Less than a 10 minute drive up Tobacco Road separates two of the biggest college basketball powerhouses of all-time and also separates the biggest rivalry in college basketball. The Duke Blue Devils and the North Carolina Tarheels own one of the most hated rivalries in all of sports and they will take to the court to do battle again this Wednesday night in Durham, N.C. Both schools rank in the Top 5 in all-time wins in NCAA Basketball and have a combined 7 National Titles among them as well. These two ACC opponents have played in games year after year with Conference and National Title hopes and it has brewed into one of the most exciting college basketball spectacles in the country. The two schools meet up again this Wednesday night in a tie for first place in the ACC in one of the most highly anticipated match-ups of the season when the Duke Blue Devils host the North Carolina Tarheels on Wednesday.
North Carolina has won 4 of the last 5 meetings against the Blue Devils and they will be the favorite to win again this Wednesday. North Carolina has really been playing well over the last few weeks winning 7 straight games. The Tarheels sport the 2nd ranked scoring offense in America average 92.3 points per game and they will try to post some high scoring totals when they take on the Blue Devils. The Tarheels are led by the play of national standout Tyler Hansbrough who is averaging 22.1 points per game. However, Wayne Ellington is averaging over 21 points in his last 6 games and is becoming a bigger threat as the season progresses. Ellington and Ty Lawson will be the two excellent guards controlling the back court for the Tarheels. Both players have the ability to take over the game and they should give the Blue Devil guards a really hard time. The Tarheels should have the talent advantage, but that does not mean much against Coach K and the Blue Devils in a big rivalry showdown.
Duke leads the ACC in scoring defense holding opponents to 61 points per game. However, over the last two weeks the Blue Devils have not been able to score themselves. Fresh off one of the lowest point totals in the last two decades where the Blue Devils were held to 47 points by Clemson, Duke again only scored 19 points in the first half against Miami. Duke did respond nicely scoring 49 points in the 2nd half and edging out the Hurricanes in overtime. However, the Blue Devils will have to be more persistent Wednesday on offense. Junior Gerald Henderson has been carrying the Duke offense over the last few weeks while Kyle Singler who has lead the team all year in scoring has been struggling. Henderson, Singler, and the rest of the Blue Devil team will all have to step up on Wednesday and play better to capture what would be an extremely big win for the Blue Devils.
Guaranteed student loans: operational headache or pathway to profits and new business?
Credit Union Executive July 1, 1992 | Glatz, Dana The answer to growth and higher revenues isn’t in creating new, better products. Instead, the answer lies in offering new, better methods of member service.
That’s because the financial services industry demanded and received technology that enables quick, easy creation of new products. But the fallout of this is that a competitor can quickly and easily duplicate any product. As a result, your competition has increased.
There was a time when consumers had limited access to information about competing products. They couldn’t find information about any specific product, let alone comparison shop.
Automation, increased competitiveness, and expanded communications capabilities, however, have made it a whole new world. Now, consumers use consumer service organizationss to help them evaluate options without directly contacting anyone associated with a product.
The Guaranteed Student Loan (GSL) Program is one area credit unions can choose to deliver better member service.
Student loans today, active members tomorrow The program was established in 1965 to make loans to middle-class families facing cash-flow problems while meeting college costs. GSLs played a major role in ensuring educational opportunities for millions of people. Since then, lenders have loaned more than $102 billion to 48 million students, many of them potentially high-quality members.
“Whatever [the program's] flaws, we shouldn’t lose sight of its enormous impact in providing the United States with a more educated populace,” says Harvard Graduate School of Education visiting professor David W. Breneman in his paper, “Guaranteed Student Loans … Great Success or Dismal Failure?” “Our system of higher education is now fully dependent on the existence of credit for college.” By definition, student loans go to individuals with the highest income-earning potential during their working lives. Countless businesses spend billions to reach them. They often first venture into the unfamiliar financial world of credit cards, auto loans, checking accounts, and other products when they enter or leave college.
Why, then, do some credit unions view student loans in a negative light? Because operational problems plague many credit unions with student loans in their portfolios.
And yet, many credit unions have learned, through a combination of new technologies and marketing techniques, that the student borrower represents a built-in, untapped resource for locating and influencing potential new members.
Student loans can be profitable Orange County Teachers Federal Credit Union, Santa Ana, Calif., conducted a follow-up survey of several hundred student borrowers. Within a year, more than 58% of those surveyed brought other services–Visa cards, share draft and checking accounts, auto loans, and more.
The credit union has offered student loans for two years and now has 1,000 loans collectively worth $3.6 million.
“Student loans can be profitable,” says Linda Hembo, who is in charge of the student loan portfolio. “They bring in other kinds of business.” Saratoga Teachers Federal Credit Union, Saratoga Springs, N.Y., finds student loans profitable as well, says Joan Wagner, general manager. “They also give us an opportunity to expand our services to a wider community of members, because most of our student borrowers are children of current members.
