- LETTER FROM MEFA to MEFA PRIVATE LOAN BORROWERS
Availability of Capital for 08/09 MEFA Private Loans
- IMPORTANT CREDIT UPDATE
Availability of Capital for 08/09 Loans
The last few months have brought unprecedented volatility and uncertainty to the national credit financing markets and therefore to student loan lenders. Almost every day brings an announcement of a lender restructuring the loan programs offered as concerns of the availability of student loan capital increase.
Boston University is concerned about this changing environment, but is very well positioned in the programs offered and the prospects of available loan financing for our families.
Most notable is that 70% of all of the loans borrowed at BU are directly through the Federal and state governments. This includes all Federal Stafford Loans, Federal PLUS Loans, Federal Perkins Loans, Massachusetts No Interest Loans and several small non-Massachusetts state-sponsored loan programs.
For example, the Massachusetts Educational Financing Authority (MEFA) announced it was no longer going to make Federal Stafford and PLUS loans. This announcement does not impact BU students, because our Stafford and PLUS loans are made directly with the Federal government.
An article published in the Daily Free Press last week discussed the Sallie Mae announcement to no longer pay the “guarantee fee” on Stafford Loans for borrowers. Not only does this decision not affect BU students, because all BU Stafford Loans are made directly through the Federal government, but the government is paying a greater percentage of the fees to borrowers in the Direct Stafford Loan program for the coming year. Federal Stafford Loans made to BU students will be cheaper in 08-09 with fees of only .5% this coming year, .5% cheaper than last year.
The other 30% of loans borrowed by BU families are through private, credit-based educational lending programs. These are the programs experiencing the greatest threat in the market in obtaining sufficient loan capital to lend. Of the companies Boston University families have selected to borrow through in the prior year, MEFA is one of the largest. MEFA has still not secured the capital to begin lending private loans for the 08-09 school year. This is a concern for Boston University families but Boston University families will continue to have access to private educational loans through a variety of other loan providers, including the Federal Direct Parent PLUS Loan program, which has a fixed interest rate of 7.9% for next year. Information regarding the Federal PLUS loan and other available programs is on the BU website, as well as many other places on the web.
Last week Bank of America announced it would no longer offer private, credit-based educational loans. This has not been a large program for BU families, but for those students who have used a Bank of America private loan in the past, they will need to find a new lender for the coming year. The BU website has some information regarding programs available, as do many other places on the web.
Boston University students have very low default rates and high graduation rates, which make BU families attractive borrowers to lenders. In the next few months, the University will continue to inform students and parents about private loan lenders offering affordable financing to attend our institution.
4/23/08
- Student’s Federal Direct Stafford Loan; How to get Funds Credited to your BU Student Account
To ensure that Federal Direct Stafford Loan funds will be credited to your student account, you must complete the master promissory note and the entrance counseling requirement. Both are completed online using your Federal PIN (personal identification number). If you completed your FAFSA online, you may have signed the FAFSA electronically using a Federal PIN. If you do not have or cannot recall your PIN, request a new (or duplicate) PIN from the Federal Student Aid PIN Web Site. Allow up to ten business days to receive your PIN.
- Parents’ Federal Direct PLUS Loan; How to get Funds Credited to the Student’s BU Account
To ensure that Federal Direct PLUS Loan funds will be credited to your son or daughter’s student account, you must complete the master promissory note. The master promissory note is completed online using your Federal PIN (personal identification number). If you completed your son/daughter’s FAFSA online, you may have signed the FAFSA electronically using a Federal PIN. If you do not have or cannot recall your PIN, request a new (or duplicate) PIN from the Federal Student Aid PIN Web Site. As the parent of the student, you will need to sign with your own parent PIN. You cannot use your son or daughter’s PIN. Allow up to ten business days to receive your PIN.
- National Student Loan Data System (NSLDS)
Access Information about Federal Financial Aid You Received.
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