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Colleges and universities discuss how sequester financial aid cuts would … – The Grand Rapids Press


Students at Grand Rapids Community College



 

GRAND RAPIDS, MI — In an effort to offset a possible reduction in federal financial aid, university administrators say they’ll steer students toward outside scholarships and attempt to maximize institutional aid.

Financial aid directors say it’s difficult to say exactly how possible reductions – part of across the board cuts known as sequestration – to federal Work-Study and Supplemental Educational Opportunity Grant Programs would affect students.

But one West Michigan financial aid administrator said some students at his institution may turn to additional loans to cover the loss.

“The federal and state governments are not increasing grant funds,” said David DeBoer, executive director of financial aid at Davenport University. “It means students might rely more heavily on loans.”


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Projections by the National Association for Student Financial Aid Administrators show how the sequester would impact two financial aid programs at West Michigan colleges.



 

Colleges and universities throughout West Michigan would see slight drops in work study and opportunity grants if federal lawmakers fail to broker a deal and avoid the sequester, according to data compiled by the National Association of Student Financial Aid Administrators.

At Davenport, the total for both grant programs would fall by $100,037, bringing funding next school year to $1.29 million. As of now, about 900 students received opportunity grants, with average amount ranging between $400 and $800.

The number of students receiving the grants could drop by about 60 students with the cuts in effect, DeBoer said.

Related:
Sequester would reduce financial aid at West Michigan colleges and universities

However, DeBoer stressed that administrators would encourage students looking to make up for the loss to apply for scholarships before seeking additional student loans.

“When the government starts scaling back our funding we try to increase our communication with students to look at opportunities so that they can stay in school because we want them to graduate,” DeBoer said.

Cornerstone University said it will also point students toward scholarships if financial aid reductions occur.

“As how it will impact students, that is a difficult question to answer because each student is unique,” Nancy Schoonmaker, the university’s vice president and chief financial officer, said in a statement. “We will certainly work with each student to make a CU education as affordable as possible.”

Broad spending cuts known as the sequester date back to 2011, when lawmakers debated whether to raise the nation’s debt limit.

The cuts, approved by President Barack Obama and Congress, were meant to be so severe that it would force lawmakers to agree upon a more targeted – rather than across the board – series of spending reductions. However, there’s little indication that such an approach will occur, and many federal agencies are bracing as the March 1 deadline for a compromise approaches.

Grand Rapids Community College Interim Financial Aid Director Ken Fridsma said the number of students receiving opportunity grants would drop by about 100 to 150 fewer students.

As of now, about 1,200 students are receiving the grants, with the average award around $350. The number of students on work study would also drop, likely by 40 students.

Work study would shrink as well.

“Any loss of funding is going to affect students” Fridsma said. “It’s going to mean we have less dollars to award to students, less dollars to employee students, and so on.”

Pell Grants, the largest pool of free federal dollars for low-income students, wouldn’t be impacted by sequestration. Nor would the Federal Direct Loan Program, which includes Stafford Loans.

At Aquinas College, the amount of funding available for opportunity grants won’t be cut. However, work study grant dollars would be cut by $5,024, according to NASFAA.

That’s because sequestration only impacts the “fair share” portion of an institution’s grant disbursement, not its base award, officials said. The “fair share” portion is additional dollars that some institutions receive based upon financial need.

Aquinas Financial Aid Director David Steffee said although all student aid dollars are important, he doesn’t expect the cuts to have a significant impact. If the cuts do occur, the college would use institutional dollars to make up for the reduction.

“I don’t want to say it’s insignificant,” Steffee said, “but on the other hand I’m not sweating bullets.”

Ferris State University would also see its opportunity grant level remain flat, while federal work study dollars would fall by $18,347, according to NASFAA.

Sara Dew, the university’s financial aid director, said the drop could result in funding being eliminated for about 32 students.

“It doesn’t seem like much, but when these small cuts continue to happen each year, it adds up quickly,” Dew said in a statement.

