, and Virginia. The addition of these five states has increased the number of states to to 21 – meaning that if you a resident of any of these states, you are eligible to apply for a Fynanz OpenLoan.

Check to see if you are eligible to apply for a loan.

We encourage you to take a few minutes to apply and create a complete loan listing. Given our recent experiences, there is a strong likelihood that your loan request will be funded within a short period of time. Lenders continue to enter the Fynanz Marketplace in larger numbers.

If you are a lender on Fynanz, you may now be able to lend to neighbors in your own state!

Forty Percent of Students Graduate in Four Years

Students excited to start their college experience are aware of the doors that a degree can open. However, after beginning their journey, students begin to drop out for various reasons. Some can’t afford it. Some have personal problems. And some just don’t like being in the educational realm and want to start working.

For these reasons, colleges are starting to improve their efforts to retain their student bodies. Mary Beth Marklein from USA Today reported this week that 52% of students earn their bachelor’s degrees within 5 years, down from a high of 55% in 1988. So what exactly are colleges doing to prevent students from leaving?

Seton Hall University in New Jersey: 44% of the University are males and are less likely to participate in school-related activities than females. Seton Hall is sponsoring a videogame tournament to get them out of their dorm rooms and feel included in the community.

Southwestern University in Texas: Concentrating their efforts on holding onto their sophomore class, Southwestern University is generating a class that will help decide what majors they should be considering. Many do not know where they should concentrate, and some drop out or transfer based on their uncertainty.

The University of Richmond in Virginia: As a testament to retention programs, the University concentrated on retaining their male population in 2003. Since this time, male students have remained at a greater rate than females.

Connecticut College: Attempting to maintain their level of male minority students, Connecticut College is reaching out to minority businessmen by sponsoring different events.

Colleges are not alone in wanting to maintain enrollment. Various states and their state universities also want to retain their educated citizens. If students do decide to return for their degrees at a later date, certain states, such as Oklahoma and Kentucky, have state-sponsored programs for mature students to pursue their education. These programs benefit the state, because greater paychecks for citizens mean a stronger state economy and greater tax revenue.

State of U.S. Economy Boosts Enrollment

When the economy experiences a serious downturn, most companies experience changes in the way their business operates. This also holds true for the nations colleges, universities, community colleges and trade schools Many people are opting out of the workplace to go back to school while many high school students are choosing to enroll in their local community college rather than enter the workforce immediately, hoping that better training and an improving economy will help their prospects down the road.

From Indiana to Arizona, enrollment is up, especially at 2-year institutions. This does not come as a surprise to many analysts, who notice this dynamic often occurs when unemployment numbers are on the rise. A few examples of this include Frederick Community College in Maryland, which is expected to have an 8% - 10% rise in enrollment this year. Ivy Technical College in Indiana is seeing an enrollment increase 10.3% in the 2007-2008 academic year. Analysts expect these trends to continue in the near term.

Many wonder how the states are going to be able to cover the financial burdens. Governor Kaine of Virginia warned that the state budget would be slashed this October in areas that are traditionally considered off limits, according to Zinie Sampson of the Associated Press. Thirty or more states have fiscal deficits. Moreover, 60 percent of the funding for community colleges comes from the state legislature. While this may not be an immediate issue, Norma Kent of the American Association of Community Colleges warns that “it’s a perfect storm” that is looming over the coming months.

In addition to community colleges, online courses are also filling up quickly. The popularity of these online courses is causing schools such as Drexel University and the University of Houston to consider expanding their offerings. Drexel has reported an 86% increase in applications for its online courses from January through June, according to an article published by Reuters earlier this month. Education experts speculate that this trend is because of the higher transportation costs as well as other economic factors.

While these increasing enrollment numbers for lower cost schools are significant, statistics indicate that it is not at the expense of private schools, which typically have much higher costs. At all levels of the higher education spectrum, enrollment is increasing as students try to make the most of tough times, while preparing themselves for right opportunity when conditions improve.

