DATE: November 12, 2003
CONTACT: Gus Wales
PHONE: (225) 922-2029
FAX: (225) 922-0790
LOSFA to continue guarantee fee waiver
The Louisiana Office of Student Financial Assistance (LOSFA) has announced that it will continue to keep student loan fees low and will not follow the move by United Student Aid Funds (USAF) to charge students a guarantee fee in 2004. LOSFA will continue its policy to waive the guarantee fee through the 2004-2005 Academic Year.
LOSFA Assistant Executive Director for Operations, Melanie Amrhein, stated that LOSFA, as the officially designated Louisiana State Guarantor for the Federal Family Education Loan Program, has carefully analyzed its fiscal situation and has determined that there currently is no need to reinstate a guarantee fee. Amrhein stated that it is the intent of LOSFA to keep loan fees as low as possible for as long as possible. “With the expenses students now face in pursuing higher education, we want to keep costs down so that every dollar of a student’s loan goes directly to education. The guarantee provided by LOSFA for student loans comes at a cost to LOSFA, but we will continue to absorb that cost for the near future.”
Under federal law, the 36 student loan guarantee agencies operating in the United States are authorized to charge borrowers a guarantee fee of up to 1 percent of the loan principal. This fee is deducted by the lender from the student’s loan and paid directly to the guarantor if the guarantor is charging the fee. Several years ago many guarantee agencies elected to waive the fee for students. The decision to waive the fee has had a fiscal impact to those guarantors and many of them are now finding it necessary to reinstate the fee to counter that fiscal impact.
Amrhein stated that LOSFA will continue to provide the same excellent level of service to student borrowers, schools and lenders at the lowest cost possible. LOSFA will reassess the guarantee fee situation after in the 2004-2005 Academic Year, but until then, LOSFA’s position is no guarantee fee and low cost loans for Louisiana students.