New Mexico Educational Assistance Foundation. Annual Report 2007

Transcription

1 New Mexico Educational Assistance Foundation Annual Report 2007

2 Executive Message I Serving Students throughout the State n 1981, the State Legislature created the New Mexico Educational Assistance Foundation (NMEAF) to help make higher education more affordable and accessible to New Mexicans. The Foundation has flourished as a not-for-profit with assets of more than $1 billion. NMEAF continues to support colleges, students and their parents through a statewide outreach program that targets high school, middle school and nontraditional students and by positioning itself to meet the changing financial and regulatory environment. er $1.6 million returned to borrowers principal balances in the form of loan forgiveness. Total loan volume for the 2007 fiscal year exceeded $365 million, up 25 percent from Consolidation Loan volume reached $193 million, a 78 percent increase over the previous year. In 2007 and since our inception in 1981, the success of NMEAF has had everything to do with the support and collaboration of business partners and customers. In the coming years, we especially look forward to working with our new strategic partners in the Middle School Outreach Campaign the New Mexico Higher Education Department, the New Mexico Public Education Department, the College Success Network and the New Mexico Lottery Commission. NMEAF has achieved a 2.8 percent cohort default rate, as an originating lender, in the most recently published statistics, compared to a 4.6 percent national average. For the third consecutive year, Foundation employees earned extraordinary accolades for customer service, receiving a cumulative score of 6.2 on a seven-point scale in an independent customer satisfaction survey. In 2007, NMEAF staff continued to simplify the financial aid process for students, parents and school personnel by developing and refining innovative online tools. A new online customer gateway and Stafford loan web products were unveiled in 2007, and together provide a userfriendly loan application process. The gateway will allow for future access to PLUS, Grad-PLUS and private (Link) loan products. As the Foundation celebrates 2007, we continue to seek ways to better serve New Mexicans and meet borrowers needs across the country. NMEAF s commitment to providing first-class customer service, along with targeted marketing strategies, including middle school outreach efforts, direct mail programs, a statewide public relations campaign and ads in high school and college publications, has contributed to its ongoing success. Borrowers were the real beneficiaries of this success and sound fiscal management, as the Foundation returned to borrowers a record amount in the 2007 fiscal year. This included approximately $9 million in fee and interest savings through the Advantage Programs and anoth- 1 NMEAF Annual Report 2007 Dr. Jay Gurley Chairman Elwood G. Farber Woody President

3 Our 2007 Accomplishments u Funded more than $157 million in education loans for 39,274 students and parents u Disbursed approximately $193 million in Consolidation Loans a strong 78% increase helping more than 16,000 borrowers better manage their loan repayments u Issued $104 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 u Purchased more than $14 million in education loans from partner-lenders: Bank of Albuquerque, Bank of America, Bank of the West, Bank of the Rio Grande and Citizens Bank of Clovis u Purchased $30 million from the University of New Mexico school-as-lender loans u Returned to borrowers approximately $9 million in borrower benefits u Forgave approximately $1.6 million in student loans for 107 deserving borrowers u Provided more than $97,000 in scholarships for students at New Mexico colleges and universities through an endowed scholarship program u Reduced NMEAF s published cohort default rate, as an originating lender, to 2.8%, significantly below the 4.6% national average u Awarded 25 $1,000 college scholarships to Class of 2007 seniors from public high schools throughout New Mexico NMEAF Annual Report

4 President s Message In 2007, NMEAF combined many of the company s job responsibilities to provide better customer and business partner efficiencies. The Foundation has received positive feedback regarding this evolution from customers and business partners, expressing thanks and support for the changes that have provided increased access to departments within NMEAF. NMEAF continues to streamline the financial aid process by creating novel tools that will increase efficiency for students, parents and school personnel. Unveiled in 2007, a new online customer gateway and several Stafford loan web products, will together provide seamless loan application process and allow for future access to PLUS, Grad-PLUS and private (Link) loan products. NMEAF Evolving and Improving to Meet the Needs of Students This year, NMEAF continues to provide statewide leadership by modifying procedures for better service to our partner schools and their students through internal departmental changes, technology improvements and refined outreach projects. These changes will improve access to college, enhance the financial aid process and help students complete their educational goals. It was a year of transformation for the industry and for NMEAF, as we continuously evolve and make improvements that will serve New Mexico students. In early 2007, the New Mexico Educational Assistance Foundation and other statewide entities formed a partnership to discuss the importance of early college preparation and career exploration for pre-high school students. The Middle School Outreach Campaign began as a cooperative partnership of the New Mexico Educational Assistance Foundation, the New Mexico Higher Education Department, the New Mexico Public Education Department, the College Success Network and the New Mexico Lottery Commission and has grown by more than 30 additional organizations. Elwood G. Woody Farber President 3 NMEAF Annual Report 2007

