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CoreFirst cuts student loans
12 May, 2008
CoreFirst has joined other lenders nationwide that are no longer offering student loans.
CoreFirst has participated in the Federal Family Education Loan Program, offering Stafford and PLUS loans, for over 30 years. But the bank said its portfolio of student loans lost its profitability after Congress voted last fall to cut about $20 billion from subsidies the government pays to lenders.
“There is no monetary benefit to stay in it,” said John Fager, spokesman for CoreFirst Bank & Trust. “They are paying at a rate they are funded. It’s a wash.”
CoreFirst sent notices to students this week, saying “effective immediately CoreFirst Bank & Trust will no longer accept applications for new Stafford or Plus loans.”
Students are advised to contact their school’s financial aid office to choose another lender and sign a new master promissory note, the bank said.
Fager said CoreFirst’s student loan portfolio ranged between $15 million and $25 million over the years.
The portfolio is in the process of being sold to Sallie Mae Servicing. The sale should be completed by the end of June.
Fager said CoreFirst targeted students at Washburn University, Emporia State University, Kaw Area Technical School and other trade schools in the area.
Jerry Farley, Washburn University president, said CoreFirst had handled the majority of loans for students at Washburn University.
After finding out the bank is getting out of the business, Washburn University applied to be part of the U.S. Department of Education’s direct loan programs.
"We applied to the Department of Education to make sure we will be part of it,” he said.
Farley said there is ample opportunity for Washburn students to find other lenders before the next semester begins in August.
Farley, a member of the board of directors at CoreFirst Bank & Trust, said other lenders, including Capitol Federal Savings, have gotten out of the student loan business.
Farley said he has a list of about 24 other lenders who are willing to provide student loans, but they aren’t locally-owned banks. The list includes Bank of America, US Bank and Citibank.
The average student loan debt of graduates of Washburn University is about $13,000.
More than 60 percent of Washburn students have student loans, Farley said.
Farley said that because so many lenders have gotten way from providing student loans, Congress introduced a bill to entice lenders to stay in the business.
President Bush recently signed into law a bill passed by the House and Senate (H.R. 5715) in response to shifts in the student loan markets. While there are no reports of any eligible students or parents being denied a federal loan, Congress and the White House believed it prudent to be prepared for any sudden or drastic shifts in the markets that could affect access to federal student loans, according to a report from the American Association of State Colleges and Universities.
Source:-http://cjonline.com/stories/050908/bre_studentloans.shtml |
