NHHELCO Reinstates Fees on Federal Loans

Concord, NH - The Board of Trustees of the NH Higher Education Loan Corporation (NHHELCO) voted to reinstate the origination and default fees associated with NHHELCO-funded federal loans effective Tuesday, April 15. Last year, NHHELCO originated $184 million in federal loans. The reductions in fees represented $3.3 million in savings. “This was a difficult decision, but reinstatement of the fees is necessary for NHHELCO to generate the capital to fund student loans in New Hampshire,” said Edward MacKay, NHHELCO chair and long-time trustee of the Organization. The reinstatement of fees will mean an increased cost-to-borrow of $70 for a dependent undergraduate freshman with the maximum Stafford Loan.

Though Federal law sets the maximum interest rates and fees on federal loans, lenders sometimes offer benefits, such as interest rate, fee and principal reductions in order to lower the overall cost of borrowing and encourage responsible loan repayment. “Prior to the College Cost Reduction and Access Act, NHHELCO offered among the best borrower benefits in the nation,” said President & CEO René Drouin. In fact, students borrowing through NHHELCO for federal Stafford loans paid no fees and could qualify to save almost $1,000 during repayment on $10,000 in Stafford Loans.

Despite four decades of tenure in the student loan business and AAA bond rating, issues in financial markets related to the sub-prime mortgages have spilled over into the student loan area. According to MacKay, “The current markets demand much higher levels of capitalization to provide the liquidity required to issue bonds used to fund student loans, and NHHELCO has responded in the only means reasonably available.”

Drouin expressed his commitment to the loan program and New Hampshire students and parents. “We are hopeful that small changes to business practices today will provide financing opportunities that preserve the loan program long-term.”

For updated information about the credit crisis and its impact to student loan programs nationally, visit www.nhheaf.org/about.asp.

The NHHEAF Network Organizations are comprised of four 501(c) (3) nonprofit organizations that provide students and families with the resources and funding to pursue higher education aspirations. Funds generated by the Organizations make their charitable mission possible as student loan earnings are reinvested in programs and services that benefit citizens of New Hampshire. For more information, visit www.nhheaf.org.