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Nelnet Reports Fourth Quarter 2012 Results

LINCOLN, Neb., Feb. 28, 2013 /PRNewswire/ — Nelnet (NNI) now reported GAAP net income of $56.6 million, or $1.20 per simple share, for a fourth entertain of 2012, compared with GAAP net income of $64.9 million, or $1.37 per simple share, for a same duration a year ago.

Included in a company’s fourth entertain formula is a $2.8 million, or $0.03 per share after tax, non-cash spoil assign in a company’s enrollment services segment. In addition, a derivative marketplace value and unfamiliar banking adjustments were income of $8.5 million after tax, or $0.18 per share, for a fourth entertain of 2012, compared with income of $7.3 million after tax, or $0.15 per share, for a fourth entertain of 2011. 

Excluding a spoil assign and a derivative marketplace value and unfamiliar banking adjustments, net income was $1.05 per share for a fourth entertain of 2012, compared with $1.22 per share, for a same duration in 2011.

The diminution in year-over-year net income was approaching as a company’s tyro loan portfolio runs off due to a legislative rejecting of new Federal Family Education Loan (FFEL) Program loan originations in 2010. However, a diminution in income from a company’s tyro loan portfolio is being partially equivalent by a flourishing fee-based businesses.

“2012 was another superb year during Nelnet,” pronounced Mike Dunlap, Nelnet Chairman and Chief Executive Officer. “We invested and worked tough to urge a patron experiences, emanate efficiencies, grow a core businesses, and variegate around a strengths. In addition, we purchased $3 billion of tyro loans in a entertain and continue to pursue opportunities to squeeze additional portfolios.”

Nelnet operates 4 primary business segments, earning seductiveness income on tyro loans in a Asset Generation and Management handling segment, and fee-based income in a Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce, and Enrollment Services handling segments.

Asset Generation and Management

As of Dec 31, 2012, net tyro loan resources were $24.8 billion. A estimable apportionment of Nelnet’s federally insured tyro loans are financed for a life of a loan during terms a association now believes will beget poignant destiny money upsurge of approximately $1.97 billion, adult from approximately $1.81 billion final year, as a outcome of a 2012 item purchases.

On Jul 1, 2010, a association stopped imagining federally insured tyro loans after legislation separated a fad of FFEL Program loans.  As a result, a company’s tyro loan portfolio will run off over a duration of approximately 20 years.

Historically low seductiveness rates are stability to yield an event for a association to beget estimable near-term value and money upsurge from a tyro loan portfolio. For a fourth entertain of 2012, Nelnet reported net seductiveness income of $90.6 million, compared with $93.3 million for a same duration a year ago.  Net seductiveness income includes $35.5 million and $39.4 million of bound rate building income in a fourth buliding of 2012 and 2011, respectively.   

Fee-Based Revenue

The association reported sum income from a fee-based segments in a fourth buliding of 2012 and 2011 of $98.2 million and $96.6 million, respectively.

Revenue from a company’s Student Loan and Guaranty Servicing shred increasing 7 percent, or $3.6 million, to $54.6 million for a fourth entertain of 2012, adult from $51.0 million for a fourth entertain of 2011. The boost in income is essentially a outcome of expansion in servicing volume underneath a company’s agreement with a U.S. Department of Education (Department) and collection income from rehabilitated loans.

As of Dec 31, 2012, a association was servicing $68.8 billion of loans for 3.9 million borrowers on seductiveness of a Department, compared with $46.1 billion of loans for 3.0 million borrowers as of Dec 31, 2011. Revenue from this agreement increasing to $19.4 million for a fourth entertain of 2012, adult from $14.0 million for a same duration a year ago.

The association is allocated 30 percent of new loan volume originated by a Department during a duration of Aug 15, 2012 by Aug 14, 2013, adult from 16 percent a before dual agreement years.

For a fourth entertain of 2012, income from a company’s Tuition Payment Processing and Campus Commerce shred was $17.7 million, an boost of $0.8 million, or 5 percent, from a same duration in 2011. The company’s fourth entertain of 2012 income from a Enrollment Services shred was $25.9 million, compared with $28.8 million for a same duration in 2011.

