Tuesday, 23 September 2014

Student loan | Credit Suisse Back to School Upgrades — in Student Loan Players ...

Student loan | Credit Suisse Back to School Upgrades — in <b>Student Loan</b> Players <b>...</b>

Credit Suisse Back to School Upgrades — in <b>Student Loan</b> Players <b>...</b>

Posted: 23 Sep 2014 06:43 AM PDT

Credit Suisse is adding student lenders to its back to school shopping list. Currently it is reiterating Outperform ratings and price targets for Navient Corp. (NASDAQ: NAVI), Nelnet Inc. (NYSE: NNI) and SLM Corp. (NASDAQ: SLM) — commonly known as Sallie Mae.

Wells Fargo announced its plans to sell roughly $9.7 billion of Federal Family Education Loan Program (FFELP) loans, and this could be a catalyst for other banks looking to sell. The buyers are Navient and Nelnet. When this sale goes through, Credit Suisse would increase the price targets by $1 for Navient and $9.50 for Nelnet, assuming the entire portfolio is acquired at a 0.5% return on assets.

Navient has a consensus price target of $19.25 and a post-IPO trading range of $15.00 to $18.28. Its market cap is over $7 billion.

Nelnet has a consensus price target of $53.50 and a 52-week trading range of $34.86 to $45.91. The company has a market cap of $2 billion.

Sallie Mae has a consensus price target of $10.63 and a 52-week trading range of $7.53 to $9.77. It has a market cap of $3.81 billion.

Credit Suisse's Moshe Orenbuch had this to say about student loan competition:

Private student loan competition and origination forecasts. We believe Sallie Mae's originations will grow from $4 billion in 2014 to $4.3 to $4.5 billion in 2015 and $4.6 billion to $5.1 billion in 2016. We take a deeper look at competition in private student lending and expect the company to maintain its market share in the short-term due to barriers to entry, the small size of the origination market, and regulatory risk. Paydowns could increase marginally if competitors refinance more private student loans.

J.P. Morgan has stopped making new student loans, according to Credit Suisse, and could stand to sell off its private student loan portfolio. It is worth noting that typical private student loan portfolios generate between 1.6% and 2.3% in a return on assets, and that each $1 billion in private student loans could add approximately $0.04 to $0.05 in annual earnings per share.

Regulatory risk appears to be lower when Senator Warren's bill failed for a second time. Senators Rubio and Warner also are not pushing their income-based repayment bill. Dischargeability in bankruptcy is a perennial topic, but currently there are no signs the debate will take off and reach the forefront.

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By Chris Lange

Study: Housing Market Poised To Lose $83B This Year Because Of <b>...</b>

Posted: 22 Sep 2014 10:32 AM PDT

Study: Housing Market Poised To Lose $83B This Year Because Of Consumers' Student Loan Debt – Consumerist
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DutchNews.nl - Senior government advisor questions <b>student loan</b> <b>...</b>

Posted: 23 Sep 2014 12:28 AM PDT

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Senior government advisor questions student loan logic

Tuesday 23 September 2014

The Council of State has criticised the government's decision to scrap student grants, saying there is no certainty the savings will be ploughed back into education as pledged.

On Monday, draft legislation ending the current system of grants was introduced in parliament. Education minister Jet Bussemaker earlier won the support of three opposition parties for the plan by promising the money she saved would be used to improve educational standards.

The council, which is the government's most senior advisory body, says it had doubts about Bussemaker's assertion that individuals profit more from higher education than society as a whole. This is one of her key arguments for replacing grants with extra loans from the next academic year.

On November 14, some 14 student and youth organisations will demonstrate against the plans.

Anchored in law

Student unions say the move will add at least €15,000 to the average debt that students have when they graduate. In addition, the promised improvements in education have to be anchored in law, the student bodies say.

At the moment, Dutch students are given a basic grant of €279.14 if they live away from home and €100.25 if home-based. On average, they leave university with around €15,000 in debts. The loans are subject to interest rate rises.

Spending cuts

The new rules state that students whose parents earn less than €46,000 a year or whose parents cannot be traced will still be entitled to a grant.

Students will have 35 years to pay back the loan once they have graduated and do not have to start repaying their debt until they earn at least the minimum wage.

However, the student public transport card, which entitles students to use trams, buses and trains free of charge either at weekends or during the week, will remain.

Vocational training

It will also be extended to cover vocational training students (mbo) who currently have to pay for their own transport costs.

The end of student grants will affect all new bachelor's and master's students from 2015.

The deal was reached with the D66 Liberals and the left-wing greens GroenLinks, whose support is necessary to make sure the reforms get through the upper house of parliament.

© DutchNews.nl


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