Young and in Credit Card Debt

After graduating high school, some students go with their parents to the bank to take out a loan for college. Some go to the bank by themselves, and better yet, some don’t need to worry about paying for tuition. But what happens when an 18 or 19-year-old walks into their bursar’s office and are given a plastic card with a Visa or MasterCard logo on it?

Many colleges do just this, refunding any overpayments on a stored value debit card rather than refunding cash directly to students. While these cards are not technically credit cards, and are certainly convenient, they also encourage the use of plastic by students while familiarizing them with major branded credit card logos. The convenience argument promoted by the companies that provide these cards is flimsy at best, as nothing is more widely accepted than cash. For large amounts, most students have a bank account that already has a debit card.

Schools have defended the practice of forming select, sometimes exclusive, relationships with various companies by touting convenience. Many Schools have also allowed these relationships to permeate wide areas of campus so that credit card issuers may directly solicit student credit applications through various promotions. Whether students make the distinction between the debit cards they get from the school and the credit cards they are applying for while enjoying a credit card promotion is questionable at best. However, with the blanket issuance of credit cards, and on campus credit card application drives, the school has a responsibility of educating their students on fiscal responsibility.
As Tony Pugh of the Chicago Tribune points out in Big Debt on Campus: Credit Offers Flood the Quad, some students are using credit cards to pay for educational expenses, even their tuition. Students may not know what consequences may be down the road. Sure, swiping a credit card is an easy and immediate solution when there is no cash on hand, but with interest rates as high as 28%, students may face a rude awakening when trying to repay their debts.

A survey by U.S. Public Interest Research Groups reports that upon graduating, students without student loans have $2,600 in credit card debt, while those with student loans have $3,000 in debt. Pugh found two students who were willing to discuss the combination of credit cards and attending college.

John Velasco, who was a student at West Virginia University, was lured to sign up for a credit card with the promise of a slice of pizza. He refused. Others may not have had the same good judgment. Another student, Andrew Kunka who attended Loyola Marymount University in Los Angeles, charged $4000 for tuition and regrets it. He stated that he “…feel[s] like credit card companies target us because we really have no financial awareness. We're barely out of our homes, barely having experiences as adults, and they throw these things at us and they don't make you aware of what you're signing into.”

A lot of students may not object to their university giving them a debit card with a logo or using their own credit card to pay for expenses when in a financial bind. One thing is certain - students should know their options, and think twice before filling out a credit card application for a slice of pizza.

Learn How to Control Your Finances and Save

For many young adults, going away to school is the first time that they will have to think about how they spend all of their money. Many college students have never even balanced their checkbooks, but knowing how much you spend is the first step towards saving more money.

An online company called wesabe started in December 2005 to help individuals take charge of their financial situations. A student can easily sign up for an account, link their bank accounts, and can enter how much they spend on groceries, rent, transportation, and entertainment. Students can set goals for how much they want to spend each month and can rely on forums and other community members to give tips on how to save more money. The three minute video tour listed on the website is a great place to start learning more information.

If one decides to choose a different avenue, documenting what you earn and what you spend. Students can track their information – keeping it private on their own computers. Simple spreadsheets can be found by doing a Google search – like one found on vertex42.com.

A new website that may be convenient for students is Revolution moneyexchange. Similar to PayPal, this site allows for easy electronic transferring of money between friends, families, even customers and businesses. Users on the site can transfer money to any other users to cover debts, pay bills or informally lend money. Once money is transferred into the Revolution moneyexchange account, it may then be transferred again directly to the users linked bank account. Unlike PayPal, this site also has a debit card feature, but it is unclear how widely the card is accepted at this time. As with any website, make sure you read all the terms and conditions and get a comfort level before deciding to give any personal information.

Why not learn to save and take advantage of tools that technology provides?

Many Student Lenders are Out, But…

Doug Lederman of Inside Higher Ed wrote an article yesterday entitled Credit Crunch or Echo Chamber? questioning whether or not there will be any difficulty for students paying for college this fall. Time and time again, he points out, we have heard that there is a major problem and we had better brace ourselves for the inevitable calamity. But does a crisis actually exist?

