Changing with the Seasons

Transcription

1 Changing with the Seasons NEW MEXICO EDUCATIONAL ASSISTANCE FOUNDATION 2009 Annual Report

2 EXECUTIVE MESSAGE NMEAF Continues Serving New Mexicans Richard Carpenter Elwood G. Woody Farber Over the past year, significant changes to the student loan industry have been proposed. As we wait for the final outcome, New Mexico Educational Assistance Foundation (NMEAF) continues to participate in FFELP, accumulating assets of more than $1.3 billion. During 2009, the support of New Mexico colleges, universities and outreach programs to students and parents from elementary, middle school, high school and college resulted in an explosion of new opportunities in which NMEAF staff was involved in During the 28 years of existence, NMEAF as a non-profit organization, continues to run the FFELP lender, and servicing programs on revenues generated solely by the FFEL program. In the 2009 fiscal year from July 1, 2008 to June 30, 2009, NMEAF s total loan volume exceeded $218.3 million. The monies generated from these loans have been used to return money back to our student and parent borrowers via borrower benefits, which include interest rate reductions, loan forgiveness and fee waivers. A total of $5.5 million has been returned back in the form of borrower benefits in fiscal year More importantly, NMEAF conducted outreach activities throughout the state that reached almost 25,000 students and parents last year. This is critically important to the economic wellbeing of New Mexico and its residents. These outreach activities, coupled with local customer service, have allowed NMEAF to maintain a 3.3 percent cohort default rate as an originating lender, compared to the 6.7 percent national average. For the fifth consecutive year, Foundation employees once again earned remarkable recognition for customer service, receiving a cumulative score of 6.3 on a 7-point scale in an independent customer satisfaction survey. NMEAF was also selected as one of New Mexico Business Weekly s Best Places to Work and received a Greater Albuquerque Chamber of Commerce Challenging Times, Thriving Companies award. As we celebrate 2009 achievements, we will continue to look for ways to better serve students and parents to achieve savings that will capitalize on our changing infrastructure, with minimal disruption to New Mexicans and all of our business partners. Richard Carpenter Chairman Elwood G. Woody Farber President 1 New Mexico Educational Assistance Foundation Annual Report 2009

3 2009 Accomplishments New Mexico Student Loans was selected as one of New Mexico s Best Places to Work according New Mexico Business Weekly newspaper. Received recognition from the Greater Albuquerque Chamber of Commerce in the category of Challenging Times, Thriving Companies For the fifth consecutive year, New Mexico Student Loans customers gave the company an excellent customer service rating; this year s result was 6.3 on a 7-point scale. Funded more than $167.9 million in education loans Purchased $27.2 million in loans from the University of New Mexico s school-as-lender program Purchased more than $23.1 million in education loans from partner-lenders: Bank of the West, Bank of the Rio Grande, Citizens Bank of Clovis and Bank of America Issued $95.1 million in tax-exempt revenue bonds and $50 million in taxable revenue bonds to ensure the continued availability of funds to help New Mexico students and families pay for postsecondary education Returned to borrowers approximately $5.5 million in borrower benefits Provided more than $56,000 in scholarships for students at New Mexico colleges and universities through an endowed scholarship program NMEAF maintained a cohort default rate, as an originating lender of 3.3%, significantly below the 6.7% national average. New Mexico Educational Assistance Foundation Annual Report

4 PRESIDENT S MESSAGE NMEAF Access to Postsecondary Education for Students & Parents New Mexico Educational Assistance Foundation (NMEAF) worked diligently in 2009 to ensure that students and parents continued to have access to postsecondary education. Funding for education loans increased significantly to $218.3 million, assisting over 27,333 borrowers in 2009 that enrolled in postsecondary education and providing more than $56,000 in scholarships for students at New Mexico colleges and universities. In addition, NMEAF returned approximately $5.5 million in borrower benefits at a time when unemployment in New Mexico has reached near-record levels. As evidenced by our outstanding customer satisfaction survey rating and low cohort default rate, NMEAF provides exceptional local service. Students have local access to make loan payments and the added opportunity to discuss various payment options if they are struggling to make their monthly payments. NMEAF overcame a tumultuous year a year when tightening of credit caused NMEAF to find a creative way to secure the funding for student loans. It was a year that resulted in many of the FFELP lenders dropping out of the program completely or selling their loans to the U.S. Department of Education. Despite all the turmoil, NMEAF was able to fund every loan request and continues to participate in FFELP, accumulating assets of more than $1.3 billion. Our programs and services are customized to meet the unique needs of New Mexico borrowers to include first generation college students. Outreach representatives work with schools of all sizes in every area of the state providing vital college information. The support of New Mexico colleges, universities and outreach programs to students and parents from elementary, middle school, high school and college resulted in an explosion of new opportunities in which NMEAF staff was involved. In addition to events held annually, NMEAF was approached by new outreach programs serving New Mexicans most notably, Carve Your Path, New Mexico School Counselors Academy, New Mexico for Youth in Community Annual Youth Practioners Summit, and the Lt. Governor s Summit. NMEAF s rise as the No.1 outreach program in New Mexico, its commitment to providing excellence in customer service, and the continued development of products and services that best serve the New Mexico community are once again responsible for our continued success as a viable FFELP business partner to all New Mexicans. Elwood G. Woody Farber President 3 New Mexico Educational Assistance Foundation Annual Report 2009

