FINANCIAL ASSISTANCE COMMISSION
| Lenders; College,
University and LAICU Financial Aid and Business Offices and Registrars;
Tech School Personnel and Campus Deans; and Proprietary Schools.
|July 1, 2006|
|PAYMENT OF DEFAULT FEES|
A provision in the recently enacted federal Higher Education Reconciliation Act (HERA) of 2005, which becomes effective July 1, 2006, requires all guarantors of federal student loans to collect a 1% federal default fee from the borrower’s disbursement, unless the fee is paid using non-federal funds from some other source.
To date, a number of lenders have announced they will pay the default fee on behalf of their student borrowers for loans guaranteed by LOSFA. By agreeing to pay the 1% federal default fee, the following lenders have made a commitment to assist students by reducing their costs of borrowing:
· Bank of America (801871, 806746, 818334, 831846 and 807674)
· Brazos for EFSI (833864)
· Brazos for Academic Finance Corp (833617)
· Campus Federal Credit Union (817558)
· Edsouth for Edamerica (831453)
· Louisiana Education Loan Authority - LELA (805113)
· Nelnet Academic Loan (833669) and Nelnet Health Ed Solutions Loan (833820)
· Oklahoma Student Loan Authority for Chase (828352)
The Louisiana Legislature has appropriated general funds for payment of the mandatory one percent (1%) federal default fee, beginning July 1, 2006, for all borrowers of Federal Stafford, PLUS and Grad PLUS whose loans are guaranteed by LOSFA, when those fees are not paid by the lender. By appropriating these funds, the State of Louisiana acted to reduce students’ cost of borrowing, to strengthen Louisiana’s guaranty agency by making its guarantee price competitive and to promote the agency’s long-term growth and contributions to state student assistance programs.
Revenues generated by LOSFA from guaranteeing student loans are used to pay for the administration of the Tuition Opportunity Program for Students (TOPS), the Student Tuition Assistance and Revenue Trust (START Saving Program), and other state student financial aid programs. Revenues in excess of these costs will be used to supplement existing student aid programs and to create new programs to assist students.
Questions regarding LOSFA’s
payment of the default fee should be directed to a School/Lender Services Specialist
by calling 1-800-259-5626, Ext. 1012, and asking for your representative.