Dozens and dozens of student lenders have stopped issuing federal and/or private loans. The media has been constantly reporting on the latest companies who leave the industry. Some college financial aid officers and directors have voiced their apprehension based on experiences with their own students. Lederman (and many supposed Financial Aid Directors and other school administrators who commented on the article) asserts that just because the signs are there, doesn’t mean the “credit crunch” is the norm for the majority of students and their parents.

There are, however, many students who have been struggling – calling company after company trying to get financing for their education. Robert Massa of Dickinson College claims the “sensational media” may be trying to invent a story. As he points out, “there is no story in ‘same old, same old.’” However, stories identifying the credit crisis as real state there may be a bleak outlook for students who are now applying for student loans. Students that are more vulnerable, such as those whose schools do not participate in FFELP, attend for-profit universities and others, may not get all of the money they need.

The truth is that no one knows whether the crisis is real or not until after students apply for their loans. Despite all of articles reporting on the “credit crisis,” if students get rejected, the question might then be, “Why wasn’t I told that I wouldn’t be able to get my loan?”

Wachovia Drops Private Student Loan Program

Wachovia is the latest student lender that has announced it will no longer be issuing private student loans. This comes a few weeks after the company reported that had lost $8.9 billion dollars in the second quarter. Previously, Wachovia’s subsidiary, Wachovia Education Finance, had been the sixth largest student lender in the United States. The company currently has $9.9 billion in federal and private student loans on the books. Banks have been forced by the difficult credit environment to dramatically tighten lending standards in the face of mounting losses from bad loans.

CNN Money reports that a spokeswoman for Wachovia, Ferris Morrison, did not get into why the company decided to halt their program, stating "At this time, we felt it was prudent."

Congress Passes Overdue Higher Education Bill

The House and Senate reauthorized the Higher Education Act today for the first time since 1998. HR+ 4137, "The Higher Education Reauthorization and College and College Opportunity Act of 2008," passed the House yesterday in a vote of 380 in favor and 49 against. It passed the Senate by a vote of 83 in favor and 8 against. President Bush is expected to sign the bill into law.

The bipartisan bill addressed almost all facets of the federal government’s involvement in higher education. The bill tackled such issues as the simplification of the FAFSA and mandates the Department of Education to generate reports on the most expensive colleges. The colleges that have the largest annual cost increases are required to issue a report to the Department demonstrating why such hikes are necessary and how the institution expects to lower the costs for students.

While a total funding amount was not included in the bill, the overhaul expected to directly cost the federal government hundreds of millions of dollars. And that’s not including the funds that the state governments will need to commit to. To the dismay of many states, they can be penalized if they reduce educational funding. States will now be forced to increase their spending on education in line with the increases voted on in the past five years.

Summed up by Charles Dervarics from DiverseEducation.com, other aspects of the HEA bill would:

• Require colleges and student loan companies to adopt strict codes of conduct;
• Streamline the Free Application for Federal Student Aid, including a two-page FAFSA-EZ for low-income families;
• Give students advance information on textbook pricing to help them plan expenses; and
• Provide support for graduate programs at Hispanic-serving institutions.

There is more good news for students. The HEA bill sets increase the availability of the federal Pell Grants from $4,800 to $6000 in 2009 and up to $8000 by 2014 and federal loans for students who attend minority-serving institutions. Qualified students can receive Pell Grants yearly, as opposed to just for the current term.

While the immediate affects of the bill may not be felt immediately, hopefully students will have less of a financial burden when they try to apply for their loans in 2009.

H.R. 4137 Passed by Congress

New York Enters as Mass. Flounders

Just as New York’s Governor Paterson is planning to ask the state legislature to create a new low-interest student loan program, Massachusetts is turning students away from its own.

Governor Paterson announced last week that he would begin working with Albany to meet the needs of college students in his state that have been struggling to pay for college. New York is one of a handful of states that currently does not offer a low-cost program that alleviates financial burdens caused by the increasing cost of higher education. As highlighted in a recent New York Times article, Patterson has decided to pursue Eliot Spitzer’s agenda to allocate funding for a state government loan program; yet, opponents say that there is just not enough money in the budget that is already stretched thin.