Other Income

Included in other income are gains from a company’s repurchase of debt, cost income from  investment advisory services, and net investment gains of $4.6 million for a fourth entertain of 2012, compared with $7.9 million for a same entertain a year ago.

Operating Expenses

Excluding a spoil charge, a association reported combined handling waste of $106.5 million for a fourth entertain of 2012, compared with $102.7 million for a same duration in 2011.

Common Stock Repurchases

During a fourth entertain of 2012, a association repurchased and late 746,459 shares of Class A common stock, underneath a company’s batch repurchase program, for $21.3 million, or an normal cost of $28.53 per share. In 2012, a association repurchased 806,023 shares of Class A common batch for $22.8 million, or an normal cost of $28.30 per share.

From Jan 1, 2013 by Feb 26, 2013, Nelnet repurchased and late 153,908 shares of Class A common batch for $4.7 million, or an normal cost of $30.50 per share.  As of Feb 26, 2013, approximately 4,093,000 shares sojourn certified for squeeze underneath a company’s repurchase program. 

Cash Dividend

As formerly announced, Nelnet will compensate a initial entertain 2013 money division on a company’s superb shares of Class A common batch and Class B common batch of $0.10 per share.  The division will be paid on Friday, Mar 15, 2013, to shareholders of record during a tighten of business on Friday, Mar 1, 2013.  The association now skeleton to continue creation unchanging quarterly division payments, theme to destiny earnings, collateral requirements, financial condition, and other factors. 

Year End Results

GAAP net income for a year finished Dec 31, 2012 was $178.0 million, or $3.76 per simple share, compared with GAAP net income of $204.3 million, or $4.24 per simple share, for 2011. Excluding a derivative marketplace value and unfamiliar banking adjustments, net income in 2012 was $207.4 million, or $4.38 per share, compared with $215.4 million, or $4.47 per share, for 2011. The derivative marketplace value and unfamiliar banking adjustments were an responsibility of $29.4 million after tax, or $0.62 per share, during 2012, compared with an responsibility of $11.1 million after tax, or $0.23 per share, for 2011. 

Non-GAAP Performance Measures

The association provides additional non-GAAP financial information associated to specific equipment supervision believes to be critical in a analysis of a financial position and performance, including specifically, though not singular to, a impact of unrealized gains and waste ensuing from changes in satisfactory values of derivative instruments that do not validate for “hedge treatment” underneath GAAP, unfamiliar banking transaction gains or waste ensuing from a re-measurement of a company’s Euro-denominated holds to U.S. dollars, and non-cash impairments of unsubstantial assets.  The association believes these indicate in time estimates of item and guilt values associated to financial instruments that are theme to seductiveness and banking rate fluctuations, and equipment whose timing and/or volume can't be pretty estimated in advance, impact a duration to duration comparability of a formula of a company’s elemental business operations on a repeated basis.

Forward-looking and Cautionary Statements  

This press recover contains forward-looking statements within a definition of sovereign bonds laws.  These statements are formed on management’s stream expectations as of a date of this recover and are theme to famous and different risks and uncertainties that might means tangible formula or opening to differ materially from those voiced or pragmatic by a forward-looking statements. Such risks include, among others, risks associated to a company’s tyro loan portfolios such as seductiveness rate basement and repricing risk and a use of derivatives to conduct bearing to seductiveness rate fluctuations; a company’s appropriation mandate to prove item financing needs; a company’s ability to say and boost volumes underneath a loan servicing agreement with a Department to use federally owned tyro loans; changes in a tyro loan and educational credit and services marketplace ensuing from a doing of or changes in germane laws, regulations, and supervision programs; changes in a direct or preferences for educational financing and associated services by educational institutions, students, and their families; uncertainties fundamental in forecasting destiny money flows from tyro loan resources and associated asset-backed securitizations; and changes in ubiquitous mercantile and credit marketplace conditions. For some-more information, see a “Risk Factors” sections and other cautionary discussions of risks and uncertainties enclosed in papers filed or furnished by a association with a Securities and Exchange Commission, including a cautionary information about forward-looking statements contained in a company’s supplemental financial information for a fourth entertain finished Dec 31, 2012.  All information in this recover is as of a date of this release. Although a association might from time to time willingly refurbish or correct a forward-looking statements to simulate tangible formula or changes in a company’s expectations, a association disclaims any joining to do so solely as compulsory by bonds laws.

