Student Lending Analytics (SLA), an independent research and advisory firm focused on finding the best lenders for students, performed a flash survey last week to determine the prevalence of emergency loan programs at institutions and analyze the structure of these programs including term, interest rates and eligibility requirements.

The survey found that given the ongoing economic challenges, more schools are emphasizing their emergency loan programs. In addition, schools should review the structure of their emergency loan programs because the Federal Reserve's private loan regulations exempt institutional loan programs with certain characteristics.

The survey found that:

• Overall, 2/3 of survey respondents indicated that they have a short-term emergency loan program with 6% indicating that they were considering starting one up at their institution
  • 88% of respondents at 4-year public institutions indicated that they had an emergency loan program while 55% of 4-year private institutions had a current program in place

• Over 95% of emergency loan programs had been in existence for over 5 years

• In terms of funding, the most prevalent source was a donor gift (51% of respondents) with the University’s general fund the next most cited source of funds by 35% of respondents

• In terms of program administration, 74% of survey respondents indicated that the financial aid office had primary responsibility while 47% indicated that the business office was responsible for managing the program

• In terms of fund size, 62% of respondents indicated that their emergency loan fund had less than $100,000 in funding with only 3% having assets over $1 million

Here were the most common characteristics of the emergency loan programs cited by respondents to the survey:

• Almost 2/3 of programs (64%) charged no interest on these loans

• The five most frequently cited eligibility requirements were:

• Proof of current enrollment:  77% of respondents with emergency loan program in place
• Signed promissory note:  74%
• No existing emergency loans:  64%
• Completed paper application:  54%
• Student account in good standing:  46%

• The three most common maximum loan limits were:

• Between $250 and $499:  36%
• Between $500 and $999:  25%
• Between $1,000 and $2,499:  14%

• 39% of survey participants had no aggregate borrowing limits in place

• Most common loan term was "end of academic term" which was selected by 27% of respondents followed next by 30 days (23%) and 60 days (16%)

• Note that Federal Reserve regulations on private education loans will exempt loans provided by covered educational institutions if they have a term of 90 days or less

Posted 08/31/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.