No specific details have been provided for how Paterson will afford sending thousands of students to school, but he stated that his administration “is deeply committed to ensuring that we provide the best education services to our citizens.”

A low-cost program is already in place in Massachusetts, but financial strains are affecting the ability to meet demand. Prior to the credit crunch and the economic downturn, the Massachusetts Educational Financing Authority (MEFA), had a low 6.5% fixed rate for college students looking to borrow money. MEFA’s Executive Director, Thomas Graf, stated, “As a result of our problems and the continued dislocation of the capital markets, we have been unable to raise funds for the coming academic year.” Last year, MEFA provided over $500 million in loans to its residents, according to the Boston Herald.

Students who have taken advantage of the MEFA program must now turn to private student loans if federal loans do not cover the overall cost of their college expenses. The good news is that there are deals out there if students take the time to research the different institutions that offer borrower benefits. Putting in a little effort can save borrowers and their families hundreds or thousands of dollars over the life of the loan if they recognize that they should only take out what the need.

Planning Today for a Debt Free Future

With tuition prices of most colleges and universities steadily on the rise, it is not surprising that a large majority of students are relying on both private and federal loans to supplement the funding of their educations. However, thinking about the debt that you are incurring now, and making a viable plan to pay it off in the future, can greatly reduce the stress and financial burdens that can come along with taking out student loans.

Purdue University in Indiana’s weekly publication, The Exponent, is just one of countless student-run newspapers that has been addressing the topic of student loan debt more and more in recent months, offering ways to help decrease costs. The most common and helpful ways to reduce your debt amount while in school include:

• carefully planning out expenses and adhering to a budget
• taking advantage of work study and/or steady employment
• opening a savings account and/or consolidating loans to reduce interest rates
• making small monthly payments, if possible

Financial instability for many students after graduation stems from the idea that they do not need to think or be concerned about the debt they are incurring while in school. However, financial aid director of Purdue University, Joyce Hall, as well as countless other higher education officials across the nation, have the student’s best interests in mind, and are urging them to think now about working towards a debt free future. "Pay your loans off as soon as possible after graduation. Before you get a new car, computer or house, pay your student loans off. Pay them off as fast as you can so you can begin saving for the rest of your life," Hall stated to Exponent reporter Spencer Morris in a recent issue.

At Fynanz, we require a $25 monthly “good faith payment” for those students who opt to defer payments. The purpose of this is to instill a sense of responsibility early on by the borrowers. This can make them less likely to default in the future, if every month they are reminded that their loan is active, in existence, and accruing interest. In addition, lenders might feel more comfortable knowing that the borrowers are showing financial stability and responsibility. Furthermore, this process will help decrease the amount of interest students have to pay over time. This is why we also reward our borrowers by deducting 1% off your interest rate after 10% of the loan principal has been repaid and release your cosigner after 24 on-time payments.

Finance Your Education for the Fall

Despite the difficult times in the student loan industry, financial aid administrators are working tirelessly to get the funds that their students need to attend college in the fall. In a recent poll conducted by NASFAA, a total of 90 percent of student financial aid administrators have stated that they are “concerned” about the student loan crunch, and for good reason. To date, according to Finaid.org, a total of 119 student loan lenders have opted out of the market or have taken a temporary leave.

Many lending institutions who offer federal and private loans have notified colleges and universities that they will no longer offer loans to their students. A high percentage of schools that are being told that their students will not be receiving loans are those primarily attended by low and moderate income students attend. This process needs to change. Every student deserves the opportunity to better their livelihood and should have the right to an education.

The good news is that the landscape appears to be changing. As of July 1^st, subsidized Stafford Loans carry an interest rate of 6.0 percent, down from 6.8 percent previously. This is good news for students who are trying to cope with increasing prices and who need to borrow now to invest in their future. The government has stepped in to help students who are seeking federal student loans, which is always the best bet for students who need to borrow money for their degree.

