NYHELPs

1
NYHELPs

• An alternative loan for New York students
  attending New York colleges

2
Financing Issues in Higher Education

• Families have fewer options this year
• Unemployment in New York State has escalated
• Nest eggs have dwindled
• Home equity has dropped
• Demand for second looks have increased

3
Limited Private Options

• Many lenders have stopped offering products
• 2 years ago a 600 620 FICO would generate loan
  eligibility
• Most lenders now require at least a 700 FICO
• Some lenders require in-school interest payment

4
NYHELPs vs. PLUS Loans

• NYHELPs is not designed to compete with PLUS
• More parents have adverse credit
• Some parents will not become a borrower
• Independent Students

5
Alternative Loans vs. NYHELPs

• Alternative Loans , variable only, average rates
  above 10, high credit requirements do students
  really know what they are getting
• NYHELPs - Fixed and variable options, lower
  costs, transparency, credit access

6
Key Features of NYHELPs

• Lower interest rates,
• Fixed and variable rate loans
• Required web-based financial literacy
• Online loan comparison and selection tool, based
  on loan terms and rates
• Leverages a relatively small state investment

7
More Key Features

• Lower FICO (underwriting will permit a floor of
  640)
• All NYHELPs are school certified
• In-school payment of interest is optional
• Students may borrow for a prior term
• Bridges the gap
• Educates the borrower

8
How NYHELPs Works

• Uses private capital backed by a default reserve
  fund
• SONYMA issues bonds up to (350 million /year)
• Lender can hold loan or sell (fixed loans) to
  SONYMA after loan is fully disbursed
• One servicer (loan remains with servicer)
• Borrower payments repay bondholders

9
State Supports Establishes Default Reserve Fund

• The default reserve pays claims to the holder of
  the loan as a backstop
• The funds that make up the default reserve are
  the appropriations from the State of New York
  (50 million initially and 10 million in future
  years), all borrower fees, 1 percent college
  fee, and all default collections

10
NYHELPs Loan

• Borrower shops on HESC Student Loan Marketplace
• Selects loan product
• Fixed 7.25 - 8.5 5 fee
• Variable LIBOR 4 - 5 5 fee
• If NYHELPs is selected, borrower completes a
  financial literacy module
• Borrower completes P-note

11
NYHELPs Financial Literacy

• Online financial literacy course required
• This course will provide
• A robust, web based experience
• Learning paths used at the participants own pace
• Tracking through HESC

12
NYHELPs Provides Transparency

• NYHELPs will only be offered in the HESC Student
  Loan Marketplace.
• Students can choose NYHELPs or other offered
  products
• Students will comprehend loan terms before they
  sign P-note
• Students will see total cost of borrowing