5 Serving New Mexico Communities NMEAF works closely throughout the year with postsecondary institutions, routinely visiting college and lender partners and assisting with various aspects of loan administration. In addition, the Foundation assists students of all ages and those who work with students in accessing college preparation tools. Corporate citizenship has always been a priority to NMEAF. Since its inception, the Foundation has actively supported educational initiatives throughout New Mexico. Last year, NMEAF staff members reached nearly 25,000 students, parents, and educators at workshops, presentations and counselor trainings throughout New Mexico. Here are some community activities in which the Foundation participated in 2009: New Mexico Higher Education s Carve Your Path Initiative New Mexico Education Council College Days College Goal Sunday New Mexico College Awareness Coalition College Fair Pathways to College Day with New Mexico Higher Education Department at the New Mexico State Fair School-to-World program Golden Apple Foundation Awards for Teacher Excellence American Cancer Society Relay For Life team and corporate sponsorships Albuquerque Public Schools Join-A-School Program New Mexico Coalition of Charter Schools Conference Supercomputing Challenge Fair New Mexico DECA Program Rocky Mountain Association of College Counselors College Fair New Mexico Commission on the Status of Women Greater Albuquerque Chamber of Commerce Albuquerque Reads Program University of New Mexico Lobo Reads Program New Mexico Educational Assistance Foundation Annual Report

6 LOAN PROGRAMS Stafford & PLUS Loans The Federal Stafford Loan program provides low interest loans to eligible students. Students with demonstrated financial need can get subsidized Stafford Loans on which the federal government pays the interest while borrowers are in school, and during grace or during approved deferment periods. Students who do not qualify for interest subsidies or who need additional assistance can take out unsubsidized Stafford Loans, on which they are responsible for paying all interest while in school, grace or deferment. For both types of loans, repayment begins six months after the student ceases to be enrolled at least half-time. The Federal PLUS Loan program allows for financial assistance to both parents of dependent undergraduate students and graduate students. Eligibility depends on the borrower s or cosigner s credit history. During the 2009 fiscal year, NMEAF disbursed more than $168 million in subsidized and unsubsidized Stafford Loans and PLUS loans. Consolidation Loans NMEAF also participates in the Federal Consolidation Loan program, in which borrowers consolidate multiple eligible student loans into a single new loan with a fixed interest rate, allowing borrowers to make lower monthly payments over longer repayment periods. On July 24, 2009, the consolidation program was suspended, except for current borrowers. Link Loans In addition to serving students and their families through the FFELP program, NMEAF has offered the Link education loan to help fill the gap between the cost of attendance and the amount of other aid a student receives. The Link loan program is a private, credit-based loan program. NMEAF suspended the Link program on August 8, The $162,000 in disbursements made in fiscal year 2009 were from loans approved for disbursement prior to this date. Secondary Market Purchases NMEAF provides a secondary market for other lending institutions. This allows lenders to sell their Stafford and PLUS loans to NMEAF before borrowers enter repayment, and expands the pool of available student loan funds. In FY 2009, NMEAF purchased secondary market loans totaling over $50.3 million. 5 New Mexico Educational Assistance Foundation Annual Report 2009

7 In FY09, NMEAF had four participating lenders: Bank of the Rio Grande, Bank of the West, Citizens Bank of Clovis and Bank of America. In addition, NMEAF purchased loans from the University of New Mexico s school-as-lender program. Collections In the past year, the organization serviced 154,635 loans in repayment, totaling more than $781 million, and collected approximately $99 million in principal, interest and related fees. Using Innovation and Creating Opportunity for Students In 2009, NMEAF suspended most of the borrower benefit programs for loans disbursed after July 1, The only remaining benefit programs are More Money which pays the one percent default fee, and Easy Pay, which offers a.25 % interest rate reduction for electronic loan payments. Borrowers whose loans were disbursed prior to July 1, 2009 continued to receive significant savings in programs such as More Money, Instant Savings and Pot of Gold, as well as Nurses for New Mexico, MDs for New Mexico and Teachers for Tomorrow. In fiscal year 2009, the Foundation returned more than $5.5 million to borrowers, bringing the program s total benefit to students and families to approximately $33.4 million since the program s inception. Borrower Benefit Program More Money, Instant Savings, Easy Pay & Pot of Gold In 2009, the More Money program benefited borrowers, as NMEAF paid the one percent default fee and 1.5 percent origination fee through June 30, 2009, allowing borrowers to use more of the loan proceeds for their educational expenses. This year, the Foundation paid $2 million in default fees and $7,737 in origination fees for 29,374 borrowers Through the Instant Savings program, borrowers receive a half-percent interest rate reduction when their student loans enter repayment. In 2009, a total of 29,441 Foundation borrowers qualified for Instant Savings, realizing approximately $1.3 million in interest savings. Easy Pay provides a quarter-percent interest rate reduction for borrowers who authorize automatic payment from their bank accounts. At year-end, Easy Pay participation was up 16 percent, as 5,725 borrowers took advantage of this option and saved more than $200,000 in interest. Pot of Gold provides a five-percent reduction in borrowers outstanding principal loan balance after their first 48 consecutive, on-time, monthly payments. More than 500 borrowers qualified for this benefit in fiscal year 2009, reducing their loan costs by over $371,000. New Mexico Educational Assistance Foundation Annual Report