There is an array of different techniques that financial aid administrators are employing; yet, only 25 percent have a backup plan to handle federal or private loan “disruptions.” Additionally, 20 percent aim to have a backup plan before fall 2008 to ensure the best options for their students. Students can do their part to ensure that they are receiving the best rates by taking initiative. Websites such as simpletuition.com and finaid.org can provide students with the ability to compare rates and borrower benefits.

However, while the terms of the federal program have improved significantly due to recent legislation, for many students, this is not enough. For those students seeking financing over and above what the federal program is offering, you may want to check out the Fynanz No-Cosigner Openloan program. To qualify, you must be a verifiable junior or senior and attend on of the schools on our approved list (please see our website). While this program may not be right for everyone, Fynanz is trying to make it easier to fulfill your educational loan needs while still keeping things as affordable as possible.

Friends, Family, and Fynanz

At Fynanz, education is one of the most important goals that a person can pursue, which is why we are dedicated to helping students reach their academic ambitions. With this in mind, we believe that there are people around you that will want to help you finance your future.

When a borrower designates a lender as one of their “friends and family” Fynanz will match their bids dollar for dollar up to the first $1,000 dollars and bid 50 cents on the dollar for the next $3,000 dollars.

The more friends and family that bid on your loan, the more likely the interest rate will be lower, and the quicker your loan will be funded. Your friends and family may not be able to lend you the entire amount you need, but they can help by lending as little as $50. Each $50 bid by a family or friend member translates to $100 for the borrower. Please see our website for full details on this promotion.

Example:

Friend bids $50 and Fynanz automatically bids $50 = Total Bids of $100!

Send an email to family and friends

NASFAA Conference

In order to provide you with the most comprehensive and beneficial alternative loan service, Members of The Fynanz Team will be attending the National Association of Student Financial Aid Administrators (NASFAA) Conference this weekend in Orlando, Florida. We look forward to speaking with financial aid officers from across the country regarding the student loan industry and the different financing options available to students to complete their degree programs.

More Lenders Invest in Education

Here at Fynanz, we want to ensure that students receive help financing their education. The more lenders that bid on listings, the greater the competition, which will result in lower interest rates for borrowers. We don’t want to simply follow in the footsteps of others rolling out referral programs that offer cash back incentives; rather, Fynanz wants to attract lenders to our community who share in our goal of helping the students.

Fynanz would like to thank our lender, “plattsburghchick” for suggesting the idea the we implemented last week which involves a “Lending Bonus”. The concept of the Fynanz Higher Ed Stimulus Package was built around the idea of, “what would be attractive for lenders” and “help the students pay for their schooling?” Thus, giving cash back was out of the question as while it benefitted lenders it did not benefit borrowers. And here’s where “plattsburgchick’s” ingenious idea kills two birds with one stone. By providing lenders with a Lending Bonus which they can use to bid on loans, lenders eventually see the money, but not before helping some students out.

How it works:

- Refer a friend who becomes a lender – Both receive a $25 Lending Bonus

- Lend $3,000 or more – Receive 3% Lending Bonus

- Lend $3,000 or more AND refer 5 new lenders – Receive 5% Lending Bonus AND $125 Lending Bonus

We’ve already witnessed an increase in lenders who have benefited from this new program. Fynanz wants to attract individuals and institutions who believe what we believe - education is the best investment! Our future is in the hands of today’s increasingly growing number of college and university students, so why not lend a hand?

Tips for Borrowers

Now that more applications have started to come into the Fynanz Marketplace, we thought we would give a rundown for borrowers. Here is a list of important information that may ensure a quick path towards getting your private student loan funded:

1. Fill out your description. Tell the lenders a little bit about yourself (don’t include your name or anything that may disclose your identity), such as goals, dreams, hobbies, etc. Lenders want to know about the students they are helping.

2. Add a picture or two. Again, this goes towards the idea of personalizing your loan listings for the lenders. The last thing that Fynanz wants you to upload is a face picture of just yourself for safety reasons (you can be with a group of friends). We would prefer if you used a picture of a pet, your school’s mascot, school logo, etc.

