Kevin Moehn
Chief Executive Officer
Moehn & Associates
Some schools have chosen to act now to solve specific student loan problems despite the present financial market uncertainties. More than one campus has found that a problem/solution approach with a strong partner can can reap dividends that exceed expectations. Kevin Moehn plays a key role in several such partnerships.
What did your work at the Graduate Management Admissions Council uncover?
Students and schools that formerly had access to non-cosigned student loans for foreign residents who attend in the U.S. found their loan sources had evaporated. For graduate business schools in particular, this is a real problem as about 30 percent of their full-time enrollment is foreign students.
What was going on in the financial marketplace that contributed to the problem?
The credit crisis made it very difficult for lenders to raise capital for private student loans. Many lenders withdrew from private loans entirely. And many remaining lenders restricted their lending to blue-chip borrowers with creditworthy U.S. co-signers.
What factors made it likely that American graduate schools could themselves redesign student loans and their availability?
Many of the affected schools have marquee names which are attractive to investors. Their students need to borrow significant amounts, and they have very good income potential after graduation. These factors enabled a number of problem/solution approaches.
What other factors enabled schools themselves to achieve a successful student loan redesign?
Business Schools at UCLA and the University of Chicago understand finance and the capital markets very well. They can leverage their brands and buying power in it. When they were teamed up with a financier like Deutsche Bank, a beneficial financing infrastructure resulted. It is called the Affiliated Loan Program for Students (ALPS). The resulting ALPS loans at UCLA and Chicago can ultimately be offered to any students they wish and at attractive rates.
What problem has one college affiliate solved successfully?
University of Chicago's Booth School of Business offers non-U.S. students affordable loans with no co-signer. The school was able to do so without any out-of-pocket expense. The school does not insure individual loans, and the school does not own any loans. The school takes part in the financing structure with only a controlled contingent liability.
Do the loans vary from school to school or borrower to borrower?
They can, because each ALPS arrangement is customized to each school. Fees, interest rates and student populations served can vary within a university at the school's discretion. The same variety is available from campus to campus.
How well is Deutsche Bank suited as the major financier of ALPS, and why?
Deutsche Bank is one of the world's largest financial institutions. They have a global presence and a long history of financing higher education. As we worked the ALPS design up the chain of command in 2009, each successive Deutsche Bank executive was more enthusiastic than the last.