5 Serving Our Community NMEAF works closely with postsecondary institutions routinely visiting college and lender partners. 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. Each year, the Foundation has actively supported educational initiatives throughout the state as its employees have volunteered time and energy toward local non-profits by supporting worthy community projects. Last year, NMEAF staff members hosted more than 27,000 students and educators at workshops, presentations and counselor trainings. Here are some community activities in which the Foundation participated in 2007: u New Mexico Education Council College Days u College Goal Sunday u New Mexico College Awareness Coalition College Fair u College & Career Day activities organized by the New Mexico Department of Workforce Solutions u Pathways to College Day at the New Mexico State Fair u Gobs of Jobs Career Fair u School-to-World program u Golden Apple Awards for Teacher Excellence u American Cancer Society Relay For Life team and corporate sponsorships u U.S. Marine s Toys for Tots Campaign u Albuquerque Public Schools Join-A-School Program u New Mexico Coalition of Charter Schools Conference u Supercomputing Challenge Fair u Rocky Mountain Association of Counselors College Fair NMEAF Annual Report

6 FFELP Loan Volume 5 NMEAF Annual Report 2007

7 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 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. During the 2007 fiscal year, NMEAF disbursed more than $157 million in subsidized and unsubsidized Stafford Loans and PLUS loans. Consolidation Loans NMEAF also participates in the Federal Consolidation Loan program, which allows borrowers to 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. In 2007, 16,150 borrowers consolidated loans with NMEAF with loans totaling more than $193 million a 78 percent increase over the previous year. Link Loans In addition to serving students and their families through the FFELP program, NMEAF also offers a private, credit-based loan program, the Link Education Loan, which helps fill the gap between the cost of attendance and the amount of federal and state financial aid a student receives. NMEAF disbursed more than $2.3 million in Link Loan funds in Secondary Market Purchases NMEAF also provides a secondary market for other lending institutions. This allows lenders to sell their Stafford and PLUS loans before they enter repayment, their most costly administrative period, and expands the available pool of student loan funds. Currently, NMEAF has five participating lenders: Bank of Albuquerque, Bank of America, Bank of the Rio Grande, Bank of the West and Citizens Bank of Clovis. In addition, NMEAF purchases loans from the University of New Mexico s school-as-lender program. In FY 2007, NMEAF purchased secondary market loans totaling over $45 million. Collections A key to the Foundation s success and solvency is an effective collection program, which includes training NMEAF staff to assist student borrowers with managing their loan debt and, if necessary, litigation of delinquent accounts. In the past year, the organization serviced approximately 72,500 borrowers in repayment totaling almost $584 million and collected approximately $223 million in principal, interest and related fees. NMEAF Annual Report

8 Using Innovation and Creating Opportunity The Foundation has developed innovative programs that assist borrowers and help address the state s critical workforce needs. 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, provide significant savings for borrowers and benefit to the state. In fiscal year 2007, the Advantage Program returned more than $9 million to Foundation borrowers, bringing the program s benefit to students and families to approximately $16.9 million since In addition, approximately $1.6 million in loans was forgiven for borrowers. The Advantage Program Advantage Program benefits are paid from earnings on the Foundation s bond issues. Participation in each of the Advantage Program plans More Money, Instant Savings, Easy Pay and Pot of Gold greatly increased from last year. More Money, Instant Savings, Easy Pay & Pot of Gold The More Money program benefits borrowers each year as NMEAF pays the one percent default fee and 2.0 percent origination fee, allowing borrowers to use more of their funds for educational expenses. This year the Foundation paid $1.9 million in default fees and $3.4 million in origination fees for about 30,000 borrowers. With Instant Savings, borrowers receive a half-percent interest rate reduction when their student loans enter repayment. In 2007, 28,820 Foundation borrowers who qualified for Instant Savings, realized approximately $863,000 in interest savings, a 33 percent increase from 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 six percent, as approximately 4,200 borrowers took advantage of this option and saved more than $133,000 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 900 borrowers qualified for this benefit in fiscal year Pot of Gold benefits reduced borrowers loan costs by over $652,000 in fiscal year 2007 and participation increased by 68 percent. 7 NMEAF Annual Report 2007