3. Always fill out your loan breakdown. Fynanz and lenders want to know where you are planning to use the money you receive. You will need to ensure that the money you are requesting is a qualified educational expense – which means tuition, room and board, books, a computer, and the cost of traveling to and from school, and any other school related fees. Fynanz will verify the expenses with a tuition bill. Remember, what you are asking for is co-payable to you and the school.

4. Make sure that you exhaust your federal loans before you apply for a private student loan. Federal loans may be cheaper than loans you receive elsewhere. Filling out the FAFSA may be a long process, but it could save you money. You can learn more from http://studentaid.ed.gov/

5. Spread the word about us to your friends and family. The more people who sign up as lenders, the more people can bid on your loan listing.

6. Juniors/seniors/grad students can apply for loans up to $7500 without a cosigner. More information can be found in the FAQ section of our website under “Is a cosigner required?”. We will require a transcript to verify a borrower’s year in school.

7. Please do not select a school that is currently not on our list of approved schools. Fynanz will verify which school you are currently enrolled with by asking for a tuition bill in your name. You can email customer.care@fynanz.com to see if or when your school will be added. During the week of 6/2 we added over 700 schools and institutions.

8. Fax or email the documents that we request as soon as possible. The sooner we receive your information, the sooner we can place your loan listing in the marketplace for lenders to bid on.

9. Check with your cosigner for when they will sign up for an account and/or when they will send us their pay stubs for proof of income. We will need their information as well as yours before we place your listing into the Fynanz Marketplace

10. When in doubt, consult the Fynanz Help section. Many questions can be answered in the FAQ for Borrowing or in Fynanz Explained.

Should you ever have any questions or comments that you would like to share with us, don’t hesitate to call us at 866-639-9339 or email us at customer.care@fynanz.com.

Good luck with getting your education funded!

Assessing Options

Options for Students Still Exist

If students and their families have been paying attention to recent publications concerning the student loan industry, they may be alarmed. However, there are still billions of dollars in financial aid that students can apply for. With all of the different outlets, such as scholarships, federal grants, federal loans, and alternative loans, most students and families can find a way to go to school.

While much of the recent press may be discouraging, it is important to remember to weigh the cost of the education with the opportunities a degree can provide. According to the College Board’s 2007 study, Education Pays, people with a bachelor’s degree on average make 60% more a year than those with only high school diplomas. Additionally they make more than $800,000 more in a lifetime. In the short-term, the sticker shock of whatever bills a student and their families may have to pay is offset by the long-term benefits.

Enrollment in universities is expected to increase over 10% in the next few years, according to American Student Assistance, and this follows a trend in the number of students who have to take out private student loans (growing 30% between 2004 and 2005). Given these facts, there’s bound to be a compromise for those students who want an education, but are unable to pay all the costs out of their own pocket.

Here are some steps that you can take when student loan shopping:

1. Start early – DO NOT start the process of learning about the loan process a few weeks before you have to pay school bills. Start early, especially this year. 10-12 weeks before the tuition bill is due is a good time to start. That will provide enough time to educate yourself on the options that best fit your needs.

2. Shop around – If you have exhausted all of your federal aid, you need to educate yourself in the process of obtaining other types of school loans. Check the APR, interest rate, borrower benefits, and the fees that you will have to pay on the loans.

3. Network – The odds are that you know people who are going through the same situation. Hundreds of thousands of students will be searching for ways to pay for college. By sharing information, you can save yourselves a lot of time and potentially a lot of money.

At Fynanz, we believe that education is an opportunity that should be open to all who wish to pursue their dreams. We and the lenders in our community are here to help students overcome the challenges they may face in making those dreams come true.

Fynanz Media Mentions of the Month

For your personal perusing pleasure here are some snippets from media stories on Fynanz:

Peer Lenders: A Last Resort for Student Loans April 25, 2008

“Fynanz won't even accept applications from borrowers who haven't first tried to get loans by filing a Free Application for Federal Student Aid.”

