[Oasfaa] summary of Guarantor discussion

[Jonna L. Raney]

If anyone responds, I think it would be good to respond to everyone as
it seems like a lot of people are interested.  I have removed names of
those who responded directly to me.  Of course, we're all waiting for
Pam's opinions too!  :-)  I have a call into Bill McFarland and asked
him to please address the listserv and reveal what TG is doing about the
1% fee just for confirmation. Thanks to everyone who responded and to
any future responders.

 

Private school responses....

 

"I am looking at Texas Guarantee.  They are not going to charge the fee
in 06-07."

 

"Many lenders are going to be going to 0% origination fees for the
2006-2007 school year, so this will really offset the 1% guarantor fee.
I believe I talked with one lender who is even going to pay the
guarantor fee for the student - I'm waiting to hear back from the rep to
verify that info.  I will probably put the lenders with the lowest fees
on my preferred lender list for the upcoming year and educate students
on the difference.

 

I think whatever saves the student the most amount of money is the best
way to go, sometimes even $50 will make or break an enrollment,
especially with us private schools.  Of course, guaranteeing through a
new agency can be a real headache - it probably depends on which
Servicer you use."

 

"(We) will continue to use TG."

 

"Jonna:  We are going to do what is best for the student.  If there is
an alternative that would have no fees (guarantor picking up the 1%)
then we will try to get that option for students.  We won't encourage
switching lenders, but will be looking at the guarantor option.

 

Like you, I want to be Oklahoma loyal, but I am loyal to helping my
students first, and doing what benefits them. That is an assignment to
me from my school."

 

 

State school responses...

 

"To add to both of your comments, has anyone seen anything in writing
from a guarantor who is willing to subsidize the 1% fee, and if so, is
there any commitment to subsidize it beyond this first year?

 Nancy Moats"  USAO

 

"Great question Jonna. I'll be the first to jump in. Hopefully, others
will join us. You're not alone struggling with this delimma. Many of us
are "in a pickle" on this one though. 

 

Who among our students, if given the opportunity to pay zero fees or pay
a 1% fee would opt for the 1%? Not many I'd bet. At the same time who
among our financial aid offices wants to sit down with a student/parent
and defend processing a loan with 1% fees when it could have been
processed with no fees? I don't look forward to that type of a
conversation. Therefore, I'm trying to figure our a simple way of
communicating the choices to our students and let them make the decision
for themselves.

 

When lenders are biting the bullet and waiving fees in order to be
competitive, I'd like to see OGSLP do the same thing. Unfortunately, I
don't believe state schools have to same flexibility that privates do in
pursuing a better alternative for their students. Let's face it,
polictics are part of the environment in which we live. So if anyone has
any creative solutions in mind, please share them with the rest of us. 

 

These observations are not intended to represent anyone but me. 

Larry"  SWOSU

 

"I just visited with Kimberly today from BOK and she says that they are
picking up the Guarantee fee.  She just smiled when I mentioned future
years.  I don't think anyone knows for sure.

Sherry Foster" SOSU

 

OGSLP Clarification

"OGSLP is pleased to see that discussion is taking place within the
financial aid community about the new Default Fee. 

The Deficit Reduction Act, signed into law one month ago, mandates that
for loans guaranteed on or after July 1, a Default Fee must be collected
and deposited into the guarantor's Federal fund. This means that when
the new law takes full effect this year, no guarantor may waive the
collection of the fee.  Further, the fee is required to be collected
from a non-federal source. 

We are among a very small group of guarantors who have announced to
their constituents the implementation of the new fee.  While we expect
that most guarantors will soon be making similar announcements, we
thought our community would appreciate an earlier notice for planning
purposes.  You may or may not be aware that both NELA and USA Funds have
made announcements similar to ours. 

I hope this has provided some clarification to the new Federal mandate.


Mary Mowdy, Executive Director 
Oklahoma Guaranteed Student Loan Program"

 

 

 

 

 

 

 

 

 

 

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