“Even after the students complete their schooling and move away, they continue their relationship with the credit union. We have members all over the country,” sayss Wagner. site citi student loans
GSLs carry the highest rate of return of any 100%-government-backed investment mechanism (Figure I). That’s why many lenders aggressively pursue student loan business as a profit center.
Western Computer Services (WESCO) of Helena, Mont., surveyed more than 30,000 financial institutions, including more than 100 credit unions, during a three-year telemarketing study. It also interviewed staff at the U.S. Departmmnt of Education, state guarantee associations, and secondary markets. Considering allowance for loan loss, respondents say student loans can be the single most profitable loans they make.
Operational problems are widespread Making a profit on student loans isn’t easy, however. Because student loans appear much like any other loan, many lenders try to process them through their general lending systems. The similarity, however, is an illusion. Originating a student loan requires input from financial needs analysts, the student borrower, a guarantee agency, and the educational institution (Figure II). [FIGURE II OMITTED] You can collect interest from two different sources–the borrower and the Department of Education. Each loan’s repayment is deferred, based on a complicated set of regulations. When a loan does enter the repayment structure, it’s subject to strict “due diligence” procedures.
The program also is subject to audits by the Department of Educational and the local guarantee agency. Selling the loans to the secondary market requires adherence to rules that each secondary market may define differently.
These differences guarantee a catastrophe–unless you have specific new software tools to handle the operational complexitie due to regulations.
Department of Education audit findings and U.S. General Accounting Office reports indicate that lenders’ operational problems for student loans are widespread. The rejection rate of ED Form 799, the government billing form the Department of Education requires from lenders each quarter, is high. This form is the basis of interest and special allowance income to financial institutions. go to site citi student loans
Guarantee agencies conduct thousands of training hours nationwide ,showing lenders how to complete the GSL program successfully. Yet, program complexities prevent successful submission of the form without help (Figure III).
Figure III 1990 Most Frequent Lender Review Findings * Failure to notify credit bureau(*) * System needed to cancelk Stafford Loan checks outstanding after 120 days * Incorrect calculation of interest benefits * Interest subsidy billed on loans in forbearance status(*) * Inadequate documentation for deferments * Interest billing: Late conversion(*) * Untimely removal of loan sales from interest and special allowance * Allowance principal balances for special allowance calculated incorrectly * Incorrect reporting of special allowance balances * Origination fees are not reconciled(*) (*) 1989 most frequent findings Because it’s difficult to find real expertise in this area, some lenders often decide: 1) to leave the program and take their lumps, or 2) more likely, to originate as few student loans as possible to minimize the loan’s effect on operations.
How to prevent difficulties Does it make sense for anyone to consider the program? Yes. The challenge is to make sure your credit union can realize all the GSL program’s advantages while preventing operational difficulties.
Here’s a six-point checklist to help you decide about GSLs:
* Find expert help to assist you. Verify the resource’s credibility and check references. Be sure the resource has a thorough working knowledge of all aspects of student loans. Once you’ve identified a good resource, outline your problems and interests.
* Develop a marketing plan. Most students originate their loans through school financial aid offices. Cultivate good relationships with schools to generate new business. This is one area where you can generate a large volume of future high-quality member relationships by selling only one relationship–the relationship to the school. Then, cross-sell potential or new members generated through new student loan business.
* Identify the tools necessary to support your student loan operation’s structure. Regulations can change; be sure your program will keep pace.
You’ll need answers to the obscure questions that arise day-to-day. Demand timely access to these answers from your product provider.
* If you already participate in the student loan program, take steps to collect all that’s due your credit union.
You may need to reconstruct your portfolio. By not filing the ED Form 799 properly, lenders often underestimate the amount of income left on the table (Figures IV and V). In nearly every case, the initial reconstruction expense is more than offset by additional income received.
* Make the capital investment necessary to purchase software and training to operate within the demanding GSL environment.
* Implement your plan. Some tools can help streamline your operations and answer your questions. Your portfolio will remain in compliance, and audit problems won’t occur. Your loan volume will rise, and your student loan portfolio will generate income. Active cross-selling will increase your loan volume in other targeted areas.
Software tools can help A variety of special tools exists to help you. For example, WESCO’s HELP system and strategic services save your staff time and track important variables affecting student loan income.
Hembo reports that computing the ED 799 report once took eight to 15 hours. Today she uses HELP to complete the task in minutes.
Wagner’s specialized system figures average daily balances, keeps track of transactions, and provides due diligence in a timely fashion.
A spokesperson for the Department of Education says using “student loan-specific software is good, if not essential, in maintaining your student loans” (Figure VI).
Differentiation in a commodity marketplace is the key to the future. And student loans provide one avenue for excellent member service.
Dana Glatz is chief executive officer of Western Computer Services (WESCO), a Helena, Mont., firm. More than 500 lenders in 42 states, including 100 credit unions, use its HELP program.
Glatz, Dana