“Two big advantages of traditional student loans — deductible interest and not having to make any payments until after graduation — aren't going to be offered with most peer-to-peer loans, cautions Kantrowitz. Instead, you'll probably be required to start paying back the loan immediately, with payments spread out over a short (usually three-year) period. The exception: Fynanz, which offers longer repayment periods and an in-school deferment. Because it verifies your student status and ensures you use the loan for qualified educational expenses, the interest you pay may also be tax deductible.”

Student Loan Confusion Opens Market Niche April 20, 2008

“So-called peer-to-peer lending companies are also sailing into the student loan fray. Waltham-based Virgin Money (part of Richard Branson's empire) offers to formalize loans between students and their family members for $299. Fynanz Inc., a younger New York start-up, recently began doing the same thing in Massachusetts, though Fynanz allows strangers (perhaps alumni of a school) to make loans to students and earn interest - anywhere from 6 to 10 percent, depending on the borrower's credit score.”

“But online peer-to-peer lending is still new, and Fynanz has completed one loan since its launch in March. "We don't expect this to be mainstream anytime soon, but I do expect some of the smarter, more involved students to see this as an option," says chief executive Chirag Chaman, an alumnus of Worcester's Clark University.”

Student Lending Exodus Lures a P-to-P Network April 18, 2008

(You will need a membership to view the full article)

"While bankers are exiting the student lending market, a person-to-person loan facilitator is taking a run at the niche. With banks and other lenders backing away from the student market as a result of narrowing margins and a dearth of liquidity, Fynanz Inc. sees an opportunity to market to individuals willing to offer loans to students and hold on to the debt."

Bobbie Britting, a senior analyst with the TowerGroup was quoted as saying (about Fynanz):

"It's going to fill a void, because there are lenders closing their doors on a regular basis, and students still want to go to school," she said. "And as Americans, we want them to go to school. We want an educated society."

Peer-to-Peer Sites Connect Lenders with Borrowers April 12, 2008

“If you're using a site like Prosper or Fynanz, make lots of smaller loans to multiple borrowers, instead of a few big loans to a few borrowers. That's the same principle as diversifying your portfolio.”

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Feel free to contact me with any questions or comments & I will respond with more information.

Regards,

William Kermode
Community Development Manager
www.fynanz.com

Guarantees for Lenders, More Bids for Borrowers

A word about guarantees…

Unlike some other people-to-people lending sites you may be familiar with, we treat lenders differently. At Fynanz, we will guarantee a portion of the amount that is lent. If you read the posts below, you already know about FACS grading. The higher the FACS grade, the more of the original amount lent we will guarantee, up to 100% for our Platinum Honors grade.

The idea here is twofold. 1.) We directly address the primary concern of anyone who has ever lent money on a people-to-people site by making sure that at least a portion of a lenders initial outlay is protected. 2.) As veterans of the student loan industry, we have enough confidence in our FACS grading to guarantee up to 100% of any amount lent at our Platinum Honors level. Check out the chart below for more detail:

Additionally, unlike some other people-to-people lending sites, lenders are not responsible for paying collection fees on those loans that are delinquent but not in default. These will be paid for by our Default Prevention and Guarantee fund that has been capitalized by Fynanz and will be continuously funded by a 1% rate addition added for each borrower. Even with this rate addition, most borrowers will find that their rates are very competitive with traditional private student lenders. Borrowers are also eligible to have this 1% rate addition removed as soon as 10% of the principal balance has been repaid.

Neal Coxworth
Director of Marketplace development
www.fynanz.com

Interest Rates & The Student Loan Industry

On this post I’d like to address a couple of the questions we have received since launching the Fynanz website.

First, a few people have asked, “Will lenders be adequately compensated given the recent interest rate cuts by the Federal Reserve?” The concern is interest rates have declined to a level where the rates borrowers are required to pay for their student loans will not be enough to attract lenders to loan money.

Before I answer this question, it is important to first mention that our private student loan, which we call the OpenLoan, has a variable interest rate. This means the interest rate charged to borrowers will change depending on fluctuations in market interest rates.

It is also important to remember that the Federal Reserve rate cuts have broad implications across the financial markets, including the lowering of interest rates banks are willing to pay for depository products such as savings accounts and certificates of deposit. Therefore, the interest rates offered on the Fynanz OpenLoan will be attractive when compared to traditional bank products.

