Student Loan Blog : federal loans

Montana Senator: Give Tax Break to Companies That Pay Off Employees’ Student Loans

Student Loan Girl — Sat, 09 Aug 2008 00:59:00 GMT

Roy Brown, a Montana state senator and candidate for governor, would like to reward companies that repay their employees’ student loans with a tax break, reported the Great Falls Tribune (“Brown Says Companies Could Help With Student Loans,” Aug. 6, 2008).

The senator says that his plan would offer an incentive for Montana students to remain in state and could help keep them from becoming overwhelmed by high student loan payments.

As another way of encouraging Montana students to attend a state school, Brown also proposes allowing Montana high school graduates with a 3.7 GPA or better to attend a public college or university free of charge. These education grants would be funded by a portion of the interest income from the Coal Severance Trust Fund.

“It is absolutely critical,” says Sen. Brown, outlining this proposal and others on the higher education page of his website, “that the most affordable place for a Montana student to pursue their higher educational goals is right here, in their home state.”

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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.

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Governor Launches Website to Help Massachusetts Families Find Student Loans

Student Loan Girl — Thu, 07 Aug 2008 11:32:00 GMT

Massachusetts Gov. Deval Patrick has set up a financial assistance website to help the 40,000 families who were previously served by the Massachusetts Educational Financing Authority to find a new student loan provider for the 2008–09 academic year, following MEFA’s announcement on July 28 that it was suspending its private student loan program.

The news that MEFA would no longer be offering private student loans came just weeks before fall tuition payments are due and a mere three months after the state agency suspended its federal student loan program, citing the troubled economy and continuing fallout from the collapse of the subprime mortgage market. MEFA’s announcement last week marks the first time in the lender’s nearly 30-year history that it won’t be able to provide any student loans, federal or private.

The governor’s new student loans website gives borrowers an overview of student loans and the different types of student loans still available, provides links for families to compare the interest rates being offered by certain private student loan lenders, and brings together information on scholarship resources.

“It is critical for our students to be able to pay for the colleges of their choosing,” said Gov. Patrick. “I have directed my team to make available a list of resources to help students and their families locate the information they need to finance education this fall and beyond.”

Late yesterday, Gov. Patrick also made a move aimed at restoring liquidity to MEFA, asking the Massachusetts pension fund to invest $50 million in the state student loan agency by buying MEFA bonds — MEFA would use the proceeds from the bond sale to finance new student loans. The governor intends to approach Boston College, Harvard, MIT, and the University of Massachusetts, among other schools in the state, about making similar investments.

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Wachovia Suspends Its Undergraduate Private Student Loan Program

Student Loan Girl — Thu, 07 Aug 2008 00:41:00 GMT

After posting an $8.9 billion second-quarter loss in July, Wachovia Corp. announced on Tuesday that it would stop making private student loans to undergraduates (“Wachovia to Stop Writing Private Undergrad Student Loans,” CNN Money, Aug. 5, 2008).

Wachovia representative Ferris Morrison said the company’s student loan lending subsidiary, Wachovia Education Finance Inc., will continue to offer federal student loans, as well as private loans for graduate and professional education students. However, as of August 5, Wachovia is no longer accepting applications for private student loans for undergraduates.

“At this time, we felt it was prudent,” Morrison said.

Wachovia Education Finance, the sixth-largest provider of student loans, sent a letter to its borrowers on Tuesday informing them of the change, citing “the current overall financial industry environment,” reported Inside Higher Ed (“Quick Takes: Wachovia Abandons Private Student Loans,” Aug. 6, 2008).

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NextStudent Unveils Website with New Look, Improved Features

Student Loan Girl — Sat, 07 Jun 2008 01:37:00 GMT

NextStudent has a sleek new website with upgraded features designed to offer you the most comprehensive and easy-to-use financial aid resource on the Web.

We’ve simplified our online application to make applying for student loans even easier, whether you’re a parent, undergraduate, or graduate.

Learn more about private student loans, Stafford loans, PLUS loans, Grad PLUS loans, and student loan consolidation.
Find free money for college with our award-winning NextStudent Scholarship Search Engine, which lists more than 5.9 million scholarships worth over $16 billion.
Sign up for our monthly NextPath newsletter for tips on everything from snagging a summer job to how to survive the economy with 10 easy ways to save money right now. Grads, get the scoop on the top 10 cities for jobs or how you can travel the world rent-free.
Check our education news bulletins to keep up to date on what’s happening in the world of financial aid, student loans, and higher education — all the changes and developments that affect you and how you’ll be able to pay for school.

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Sen. Hillary Clinton Unveils Plan to Tackle the Student Loan Crisis

Student Loan Girl — Tue, 29 Apr 2008 17:56:00 GMT

Sen. Hillary Rodham Clinton recently announced the details of a sweeping plan to help ensure students have continued access to federal student loans amid a flurry of private lenders leaving the federal student loan program.

“Hundreds of thousands of students who are actively considering how to finance their education could be left in the lurch, without the ability to pay for college,” Clinton wrote in a press release on April 25.

Clinton urged the Bush administration to act quickly to support her plan, which includes:

Creating a way for colleges to quickly make a switch from the Federal Family Education Loan Program to the Department of Education’s Direct Loan Program — a move that currently takes colleges about six weeks.

Allowing parents’ applications for credit-based federal PLUS loans to be reviewed on a case-by-case basis. Currently, parents will be denied outright for the low-cost federal loans if they have defaulted on a mortgage, or if they are 90 days late on a loan payment.

Authorizing the Education Department to advance money to state or private entities that issue student loans and to purchase federally guaranteed loans from private lenders that are no longer able to service the loans.

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Bank of America Backs Out of Private Student Loan Business

Student Loan Girl — Sat, 19 Apr 2008 13:03:00 GMT

On April 17, Bank of America Corp. notified student-loan packager First Marblehead Corp. that it would no longer offer private student loans, focusing instead on providing federal student loans. Bank of America’s announcement comes amid increasing unsteadiness in the federal student loan market, where nearly 50 non-government lenders in the last six months have suspended their federal student loan programs.

Bank of America exercised its right to terminate its agreement with First Marblehead after The Education Resources Institute, the Boston-based nonprofit that guaranteed the loans packaged by First Marblehead, voluntarily filed for Chapter 11 bankruptcy protection on April 7, 2008.

Bank of America’s decision delivered yet another financial blow to First Marblehead, whose shares have already been on a downward spiral over the past few weeks, tumbling 37 percent on April 8 alone, the day after TERI filed its bankruptcy petition.

Shares in First Marblehead fell another 17 percent to $3.37 on the heels of Bank of America’s announcement, with the stock down nearly 91 percent over the past year. The loans originated by Bank of America accounted for about 15 percent of First Marblehead’s total revenue for the 2007 fiscal year, according to a Boston Business Journal article (“First Marblehead Loses Major Customer, Revenue Source,” April 18, 2008).

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