9 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 retain and attract workers in fields in which the state is experiencing ongoing shortages of professionals. The programs allow student borrowers, who 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 93 percent in FY 2007, resulting in interest savings of approximately $209,000 for New Mexico nurses. Participation in Teachers for Tomorrow increased by 117 percent which allowed 670 New Mexico public school teachers to save about $568,000 in interest last year. MDs for New Mexico, the latest addition to the Foundation s Advantage Program, 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. Program participants began realizing significant interest savings in FY 2007 with $18,000 saved for five students. NMEAF Annual Report

10 New Mexico Educational Assistance Foundation New Mexico Educational Assistance Foundation CONDENSED BALANCE SHEET (UNAUDITED*) June 30, 2007 COMBINED FUND TOTAL June 30, 2007 June 30, 2006 Assets Cash & Investments $ 128,179,649 $ 129,338,311 Student Loans Receivable, net & Accrued Revenue 887,451, ,997,593 Debt Issuance Costs, net 6,506,883 5,959,897 Property & Equipment, net 7,135,362 7,143,391 Other Assets 2,587, ,687 Total Assets $ 1,031,860,947 $ 854,089,879 ============= ============= Liabilities & Fund Balances Bonds/Notes Payable & Accrued Expenses $ 897,311,228 $ 729,120,787 Arbitrage Rebate & Reserve for Excess Earnings 37,089,109 34,507,793 Accounts Payable & Accrued Liabilities 5,506,110 6,027,672 Other Liabilities 170, ,739 Total Liabilities 940,076, ,282,991 Fund Balances 91,784,317 83,806,888 Total Liabilities & Fund Balances $ 1,031,860,947 $ 854,089,879 ============= ============= CONDENSED STATEMENT OF REVENUES, EXPENSES & CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2007 (UNAUDITED*) COMBINED FUND TOTAL June 30, 2007 June 30, 2006 Revenues $ 73,669,978 $ 58,732,366 Expenses Interest Expense on Bonds & Notes Payable $ 34,511,467 $ 23,278,732 Salaries & Employee Benefits 9,276,518 8,581,940 Other General & Administrative 15,327,607 8,482,401 Arbitrage Rebate & Excess Earnings 2,671,192 5,883,939 Depreciation, Amortization & Provision for Losses 1,989,301 1,856,174 Trustee Fees & Debt Issuance costs 1,916,464 2,048,429 Total Expenses $ 65,692,549 $ 50,131,615 Excess of Revenue Over Expenses 7,977,429 8,600,71 Fund Balances, Beginning of Year 83,806,888 75,206,137 Fund Balances, End of Year 91,784,317 83,806,888 ============= ============= * Audited financial statements are available by request or may be viewed at 9 NMEAF Annual Report 2007

11 Executive Staff ELWOOD G. WOODY FARBER President BRAD ALLPASS Vice President Finance SARAH S. BRANCH Senior Vice President and Chief Operating Officer REGINALD J. STORMENT Vice President and General Counsel CECILIA EVJEN Vice President Administrative Services PAUL C. PADILLA Vice President Information Technology CHRISTOPHER J. SANCHEZ Director Internal Audit 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. 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. DR. JAY GURLEY, Chairman Eastern New Mexico University Regent RICHARD N. CARPENTER, Vice Chairman New Mexico Institute of Mining and Technology Regent EILEEN GIVLER, Secretary & Treasurer Bank of the West STEVEN ANAYA New Mexico State University Regent DR. WILLIAM DAVIS Western New Mexico University Regent JAVIER M. GONZALES 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 PAUL WEAVER Bank of America NMEAF Annual Report

12