Iowa Student Loan 2007 Economic Impact Study Executive Summary

Iowa Impact

Iowa Student Loan has a profound economic impact on the state. From generating thousands of new jobs and increasing personal income for Iowans by millions of dollars to stimulating consumer spending and growing state income and sales tax collections, Iowa Student Loan’s contribution to Iowa’s economy is considerable. Furthermore, intrinsic to its mission, Iowa Student Loan provides or facilitates college loans to thousands of Iowans who, because of their income levels or lack of credit history, would otherwise not qualify for traditional student loans and hence not attend college.

Research, led by Harvey Siegelman and Daniel Otto of Strategic Economics Group, examined three components of Iowa Student Loan’s activity during the 2005-2006 academic year to understand how the organization benefits Iowa’s economy. They found Iowa Student Loan impacted Iowa families through the following:

• Jobs – Generating more than 2,400 additional Iowa jobs.
• Personal Spending – Stimulating an additional $237 million in annual consumer spending.
• Personal Income – Increasing personal income for Iowa residents by about $72 million.
• Output Production – Boosting Iowa’s goods and services production by about $134 million.
• State Economy – Helping grow Iowa’s income and sales tax collections by about $2.3 million.

Study Overview

The study’s purpose was to determine Iowa Student Loan’s economic impact on Iowa and its citizens. The research team examined the economic impact of Iowa Student Loan on students and parents, vendors and taxpayers, job holders and job seekers in Iowa. Criteria included increased jobs, personal income, vendor sales, output production and state tax collections. Researchers focused on three areas: operations, borrower impact and “education access” lender.

Operations – Iowa Student Loan provides benefit through the day-to-day operations and delivery of loan services. These benefits are primarily felt by the employees, vendors and communities where Iowa Student Loan’s business activity occurs. In 2006, Iowa Student Loan had a total workforce of 323 people with an aggregate payroll of $14.4 million. Vendor expenditures in the operating budget were about $56.4 million and include payroll, vendor purchases and interest expenses.

Borrower Impact – Iowa Student Loan provides benefits to borrowers and their families through lower interest rates and more favorable terms for their loans, which directly and indirectly affects the competitive lending market. Lower interest rates reduce out-of-pocket expenses for borrowers and generate extra spending income for families, which is an economic benefit to the state. The study focused on three major government loan programs which Iowa Student Loan supports: Stafford loans, Partnership loans and PLUS loans.

“Educational Access” Lender – Iowa Student Loan also provides or facilitates college loans called Partnership Loans, to thousands of Iowans who, because of their income levels or lack of credit history, would otherwise not qualify for traditional student loans and would not attend college. The benefit to those individuals and the state can be measured by their higher future earning levels. A report generated by the U.S. Census Bureau in 2002 estimated the work-life earnings to be 177% greater for an individual with a bachelor’s degree than one with a high school diploma, and 387% higher with a professional degree. In the 2005-2006 academic year, Iowa Student Loan issued loans to 26,460 Partnership Loan borrowers.

Iowa Student Loan’s Future Impact

About Iowa Student Loan

Iowa Student Loan is a private, nonprofit corporation whose mission since 1979 has been to help students and parents obtain the financial resources necessary for a postsecondary education. Based in West Des Moines, Iowa, with 315 employees, Iowa Student Loan is a significant Iowa financial services company, with $3.2 billion in student loans. To date, the company has helped more than 260,000 students pay for college. Iowa Student Loan’s board of directors is appointed by the governor of Iowa.