Louisiana students who participate in the Federal Family Education Loan Program (FFELP) could save as much as $2 million annually with the elimination of the 1% insurance fee traditionally charged by the states guaranty agency. The elimination of the fee for loans guaranteed by Louisiana on or after May 5, 1999, was announced today by Governor Mike Foster.
The action was ratified on April 27 by the Louisiana Student Financial Assistance Commission, the regulatory body which oversees operations of the state guarantee agency.
"Elimination of the insurance fee on student loans guaranteed by the state is another example of Louisianas commitment to making a college education as accessible and affordable as possible for our young people," Foster said. "Not every student will qualify for a scholarship, and most scholarships will not cover all qualified costs of attendance," he added. "This is our way of assisting those students who must supplement their education funding through loans."
Jack L. Guinn, Executive Director of the Louisiana Office of Student Financial Assistance (LOSFA) further commented, "TOPS, our premier state scholarship, only covers the cost of tuition, which is usually less than half the cost of attending an institution of higher learning," Guinn said. "Supplementing TOPS awards with affordable student loans is a necessity for many students. Our goal, through the many programs administered by our office, is to make a college education as affordable as possible for our students and their families," he continued. "Preparation for the cost of attending college should begin at an early age with the enrollment of children in the START Saving Program, Louisianas tax-deferred college savings plan and continue throughout middle and high school with the development of good study habits that will lead to the students qualification for a TOPS scholarship award," Guinn stated. "Finally, if additional funding is needed, we want to be sure that student loans guaranteed by the State of Louisiana are the most affordable loans available to our students and their parents."
Guinns agency is responsible for administering the START Saving Program, the TOPS program and the Louisiana guaranteed student loan program. He said that later this summer the agency plans to unveil the Louisiana College Payment Plan which will combine the savings, scholarship and loan programs into a single benefits package. Participation in the Louisiana College Payment Plan will be initiated by enrollment of a child in the START Saving Program.
Loans which qualify for the zero guarantee fee are Subsidized and Unsubsidized Federal Stafford loans guaranteed by the state. Under the FFELP, federal methodology determines the amount of subsidized and/or unsubsidized loans available to individual students from information supplied when completing the Free Application for Federal Student Aid (FAFSA). This is the same application which must be completed by students to qualify for the states TOPS scholarship. To obtain these no-fee loans, students must apply through their school and may select a lender participating in the states program.
With todays announcement of the elimination of the 1% insurance fee, students choosing the State of Louisiana as the guarantor of their loans will receive 1% more funds to expend toward qualifying higher education expenses.
Financial Aid Officers at Louisianas postsecondary schools who want help switching their students to a Louisiana guaranteed loan can call their LOSFA customer service representative at 1-800-259-5626, extension 1012.