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Program Overview

The EdAccess Private Student Loan Program is a viable option that is attainable for a diverse population in this economic environment. EdAccess has disbursed Private Student Loans to students in over 700 schools nationally. This growth is a reflection on the acceptance of our offering and the growing participation with credit unions as students become aware of the benefits of membership. Our network of 50+ credit unions to date subscribe to common underwriting, marketing, processing and servicing as administered and powered by Fynanz Inc. This network creates strength in product and benefits passed on to its members in the form of interest rates and terms. The loans are not sold to another investor; in fact the credit union will hold this loan through maturity.

The EdAccess Private Student Loan Program underwrites and scores applicants based on a proprietary scoring model; FACS, (Fynanz Academic Credit Score) developed by Fynanz Inc, which not only takes in to account traditional borrower credit and income information, but also recognizes the academic attributes and progress of the student borrower to determine placement in one of 6 lending tiers.

Academic Success Plays Significant Role in Predicting Repayment

Research shows that academic success, not the background of the borrower or the category of school attended, is the most significant factor in predicting which students will default on their loans. According to a comprehensive review of research literature by Texas Guarantee (TG) Research and Analytical Services, all else being equal, students who are successful in their studies tend to have lower default rates than those who are not.The findings are important because they open the door to new strategies for marketing, originating, and underwriting in the private student loan industry.

Traditional Models For Evaluating Risk Are Outdated

Most lenders in the private student loan market use traditional models for evaluation risk and pricing loan products. Typically, these lenders require the primary borrower (who is usually a student) to secure a cosigner for his or her loan. This is done to offset the risk associated with the student, who tends to be a young person with a limited credit history.

The traditional models assume that risks associated with students cannot be assessed accurately. As a result, the risk mitigation processes of most lenders focuses on cosigners, instead of focusing on students. The shortcoming of this approach to underwriting is that it overlooks the fact that the majority of these loans are repaid by the students themselves.

The TG Research study casts doubt on the usefulness of the traditional underwriting model when used exclusively. As noted in the TG study, “loan repayment appears to hinge on factors that are at least partially under the control of the borrower, the school, or both.”

In-School Servicing with Electronic Payment Options

With traditional private student loans, students don’t begin repaying their loans until after graduation. By that time, as the Sallie Mae/Gallup report suggests, many of them have lost track of how much they owe. For some borrowers, this lack of knowledge will lead to unfortunate consequences for the borrower, the cosigner and the lender.

Fynanz has developed programs that require students to make monthly payments on their student loans while they are still in school. The $25/month Pro-Active Payment Plan is a Tremendous Financial Literacy tool where the student is “Learning by Doing”. As the student completes their education experience they will also have a full awareness of the terms of the loan in a monthly statement that demonstrates the loan balance, current interest rate, number of payments and the allocation of the principal and interest of their payment. This tool also gives the borrower an opportunity to develop a positive credit history.

These Pro Active Payments are applied toward interest and principal on the loans. Helping students “know what they owe” will help students avoid digging a credit hole with the “Credit Card Shovel”. Students will be able to budget accordingly and within their means.