8 Teachers for Tomorrow, Nurses for New Mexico & MDs for New Mexico Teachers for Tomorrow, Nurses for New Mexico and MDs for New Mexico were developed to help New Mexico attract and retain workers in critical fields with ongoing shortages of professionals. The programs allow student borrowers that work fulltime in New Mexico in designated professions to pay zero percent interest when their Stafford Loans enter repayment, and a 1.25 percent interest rate on their Consolidation Loans in repayment. Participation in Nurses for New Mexico, which covers both Registered and Licensed Practical Nurses, grew by 20 percent in FY This resulted in interest savings of approximately $493,000 for New Mexico nurses. Participation in Teachers for Tomorrow included 846 New Mexico public school teachers, saving about $946,000 in interest last year. MDs for New Mexico allows student borrowers who become full-time practicing physicians in New Mexico to pay zero percent interest on their Stafford Loans when they enter repayment, and 1.25 percent interest on Consolidation loans when they enter repayment. Fourteen program participants realized savings of more than $72,000 in FY New Mexico Educational Assistance Foundation Annual Report 2009

9 FFELP LOAN VOLUME FFELP Loan Originations $125 $128 $168 Millions 50 Secondary Market Purchases $45 $53 $50 Millions New Mexico Educational Assistance Foundation Annual Report

10 CONDENSED FINANCIAL INFORMATION (Unaudited) The Foundation s total assets at June 30, 2009 were $1.3 billion. Condensed financial information is presented below. Year Ending June 30 ($000's) Capital Assets , , ,135 Student Loan Receivables and Other Assets ,288, ,166, ,024,726 Total Assets ,300, ,175, ,031,861 Long-Term Liabilities ,032, ,030, ,871 Other Liabilities , , ,206 Total Liabilities ,208, ,080, ,077 Net Assets: Invested in Capital Assets , , ,135 Restricted , , ,510 Unrestricted , , ,139 Total Net Assets , , ,784 Total Liabilities & Net Assets ,300, ,175, ,031,861 Year Ending June 30 ($000's) Revenues: Borrower Interest Income & Fees , , ,020 Federal Subsidies , , ,614 Investment Interest Income , , ,739 Loan Servicing & Other Revenue , , ,297 50, , ,670 Expenses: Direct Costs Federal Family Education Loan Program , , ,611 Overhead Costs Federal Family Education Loan Program , , ,850 Loan Servicing , Default Collection , , ,693 Change in Net Assets (3,521) , ,977 9 New Mexico Educational Assistance Foundation Annual Report 2009

11 BOARD OF DIRECTORS NMEAF is governed by an 11-member Board of Directors composed of the following: A regent from each of the six four-year public institutions of higher education A representative of a private college or university Two officers or directors of financial institutions in the state The State Treasurer A representative of a two-year public community college or technical college RICHARD N. CARPENTER, Chairman New Mexico Institute of Mining and Technology, Regent PAUL WEAVER, Vice Chair Bank of America EILEEN GIVLER, Secretary & Treasurer Bank of the West JERRY A. WALZ Western New Mexico University, Regent NANCY R. LONG New Mexico Highlands University, Regent JAMES B. LEWIS New Mexico State Treasurer ROBERT P. MATTEUCCI Central New Mexico Community College, Board Member RAYMOND G. SANCHEZ University of New Mexico, Regent BRYAN E. VALENTINE St. John s College, Treasurer CHRIS ANAYA New Mexico State University, Regent PAULINE PONCE Eastern New Mexico University, Regent EXECUTIVE STAFF ELWOOD G. WOODY FARBER President BRAD ALLPASS Vice President Finance CECILIA EVJEN Vice President and Chief Operating Officer GAVIN GILLETTE Vice President Administrative Services PAUL C. PADILLA Vice President Information Technology REGINALD J. STORMENT Vice President and General Counsel CHRISTOPHER J. SANCHEZ Director Internal Audit New Mexico Educational Assistance Foundation Annual Report

12 MISSION New Mexico Student Loans is an association of full-service lending, loan servicing and loan guarantee organizations providing quality financial services and cultivating strong professional relationships to encourage and assist in the pursuit of higher education, thus enhancing the quality of life and future success of our stakeholders. VISION New Mexico Student Loans will be the guarantor, lender and servicer of choice by proactively providing innovative products and services to, and understanding the needs of, our stakeholders