Student Loan Blog : Missouri Higher Education Loan Authority

Missouri Loan Forgiveness Program to Erase More Than $400,000 in Student Loans

Student Loan Girl — Tue, 21 Oct 2008 00:08:00 GMT

As part of a statewide effort to support education in math and science, the Missouri Higher Education Loan Authority has agreed to forgive nearly $444,000 in student loans for almost 300 engineering and pre-engineering college students (“MOHELA Forgives Over $400,000 in Pre-Engineering Loan Program,” MarketWatch, Oct. 17, 2008).

The lender’s Prospective Engineering Student Loan Forgiveness Award Program will forgive up to $3,500 in federal Stafford student loans for any Missouri college freshman who enrolls in and completes two years of engineering classes in certain degree programs.

Students at 11 Missouri schools are eligible for the loan forgiveness program, which complements the state’s Math, Engineering, Technology, and Sciences Alliance (METS), an initiative created by Gov. Matt Blunt to improve student achievement in METS-based industries.

MOHELA’s loan forgiveness program will be funded, in part, by the revenues generated from tax-exempt bonds, says Raymond Bayer, Jr., MOHELA’s executive director and chief executive officer.

The state student loan agency also made a second announcement on Friday that it had recently closed on a $262.5 million bond issuance with Bank of America Securities (“MOHELA Announces $262.5 Million Bond Issuance,” MarketWatch, Oct. 17, 2008). This bond will give MOHELA the capital it needs to continue issuing federal student loans through the Federal Family Education Loan Program.

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State-Based Loan Agencies May Not Offer Student Loans, Despite Government Intervention

Student Loan Girl — Fri, 20 Jun 2008 23:18:00 GMT

Just this year, some 112 student loan lenders have cut back or ended their participation in the federal and private student loan markets, including nine state loan agencies, who have each issued slightly different responses to the industry’s changes, according to The Chronicle of Higher Education (“Some State Loan Agencies Say They May Stay on the Sidelines This Year,” June 12, 2008).

After the passage of the Ensuring Continued Access to Student Loans Act, which was intended to aid ailing student lenders, state-based student loan agencies in Kentucky, Missouri, and New Hampshire — often the largest student loan providers in their states — have said they will resume lending again sometime this year.

However, the Missouri Education Loan Authority says it will no longer be able to offer borrower benefits like the .25-percent interest rate reductions for those who make automatic monthly payments, or interest rates as low as .25 percent for graduates who gain employment in the state after school.

With over $12 billion in federal student loans, the Pennsylvania Higher Education Assistance Agency, the largest state lending entity in the country, will reduce grant awards to 160,000 low-income students by approximately $500 each, but is still unsure whether it will re-enter the student loan market in 2008.

The other five state-loan organizations in Indiana, Iowa, Massachusetts, Michigan, and Montana that have exited the federal program, say they’re also uncertain if they will start re-issuing loans this year, as they are awaiting clarification on loan servicing regulations under the new law. Many of these state-based lenders question whether they can continue afford to lend through the federal student loan program in light of the recent credit crunch and the elimination of federal subsidies to lenders last fall.

While industry insiders say that the new law is “a good first step,” Will Shaffner, director of business development at the Missouri Higher Education Loan Authority, believes that the federal rescue plan doesn’t go far enough. He said it doesn’t ease the longer-term problems both public and private lenders see with the federal program.

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Nursing, Teaching, Law Enforcement, Professions Losing Student Loan Incentives

Student Loan Girl — Fri, 13 Jun 2008 17:30:00 GMT

College graduates preparing to enter critical fields like nursing and teaching may no longer be able to take advantage of programs that previously offered them a break on their student loans.

In at least six states this year, state-affiliated lenders have dropped or scaled back programs that repay or forgive a portion of a borrower’s federal student loans when that student-borrower works in a critical-needs field, according to an article in USA Today (“Credit Crisis Weakens Relief for States’ Student-Loan Programs,” June 11, 2008).

Lenders are also eliminating loan programs that reduce student-loan interest rates for students who major in specific subjects.

These state loan agencies blame a $21-billion cut in government subsidies to lenders who participate in the federal student loan program and the ensuing fallout from the subprime mortgage crisis for making cuts to these incentive programs necessary.

More programs “are certainly at risk should the credit crisis continue,” says Krista Cole of the Education Finance Council, which represents student loan providers in 31 states.

Next month, Mike Reiber of the Pennsylvania Higher Education Assistance Agency, says the agency will stop funding programs for nurses, teachers, child care workers, and members of the military because the “money has literally dried up.”

Student Loan Benefits Being Reduced, Eliminated Nationwide

Other state student loan providers are already reducing or are trimming their borrower benefits for students in critical-needs fields:

The Missouri Higher Education Loan Authority will stop offering reduced student-loan interest rates for teachers, social workers, nurses, law enforcement personnel, firefighters, and National Guard members, beginning July 1.

The Iowa Student Loan Liquidity Corp. plans to cut student loan benefits for new teacher applicants this year.

The Michigan Higher Education Student Loan Authority eliminated a no-interest student loan plan in May for undergraduates majoring in engineering.

The New Hampshire Higher Education Loan Corp. suspended a benefit program in February that forgives some student loans for teachers.

The Kentucky Higher Education Assistance Authority suspended loan forgiveness programs for teachers, nurses, and lawyers in January and plans to reduce loan benefits for current borrowers.

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