DATE: Oct. 25, 2005
CONTACT: Gus Wales, Director of Public Information and Communications
PHONE: (225) 922-2029
FAX: (225) 922-0790
LOSFA returns more than $2.4 million to the state
The Louisiana Office of Student Financial Assistance (LOSFA) recently returned to the Commissioner of Administration more than $2.4 million – an amount that included the original seed grant to the Louisiana Opportunity Loan (LA-OP) Program, plus thousands of dollars in additional program earnings.
Created in 1991 as a non-subsidized student loan program authorized by the federal Higher Education Act and with loans insured by the federal government, the program was implemented by LOSFA using general fund appropriations of $750,000 and a seed grant of $2.25 million. The seed money leveraged $20 million in student loan bonds issued by the Louisiana Public Facilities Authority, who also functioned as the program’s lender. LOSFA guaranteed the loans against default.
The program provided low-interest, non-need-based loans to middle-income students at Louisiana’s postsecondary institutions. However, realizing the value of LA-OP and similar programs, Congress created a non-need based student loan program for students from middle income families when it reauthorized the Higher Education Act in 1992. As a result of the newly created federal unsubsidized loan program, the LA-OP program ceased active lending.
LOSFA retained oversight of the program throughout the payout of loans and the retirement of bonds that provided original lending capital. When the agency closed the books on the program this year, it had netted $181,176 in profits, representing a return to the state of 8.1 percent on the original seed advance.
This is the second time the agency has generated and returned to the state a profit on seed monies advanced for student assistance programs. Previously, the agency returned a profit on seed money used to create a loan program for truck driver trainees that enticed a major employer, J.B. Hunt Inc., to open a facility at the former England Air Force Base in Alexandria.
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