Contact / Dave Blumberg
TransUnion
E-mail /
Telephone / 312 985 3059

For Immediate Release

TransUnion: Student Loan Delinquencies Down This Quarter,

But Rise Year Over Year

Chicago, April27, 2010 – Over the next six weeks, colleges, universities and trade schools will hold their spring graduation exercises. Within six months, many graduates will begin paying back student loans that have been accumulating over the lasttwo, four or more years. In a recent analysis of trends in the student loan industry, TransUnion found that private student loan delinquency (the ratio of student loans 90 days or more past due) decreased approximately 4.9 percent, down from a high of 6.34 percent in 3Q2009. This quarterlydecrease represents a reversal of a five-quarter trend that began in 2Q2008.

Thirty-day student loan delinquency rates experienced a 6.6 percent drop, down from a high of 8.06 percent in 3Q2009. However, year-over-year for the fourth quarter, the 30- and 90-day delinquency rates are upfrom 2008 (10.4 percent and 11.67 percent, respectively) and from 2007 (16.93 percent and 15.52 percent, respectively).

This analysis on the student loan industry is based on information culled from TransUnion’sU.S. consumer credit database and proprietary analytic capabilities focused on student lending. Of the student loans contained in the database, approximately 20 percent are estimated to be private loans, also known as “alternative” loans, and 80 percent are estimated to be federal or government-backed loans (Stafford, Perkins, PLUS and GradPLUS).

4Q 2009 Statistics

The highest private student loan delinquency rates, defined as 90 days or more past due, were in Florida (9.44 percent), Mississippi (9.09 percent) and Tennessee (9.07 percent). The lowest delinquency rates were found in Vermont (3.28 percent), New Hampshire (3.60 percent) andNorth Dakota(3.75 percent). Areas showing the greatest percentage drop in delinquency from the previous quarter were Mississippi (-14.45 percent), Alabama (-12.41percent) and Kentucky

(-10.84 percent).

Year-over-Year Comparisons

While the nation as a whole experienced an 11.67 percent increase in private student loan 90-day delinquency from the previous year, state-level increases are varied. For example, areas showing the greatest percentage increase were, for low student loan volume states, Vermont (+29.80 percent) and Idaho (+24.66 percent). For higher loan volume states,Illinois (+20.32 percent) and Massachusetts (+21.75 percent) ranked at the top. Of the 50 states, only three showed a decrease year over year; Alabama (-0.50 percent), Michigan (-0.56 percent) and Louisiana (-4.47 percent).

The average national private student loan debt per loan on active accounts for the quarter was $17,754. The average account balance for delinquent student loan accounts 90 days or more past due was $13,033.

States with the highest volume of new private student loans during the quarter were California, Texas, New York, New Jersey and Minnesota, representing 38 percent of all new loans for the country.

Analysis

“Due to an extended ‘freeze’ in U.S. capital markets beginning in late 2007 and the expectation of new regulation and ultimate restructuring of the private portion Federal Family Education Loan Program (FFELP), the entire student industry has been a roller coaster for lenders, students/families, guaranty agencies and educational institutions alike,” said Thomas Morrissey, manager, TransUnion’s Analytic and Decisioning Services business unit. “Public sources have estimated that the total dollar value of new private loans originated in 2009 fell by nearly half when compared to the private loan heydays of 2006 and 2007. Federal loans, which faced similar funding challenges with their Asset-Backed Securities (ABS), Auction Rate Securities (ARS) and Variable Rate Demand Notes (VBDN) vehicles, still increased more than 30 percent for the same period.”

Attributing factors to the current situation include:

-More displaced and under-employed workers seeking retraining/certificates/degrees with the extended recession. For example, proprietary/for-profit educational institutions are reporting year-over-year annual record enrollment growth since 2007

-Increased student awareness that government loans are usually a better primary education funding vehicle than private loans. A 2007 studyby the American Council on Education (ACE) indicated that one in five undergraduate students with private loans who qualified for government loans, did not have a government loan.

-Continued depressed home valuations have severely limited the once popular option of using home equity loans to fund educational expenses

-Federal student loans, even FFELP-sourced, still retained their government guarantee (up to 97 percent of principal), even when capital markets freeze up. The government injected liquidity into both segments of the student loan market through Term Asset-Backed Loan Facility (TALF) and Ensuring Continued Access to Student Loans Act (ECASLA) funding.

Outlook

“TransUnion expects the number of new private student loans to remain flat, possibly incurring an up-tick by end of 2010, then recover, for the 2011/2012 school year. With most specialty private lenders out of the market; capital markets still cool to Student Loan Asset Backed Securities (SLABS);and Ensuring Continued Access to Student Loan Act (ECASLA) set to expire in September of this year, only the largest banks have the financial capacity to book and hold private student loans in the near term,” continued Morrissey. “But even as government loans retake a larger share of today’s student loan business, private loans are expected to steadily regain a good portion of their prior market share as the economy rebounds due to escalating tuition costs, no expected increase in federal loan limits and a still-soft real estate marketplace.”

About TransUnion

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 25 countries on five continents.

Graphics and/or photographs to accompany this release can be obtained by members of the media by contacting Cliff O'Neal () at 312-985-2540 or Dave Blumberg () at 312-985-3059.

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