Brazos Higher Education Service Corporation, Inc., the fourth largest holder of guaranteed student loans, announced that beginning March 21 it would suspend making new FFELP loans, but Brazos officials said they hoped to continue FFELP lending if the credit crunch eases.
The 33-year old Texas-based lender, which is not actually an entity, but a term used to describe a group of not-for-profit corporations all managed through contract by Brazos Higher Education Service Corporation, is the latest lender to stop making FFELP loans. NASFAA has been compiling a list of the more than 30 lenders that have suspended (some temporarily) FFELP loans.
Four lenders, Brazos Student Lending, Academic Finance Corporation, Educational Funding Services, Inc. and Acapita, which are a part of Brazos, will suspend making new FFELP loans, but will honor all second and third disbursements on loans where the first disbursement was made on or prior to March 27, 2008.
Like other lenders that have suspended FFELP loans, Brazos blamed the turmoil in the credit markets and cuts to lender subsidies for its decision.
"Decisions made by Congress to cut subsidies on student loans have put substantial
financial pressure on lenders originating loans after October 1, 2007," according to a Brazos press release. "The continuing disruption in the credit market has greatly compounded the problem of originating FFELP Loans."
Brazos said that it will re-evaluate what it is able to do for students and families as conditions change. In addition, it will continue to manage existing loan portfolios and offer private education loans.
"We regret this decision was necessary," Murray Watson, president and chief executive officer at Brazos Higher Education Service, said in a statement. "We hope this situation with the capital markets changes in the near future to let us re-enter student lending."
Media Coverage
By Haley Chitty
NASFAA Assistant Director of Communications
Posted 03/25/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
