Survey Shows New England Families Can Still Access Federal Student Loans, Despite Loss of Lenders

Student Loan Girl — Thu, 11 Sep 2008 22:29:00 GMT

According to a regional survey of financial aid officers from 214 New England colleges and universities, students and parents have had few problems accessing federal student loans this year, but financial aid administrators have lingering doubts about how easily students will be able to secure college loans next year (“Student Loan Availability Survey of New England Colleges & Universities,” The New England Council, September 2008).

The survey, conducted by the New England Board of Higher Education and The New England Council, asked financial aid officers to describe how New England families fared following federal legislation that Congress passed in May to help families pay for college.

The legislation was designed to ensure that families still have access to federal student loans as private, third-party lenders — crippled by fallout from the subprime mortgage crisis that dried up traditional sources of funding and hurt by legislation that cut $21 billion in their federal subsidies — continue to drop their federal student loan programs.

To date, 104 of these lenders have stopped participating in the Federal Family Education Loan Program, through which borrowers take out their federal student and parent loans from third-party lenders rather than through the federal government.

Although some families were forced to find a new student loan provider after their former lender suspended its federal student loan programs, New England financial aid officers indicated that borrowers have not been deterred from seeking FFELP loans.

In fact, the survey revealed, more parent borrowers are seeking federal PLUS loans through FFELP lenders this fall and more students are taking out unsubsidized federal Stafford student loans.

Share this post: email this | del.icio.us | reddit

Governor Asks Pension Board, State’s Colleges to Help Keep Massachusetts Student Loan Provider Afloat

Student Loan Girl — Thu, 07 Aug 2008 20:46:00 GMT

A week after the cash-strapped Massachusetts Educational Financing Authority announced that its 40,000 borrowers would have to find a new private student loan provider, Massachusetts Gov. Deval Patrick has asked the Massachusetts pension fund to invest $50 million in the state loan agency.

Patrick’s proposal would involve the Massachusetts pension fund buying portions of a $425 million bond sale that MEFA is planning for later this month, reports The Boston Globe (“A Late Try to Salvage Student Loans,” Aug. 7, 2008).

The governor also intends to ask Boston College, Harvard, MIT, and the University of Massachusetts, among other schools in the state, to make similar investments in MEFA bonds.

“This is an idea we’re definitely going to explore,” said Robert Connolly, a UMass spokesman. “We do see it as a potential win-win in terms of providing the university with a sound investment while helping families cope with their financial aid challenges.”

But State Treasurer Timothy Cahill, chairman of the state pension board, remained noncommittal in response to the governor’s request, saying only that the board would consider the proposal.

The emergency measure, put forward to the state pension board yesterday, is meant to generate liquidity for MEFA, which left thousands of families scrambling to find a new student loan provider just weeks before fall tuition bills are due and at a time when a number of other student loan lenders, feeling squeezed by the troubled credit markets, are tightening their credit criteria for private student loans. MEFA would use proceeds from the bond sale to finance new student loans.

Although MEFA, until last week, had still been offering fixed-rate private student loans, the agency stopped offering federal student loans in April, citing the troubled economy and fallout from the subprime mortgage crisis. The nonprofit student loan authority provided more than $500 million in college loans to Massachusetts students last year.

Share this post: email this | del.icio.us | reddit

Student Loan Blog : fallout

Survey Shows New England Families Can Still Access Federal Student Loans, Despite Loss of Lenders

Governor Asks Pension Board, State’s Colleges to Help Keep Massachusetts Student Loan Provider Afloat