Iowa Students and Parents to Save Millions on Loan Fees
(Des Moines, IA) - Iowa College Student Aid Commission (Commission) today announced that it will pay the federal default fee on Stafford and PLUS loans it guarantees for the 2008-2009 award year. Since 1999, the Commission has waived the one-percent fee (formerly known as the guarantee fee) which has provided over $20 million in total cost savings to Iowa students and parents.
The Deficit Reduction Act of 2005 requires that all Stafford and PLUS loans guaranteed on or after July 1, 2006, be assessed a one-percent federal default fee. The new default fee must be deducted from the borrower's loan proceeds at the time of disbursement or must be paid from other non-federal sources. This fee deduction reduces the amount of loan funds that students receive to cover college costs. By paying the default fee on behalf of borrowers, the Commission will save them over $5 million for the 2008-2009 academic year. The Commission is also working with its lender partners to implement fee buy-downs whenever possible.
The rising cost of higher education, recent federal legislation, as well as the impact of the current credit crisis on student loan financing, has not helped to ease the concerns of Iowa families struggling to pay college expenses. "We know that families are concerned about the state of the economy and its impact on their ability to pay for college. During this time we remain committed to making college affordable for Iowa students and families. We believe that paying the federal default fee is an important measure in assuring Iowans that low-cost student loan options remain available for Iowa families," said Karen Misjak, Executive Director of the Iowa College Student Aid Commission.
The Commission will review its policy on loan fees annually to determine if the savings can be extended beyond June 30, 2009.
About the Iowa College Student Aid Commission
As the state's designated guaranty agency for the Family Federal Education Loan Program (FFELP), the Commission guarantees more than $526 million annually in student loans from private lenders to support over 79,000 Iowa students. In addition, the Commission administers state scholarship, grant, and loan forgiveness programs, provides borrowers with assistance to avoid the serious consequences of default, conducts research and distributes higher education data, and offers Iowans assistance in obtaining student financial aid and college-related information. More information is available at www.IowaCollegeAid.gov.
Posted 03/17/08 to www.NASFAA.org. Posting of press releases 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.
