Student loans undergo major changes
Stephanie Hall
Issue date: 9/10/09 Section: News
Both the Stafford and Perkins loans might see changes this year.
Missouri Higher Education Loan Authority (MOHELA) sold a considerable amount of Stafford loans to the Department of Education at the beginning of the year. Two big lenders, U.S. Bank and Bank of America, chose to stop servicing student loans.
"MOHELA is still in the student loan business, and we are still issuing loans, but at some point we are selling loans to the government depending on the current economic situation because the credit markets haven't come back, so MOHELA is using general funding options through the government," said Will Shaffner, director of business development governmental relations for MOHELA.
For students, some Stafford loans could be through MOHELA, while some are through the Department of Education. Changes in the lender of loans could mean changes in benefits including interest rates and forgiveness plans.
"In the case of a MOHELA loan, if it gets moved to the department, it may not get some of the benefits that MOHELA had on our loan, because our benefits are better than the Department of Education offers," Shaffner said. "If they get moved, they lose some of the MOHELA benefits."
Shaffner said that in recent years the benefits from states agencies like MOHELA have been erased to stay consistent with the Department of Education.
Student account clerk Amy Arhens said the change in lenders has caused some concern among borrowers.
"We didn't really know that was happening until we started getting calls from parents [saying], 'Hey, did you know my loan was bought out?'" Arhens said.
She said many students' Stafford loans have been delayed this year and she is not sure if that is a result of the switch in lenders.
"I feel if the government takes [a loan] over, it will be to the disadvantage to the students," Arhens said. "Especially when it comes time to make payments. ... I guess I don't know if they will work as hard to make sure that payment really did come in, as when you have people right here at the college."
Missouri Higher Education Loan Authority (MOHELA) sold a considerable amount of Stafford loans to the Department of Education at the beginning of the year. Two big lenders, U.S. Bank and Bank of America, chose to stop servicing student loans.
"MOHELA is still in the student loan business, and we are still issuing loans, but at some point we are selling loans to the government depending on the current economic situation because the credit markets haven't come back, so MOHELA is using general funding options through the government," said Will Shaffner, director of business development governmental relations for MOHELA.
For students, some Stafford loans could be through MOHELA, while some are through the Department of Education. Changes in the lender of loans could mean changes in benefits including interest rates and forgiveness plans.
"In the case of a MOHELA loan, if it gets moved to the department, it may not get some of the benefits that MOHELA had on our loan, because our benefits are better than the Department of Education offers," Shaffner said. "If they get moved, they lose some of the MOHELA benefits."
Shaffner said that in recent years the benefits from states agencies like MOHELA have been erased to stay consistent with the Department of Education.
Student account clerk Amy Arhens said the change in lenders has caused some concern among borrowers.
"We didn't really know that was happening until we started getting calls from parents [saying], 'Hey, did you know my loan was bought out?'" Arhens said.
She said many students' Stafford loans have been delayed this year and she is not sure if that is a result of the switch in lenders.
"I feel if the government takes [a loan] over, it will be to the disadvantage to the students," Arhens said. "Especially when it comes time to make payments. ... I guess I don't know if they will work as hard to make sure that payment really did come in, as when you have people right here at the college."
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