[Oasfaa] Guarantor Question

Thu Mar 2 11:25:11 CST 2006

I think Larry has done a good job outlining the lender and guarantor
sides of the issue, yet I do not agree with the statement:

 "On the other hand, if you live in a state where the guarantor does not
reimburse the student, then your students are out of luck."

Instead, that is the very place where aid administrators can exercise
their judgment about what is best for their students and their school.

Bill McFarland - TG

Senior Regional Account Executive

RMC - Relationship Management and Consulting

P.O. Box 83100

Round Rock, Texas 78683-3100 

(800) 252-9743, ext 2505

(512) 751-7170 mobile

(918) 294-0910 fax

william.mcfarland at tgslc.org

www.tgslc.org

-----Original Message-----
From: oasfaa-bounces at lists.onenet.net
[mailto:oasfaa-bounces at lists.onenet.net] On Behalf Of Hollingsworth,
Larry
Sent: Thursday, March 02, 2006 9:27 AM
To: oasfaa at onenet.net
Subject: RE: [Oasfaa] Guarantor Question

Just a point of clarification so that we don't mix apples and oranges
here. One issue is what the lenders are doing about the origination fee,
while the other issue is what the guarantors are doing about the
guarantee fee. 

Many if not most lenders have indicated their decision to "pay the 3%
origination fee for the student" as one press release said. Obviously,
this allows the student to receive more of their loan proceeds. Lenders
have decided to do so at no small cost to them in order to stay
competitive with other lenders. It's not their favorite course of
action, but should they not do so, they risk loosing business to
competitors. And that is a risk they do not want to take. How long they
can and/or will continue this action is yet to be seen. But the fact is
for 2006-07, the student's choice of a lender can make a difference in
how much their loan check will be.

At the same time, it appears that the schools choice of a guarantor can
make a difference in how much a student's loan check will be. Mary has
correctly pointed out that guarantors are required by law to collect the
1% guarantee fees. That point is not in question. The original question
was asking for discussion about what schools will do if some guarantors
opt to reimburse the student for the 1% guarantee fee while other
guarantors choose not to so. Maybe the school's decision is on this
issue is simply a matter of location. By that I mean if you live in a
state where the guarantor reimburses the student the 1% fee then your
students fortunately get that benefit. On the other hand, if you live in
a state where the guarantor does not reimburse the student, then your
students are out of luck. 

We all want to do what will be in the best interest of our students.
Certainly money issues and service issues are both part of the mix as we
think through our options. Thanks to all for any comments regarding the
options (if more than one option exits) which are being considered by
different schools.

Larry

________________________________

From: oasfaa-bounces at lists.onenet.net
[mailto:oasfaa-bounces at lists.onenet.net] On Behalf Of Sherry Foster
Sent: Wednesday, March 01, 2006 2:55 PM
To: Nancy Moats; oasfaa at onenet.net
Subject: RE: [Oasfaa] Guarantor Question

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

________________________________

From: oasfaa-bounces at lists.onenet.net
[mailto:oasfaa-bounces at lists.onenet.net] On Behalf Of Nancy Moats
Sent: Wednesday, March 01, 2006 2:48 PM
To: oasfaa at onenet.net
Subject: RE: [Oasfaa] Guarantor Question

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

-----Original Message-----
From: oasfaa-bounces at lists.onenet.net
[mailto:oasfaa-bounces at lists.onenet.net] On Behalf Of Hollingsworth,
Larry
Sent: Wednesday, March 01, 2006 2:03 PM
To: oasfaa at onenet.net
Subject: RE: [Oasfaa] Guarantor Question

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

________________________________

From: oasfaa-bounces at lists.onenet.net
[mailto:oasfaa-bounces at lists.onenet.net] On Behalf Of Jonna L. Raney
Sent: Wednesday, March 01, 2006 12:45 PM
To: oasfaa at onenet.net
Subject: [Oasfaa] Guarantor Question

I'm interested to know what schools are doing for 06/07 about the
guarantor for their loans. I'm torn because I want to do business in OK,
but if other guarantors are paying the 1% guarantee fee, I have to also
keep in mind what is best for our students. I feel like the service from
the 1% guarantor and the no fee guarantor are both very good, so that's
not a big factor in the decision for me. 

I don't want to step on any toes, but I need to make a decision about
this topic fairly soon.  I'd like to hear from both State and Private
schools if possible.

Thanks for any feedback. 

Jonna Raney

St. Gregory's University

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