联邦学生贷款削减幅度超出预期；私人市场总规模可能翻倍

IndustryStudent Lendersec微信 9 Mark DeVriesResearch Analyst+1-212-250-4081Michael Dunlevy,CFAResearch Associate+1-212-250-9888Key ChangesCompanyNAVI.OQSLM.0QSource: Deutsche Bank 13.00 to 17.0038.00 to 42.00 Target Price 10July2025Consumer FinanceStudent LendersReconciliation Act Brings Big Cuts to Federal LendingProgramsLast week's budget billincluded several changes to Federal lending programs thatwill significantly reduce government direct lending to graduate students and theparentsofundergraduates,creatingabigopportunityforprivatestudentlenderslike SLM and NAVI. While the elimination of the Grad PLUS program was widelyexpected, the offsets from expansion in loan limits for Direct Subsidized andUnsubsidized loans was more modest than we expected, leaving a bigger hole forprivate lenders to fill than we anticipated. In addition, the bill also created newlending limits forthe Parent PLUS program, which we were expecting to go largelyuntouched. We summarize the key changes in Figure 1 below.Figure 1: Direct Loan Program ChangesSubsidized & Unsubsidized LoanUndergrad LimitsAnnual 1% changeAggregate ?Aggregate less Undergrad 2Aggregate Undergrad + Grad% changeParent PLUS ProgramAnnualAggregateGrad PLUS ProgramAnnualAggregateTotal Borrowing CapacityAnnual limits for undergrad vary based on whether the student is depedentlor independent and whether it the student's first year, second year or third year and beyond2 Aggregate lending limits pre-budget reconciliation ACT include undergraduate balancesgiven profession and a level of professional kiybfybmithat normally required for a bachelor's degree. Professional licensure is also generally required. Examples of a professional degree include but arenot limited to Pharmacy (PharmD),Dentir D.M.D.), Veterinary Medicine (D.V.M), Chiropractic (D.C.or D.C.M.), Law (LLB. oJD),Medicine (M.D),Optometry (O.D),Osteopathic Medicine(D.O.), Podiatry (D.P.M., D.P., or Pod.D.), and Theology (M.Div., or M.H.L.).COF minus OFA = Cost of Attendance minus Other Financial AssistanceSource : U.S. Congress, Deutsche Bank ResearchWe Estimate ~97% of Grad PLUS and ~24% of Parent PLUS VolumeGoes AwayThe net effect of the changes outlined above are more significant than we expected,due to minimal offsets to the elimination of Grad PLUS and meaningful news capson the Parent PLUS program that we weren't expecting.Grad PLUS Eliminated with Only Modest Offsets: As was widely expected, thebudget reconciliation act eliminated the Grad PLUS program, which provided morethan $14B of financing to grad students in 2024 at an average loan size of $32.2K.We also expected that Congress would provide some offsetting relief throughexpanded loan limits on Direct Unsubsidized loans but upon close review of thechanges, the offsets appear to be limited. While the total amount a student canborrower in subsidized and unsubsidized loans between undergraduate andgraduate school increased 14-15%, the annual limits were up only 6% forPage 2 Pre Budget Reconciliation ActUndergradGraduate 3Professional$12,500$20,500$47,167$57,500$138,500$224,000$81,000$166,500$138,500$224,000COA minus OFANoneCOA minus OFACOA minus OFANoneNoneCOA minus OFACOAminuG OFACOA minus OFA Undergrad$12,500$57,500$20,000$65,000$122,500 10 July 2025Consumer FinanceStudent Lendersprofessional students (defined above in Figure 1) and unchanged for other graduatestudents. If we assume that roughly 1/3 of graduate students are professional andthe other 2/3 are graduate, then this would create an average of above s1K ofborrowingcapacityayearforgraduatestudentsthroughunsubsidizedloans,onlyeliminated.It's important to realize that most graduate students would already have maxed outtheir unsubsidized borrowing capacity before taking outa Grad PLUS loan becausethe interest rate on the Grad PLUS loan is 100 bps higher, so we should not expectthe demand for Grad PLUS to be able to shift over to unused Direct Unsubsized loancapacity. Some of hat demand could shift over to unused Parent PLUS capacity,Parent PLUs Impacted by New Lending Limits: Some of the early talk aboutreigning in the PLUS program including Parent PLUS, though attention quicklyturning to Grad PLUS with an expectation that the Parent PLUS program would bepreserved. Parents PLUS was eventually retained, but with new lending caps addedthat we estimate could reduce lending under the program by ~24%. Prior to therecent change, parents could borrower under this program up to the full cost ofattendance ("COA") less other financial assistance ("OFA"). With the new law,borrowing is now limited to $20K per year and an aggregate of s65K. Assuming aparent would be borrowing for an average of four years, this would put the averageborrowing capacityoverthe period at$16.5K.This is 24%belowthe average ParentPLUS loan of s$21.3K in 2024, which is how we arrive at the estimate that roughly24% of the supply of credit under Parent PLUS has been removed and will need analternative source of funding, thoug