Under a federal law enacted last year, guarantors are required to collect and deposit into their federal reserve funds a 1 percent fee on new Stafford and PLUS Loans that they guarantee. Effective July 1, 2007, Northwest Education Loan Association (NELA) will pay the fee on behalf of Graduate PLUS Loan borrowers who use a lender that pays the federal default fee on all of the lender's Stafford Loans guaranteed by NELA during that same time period.
"This fee policy encourages lenders to share the cost of subsidizing the federal default fee, which makes higher education more affordable for students," said Karen deVilla, NELA executive director. "We are pleased to participate in this kind of partnership."
The policy is projected to save student loan borrowers nearly $700,000 during the 2007-2008 academic year. Additionally, students are expected to reap savings from lenders that elect to pay the fee on Stafford Loans.
In the absence of legislative or regulatory changes or other unexpected contingencies that would significantly affect NELA's financial condition, NELA intends for the new fee policy to remain in effect at least through the 2007-2008 academic year. The policy may be extended thereafter.
Headquartered in Seattle, Northwest Education Loan Association (NELA) is a not-for-profit company that assists students and parents in planning for college and understanding financial aid by providing information, training and outreach activities. For 27 years, NELA has successfully administered the Federal Family Education Loan Program (FFELP) and guaranteed student loans against default, helping more than 811,000 students pursue higher education. More information is available at www.nela.net. In 2003, NELA opened the Center for Student Success in Seattle. A second NELA Center for Student Success opened in Portland, Oregon in 2004. These college access centers provide free information, tools, counseling and expertise to build better futures through higher education. For additional information, visit www.centerforstudentsuccess.org.
Posted 01/26/07 to www.NASFAA.org. Posting of information in Constituent News is done as a service to Members and does not imply endorsement or support by NASFAA. NASFAA does not review this information for content or accuracy.