 

 

 

(code #: nnif)

 

Rising Student-Loan Delinquencies Hurt Young Homebuyers

More people borrowing for education
are failing to pay off their loans.

Almost a third of student-loan borrowers in repayment were
delinquent at the end of last year, up from about a quarter in
2008 and 20 percent in 2004, according to a report on household
debt and credit today by the Federal Reserve Bank of New York.

The amount of educational debt, which includes federally
backed and private loans taken out by students and parents, has
almost tripled in the past eight years to $966 billion, the bank
said. With costs to attend college continuing to outpace the
inflation rate, more borrowers are struggling to pay. That makes
it harder for people — especially those between 25 and 30 — to
secure other types of credit, including home mortgages.

“Student loan debt is the only kind of household debt that
continued to rise during the Great Recession and has now the
second-largest balance after mortgage debt,” wrote Donghoon
Lee, an economist at the New York Fed. “With delinquent student
debt, mortgage origination is very difficult. The mortgage
origination gap across the size of student debt has declined
between 2005 and 2012.”

The New York Fed report is based on a sample of data
provided by the Equifax Inc. (EFX) credit bureau, and examines
borrowers’ current debt. It doesn’t measure how much was taken
out at origination.

About 44 percent of student loan borrowers aren’t repaying
their loans, because of deferments, forbearances or they are
still in school.

Younger Borrowers

Delinquency rates in 2012 were highest among borrowers
under the age of 30 who are repaying their loans. Thirty-five
percent were 90 or more days behind, compared with 21 percent in
2004.

The Fed also reports on the share of all borrowers who are
delinquent for 90 days or more, including those in deferral,
forbearance or still in school. That rate is 16 percent for
those under 30, up from almost 8 percent in 2004.

As more people attend college, the average educational loan
balance, as well as the numbers of borrowers and delinquencies
are increasing. The number of student-loan borrowers was almost
39 million in 2012, up 70 percent from about 23 million in 2004.
The average balance in 2012 per borrower was $24,700 compared
with $15,308 eight years earlier.

Total student-loan debt in the fourth quarter was $966
billion, up $10 billion from the previous quarter, according to
the New York Fed. The federal Consumer Financial Protection
Bureau put the number at $1 trillion last year.

‘Stay Afloat’

Ryann Roberts, 22, is one of those borrowers and has seen
friends struggle with their debt as a large share of monthly
expenses.

She is deferring on more than $37,000 in loans for an
undergraduate degree in health policy at Carnegie Mellon
University in Pittsburgh and for the first year of a two-year
master’s in public health at George Washington University. She
has kept her graduate costs low by working full-time as an
administrator at the university’s medical school, which waives
some tuition for employees.

“I’m worried about graduating and making enough money to
pay the loan back and stay afloat,” Roberts said.

To contact the reporter on this story:
Janet Lorin in New York
jlorin@bloomberg.net.

To contact the editor responsible for this story:
Lisa Wolfson at
lwolfson@bloomberg.net.


Enlarge image
Student Ryann Roberts

Student Ryann Roberts

Student Ryann Roberts

Ryann Roberts via Bloomberg

“ I’m worried about graduating and making enough money to pay the loan back and stay afloat,” Ryann Roberts said.

“ I’m worried about graduating and making enough money to pay the loan back and stay afloat,” Ryann Roberts said. Source: Ryann Roberts via Bloomberg

Report: Sequester would reduce financial aid at West Michigan colleges and … – The Grand Rapids Press


Grand Rapids Community College would see two types of financial aid drop by a total of $83,590 next school year if across the board federal cuts take effect Friday.



 

GRAND RAPIDS, MI — Colleges in West Michigan could be out tens of thousands of dollars in financial aid next school year if across the board federal spending cuts – known as the sequester – take effect Friday, according to a new report.

