efc legal conference
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EFC Legal Conference. Matthew Myers – SVP, Private Loan Services [email protected] 858-248-1372 Goal Structured Solutions Largest third party student loan administrator ($19.4b AUM) Largest third party student loan special servicer ($4.5b AUM) - PowerPoint PPT PresentationTRANSCRIPT
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EFC Legal Conference
Matthew Myers – SVP, Private Loan Services [email protected] 858-248-1372
Goal Structured Solutions Largest third party student loan administrator ($19.4b AUM) Largest third party student loan special servicer ($4.5b AUM) Clients include: not-for-profits, hedge funds, investment
banks, colleges and universities, insurance companies, private equity and asset-backed trusts
Manage lifecycle of assets from origination to collections We traffic in data – forecasting, modeling and valuation
experts utilizing two decades of loan-level data
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Data Limitations
There are two certainties when it comes to data:1. Data is valuable2. That value is limited by the experience and expertise of the
entity analyzing the data, and the additional they have available at their disposal
This can be illustrated by two real world examples of how data would suggest one outcome yet the actual result is dramatically different, with significant implications for various parties
Pool APool B
Asset Type Private Student LoansPrivate Student Loans
Issuer Issuer XIssuer X
Average FICO 719712
Cosigner % 84%84%
Average Balance $11.5k$14.4k
Average Loan Rate L+4.49L+5.10%
Undergrad Share 84%85%
But underneath the surface…
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Surface Similarities
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...Dramatically Different Results
Pool A Pool B
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20.00%
25.00%
30.00%
Gross Charge-Off Rate 6 Years Post-Issuance%
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Pool APool B
Asset Type FFELP Student LoansFFELP Student Loans
Loan Type ConsolidationConsolidation
Issuer Issuer YIssuer Z
Average Balance $39k $52k
Average Loan Rate 4.42%5.14%
Average Term 24.1 years 26.4 years
Channel DTCDTC
Also comparable using standard loan-level data…
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FFELP Assets
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...Widely Disparate Performance
Pool A Pool B0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
On-Time Rate Reduction Borrower Benefit Qualification Rates
% o
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Attributes that play a vital role in asset performance that are not always contained in loan-level data: Program guidelines Non-credit worthy borrower quality Non-FICO underwriting criteria School type Area of study Origination channel Servicer and contractual SLAs Use of supplemental third parties Geographic concentration
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Not All Similar-Looking Assets Are Created Equal
While data can inform, an overreliance on incomplete data can have serious adverse consequences: Originators – Unprofitable products Issuers – Overestimate residual value Investors – Buy worthless subordinate bonds and/or resids Service providers – Overestimate fee streams Insurers – Underpriced premiums on wraps
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Implications of False Security
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Data is an Input, Like Fuel
You can put the same fuel in a Yugo and a Ferrari and get very different results
At GS2 our data, experience and expertise ensures the Ferrari and not the Yugo