Below is a link to an average of the rates banks are paying on CD’s nationwide.

http://www.bankrate.com/brm/news/news_investing_home.asp

Unlike a bank, Fynanz loans do not carry any type of government guarantee, but they do carry a guarantee of up to 100% of the amount lent, depending on the FACS Grade of the loan to be paid from our guarantee fund (please see earlier post). Therefore, lenders will be able to earn an attractive rate of return coupled with a degree of safety that they are comfortable with.

The second question I would like to address, “If the interest rates earned by lenders are too high, why would borrowers use Fynanz instead of a traditional bank?”

Even though the Federal Reserve has recently cut interest rates, traditional lenders will likely not pass along much, if any, of this rate decrease to consumers. Banks remain very nervous given the current housing crises and the difficulty in the credit markets. Most traditional lenders have suffered substantial losses in other types of consumer lending businesses (mostly mortgage related) and remain very concerned with the financial health of consumers and consumer lending. Many lenders are currently in the process of tightening underwriting standards and reducing risk exposure. Therefore, the rates charged to consumers will likely continue to remain relatively unchanged even with the recent rate cuts by the Federal Reserve.

Below is a link to national averages for consumer credit cards:

http://www.bankrate.com/brm/news/news_cc_home.asp

The current market environment should present a very unique opportunity for Fynanz to execute its vision of providing an alternative private student loan financing option to students. Demand for educational financing is at an all time high and is expected to only rise as the costs of education continue to increase. The current credit crises has put a damper on the ability of many of the traditional private student lenders to lend. Some lenders have been forced out of business, and others are operating in difficult conditions due to a lack of available liquidity. Simply stated, lower interest rates as a result of the recent Federal Reserve rate cuts have not yet translated into lower lending rates for consumers.

Link to article regarding Sallie Mae scaling back Federal & Private Student lending

http://www.nytimes.com/2008/01/24/business/24sallie.html?_r=2&ref=business-&oref=slogin&oref=slogin

Fynanz is opening up a new avenue for borrowers to finance their education by putting control back into the hands of students, while providing lenders in search of attractive returns a way to put their money to work for a great cause.

Hopefully this addresses some of the questions.

Feel free to let us know of any comments.

Thanks,
Neal Coxworth
Director of Marketplace Development
www.fynanz.com

Fynanz Debut!

Hello all,

Welcome to the Fynanz Blog, where we discuss things related to higher education, P2P lending and hopefully answer any questions you may have about Fynanz and our private student loan for higher education, the OpenLoan.

Fynanz is the first People-to-People lending site designed especially for college students. Right now, borrowers must be residents of Florida and New York though they may attend an eligible school in any state. Lenders may reside in any state. Keep any eye out for more states and schools as we continue to expand. Some interesting points about the Fynanz OpenLoan:

1. Borrowers can set their own rates and the amount they wish to borrow. Lenders bid on funding the loan in a competitive auction process. This helps keep rates low. Borrowers can enlist family, friends and alumni from their school to bid on their loans. Keep in mind friends and family have priority in the bidding process, so this will also help keep rates reasonable.

2. When looking at a borrower, Fynanz not does not only consider the credit of a borrower or cosigner, but also the student's academic criteria. By combining these two, we come up with FACS, or Fynanz Academic Credit Score, our proprietary underwriting system to predict likelihood of borrower default on a loan. Each loan application is assigned a FACS grade, and this helps lenders determine what level of risk they are comfortable with and the level of return they would like on any money lent. Cosigners are encouraged for borrowers who do not have two years of job history or verifiable income.

3. Fynanz also guarantees loans up to 100% of the amount lent, helping give lenders greater security and enabling them to bid on more loans for borrowers. Lenders can bid as little as $50 to get started.

Feel free to check out the site, or shoot any questions you might have my way. That's why we are here! You can also email us at customer.care@fynanz.com

Thanks,
Neal Coxworth
Director of Marketplace Development
www.fynanz.com