Disbursements under the Federal Work Study and Supplemental Educational Opportunity Grant programs will shrink unless federal lawmakers broker a deal and avoid the sequester, according to estimates compiled by the National Association of Student Financial Aid Administrators.


View full size

Projections by the National Association for Student Financial Aid Administrators show how the sequester would impact two financial aid programs at West Michigan colleges.



 

Grand Rapids Community College, for example, would lose $83,590 if cuts take effect under both programs, bringing its total disbursement to $903,099, projections show.

“These potential cuts represent broken promises to needy students and families across the country,” NASFAA President Justin Draeger said in a statement. “By the time the sequester cuts are implemented most colleges will have provided students with financial aid awards, which will then have to be reduced, leaving families scrambling to fill the gap.”

Elsewhere in West Michigan, Cornerstone University would see its grant disbursements shrink by $17,028, Davenport University would see a loss of $100,037.

The Federal Work Study Program provides funds for students with financial need to work part-time at their college or university to help cover tuition and other expenses. The Federal Supplemental Educational Opportunity Grant provides need-based grant dollars to low-income students.

Pell Grants, the largest pool of free federal dollars for low-income students, wouldn’t be impacted by the sequester. Nor would the Federal Direct Loan Program, which includes Stafford Loans.

Some colleges and universities, such as Grand Valley State University, won’t see its disbursements for either the Federal Work-Study or Supplemental Educational Opportunity Grant change.

That’s because the sequester will only impact the “fair share” portion of an institution’s grant disbursement, not its base award, said Megan McClean, director of policy and federal relations at NSFAA.

She said the “fair share” portion is additional dollars that some institutions receive based upon financial need.

“Institutions that did not see any change would be institutions that were just receiving the base amount,” McClean said.

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Report: Sequester would reduce financial aid at West Michigan colleges and … – The Grand Rapids Press


Grand Rapids Community College would see two types of financial aid drop by a total of $83,590 next school year if across the board federal cuts take effect Friday.



 

GRAND RAPIDS, MI — Colleges in West Michigan could be out tens of thousands of dollars in financial aid next school year if across the board federal spending cuts – known as the sequester – take effect Friday, according to a new report.

Disbursements under the Federal Work Study and Supplemental Educational Opportunity Grant programs will shrink unless federal lawmakers broker a deal and avoid the sequester, according to estimates compiled by the National Association of Student Financial Aid Administrators.


View full size

Projections by the National Association for Student Financial Aid Administrators show how the sequester would impact two financial aid programs at West Michigan colleges.



 

Grand Rapids Community College, for example, would lose $83,590 if cuts take effect under both programs, bringing its total disbursement to $903,099, projections show.

“These potential cuts represent broken promises to needy students and families across the country,” NASFAA President Justin Draeger said in a statement. “By the time the sequester cuts are implemented most colleges will have provided students with financial aid awards, which will then have to be reduced, leaving families scrambling to fill the gap.”

Elsewhere in West Michigan, Cornerstone University would see its grant disbursements shrink by $17,028, Davenport University would see a loss of $100,037.

The Federal Work Study Program provides funds for students with financial need to work part-time at their college or university to help cover tuition and other expenses. The Federal Supplemental Educational Opportunity Grant provides need-based grant dollars to low-income students.

Pell Grants, the largest pool of free federal dollars for low-income students, wouldn’t be impacted by the sequester. Nor would the Federal Direct Loan Program, which includes Stafford Loans.

Some colleges and universities, such as Grand Valley State University, won’t see its disbursements for either the Federal Work-Study or Supplemental Educational Opportunity Grant change.

That’s because the sequester will only impact the “fair share” portion of an institution’s grant disbursement, not its base award, said Megan McClean, director of policy and federal relations at NSFAA.

She said the “fair share” portion is additional dollars that some institutions receive based upon financial need.

“Institutions that did not see any change would be institutions that were just receiving the base amount,” McClean said.

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Brian McVicar and follow him on Twitter