Tuesday, March 11, 2014
Blethen Maine News Service
While college-bound students in Massachusetts and elsewhere have struggled to secure private loans for the coming school year, Maine students have largely been able to escape those worries, lending and college officials say.
A tight national credit market has complicated the efforts of some state lending authorities to secure the funding needed to issue private student loans.
And while the Maine Educational Loan Authority -- the primary body Maine students go through to secure private financing -- did not have access this year to its conventional funding sources, Maine Education Services President and CEO Darren Hurlburt said the nonprofit organization forged an alternate solution.
The lending authority, which is managed by Maine Education Services, secured financing from TD Bank and used proceeds remaining from previous bond issues, Hurlburt said.
''MELA was not immune from the situation other entities were having,'' he said. But ''MELA was one of the fortunate ones that was able to find alternative financing this year.''
MELA needed to lend only $20 million, Hurlburt said -- compared to the $510 million in loans the Massachusetts Educational Financing Authority doled out during the last academic year. ''That makes it a little more flexible,'' he said.
The Massachusetts Educational Financing Authority announced in July it could not provide student loans this fall, forcing 40,000 families to scramble to secure financing.
MELA handled nearly 4,900 loan applications in 2007 and issued more than 5,200 loans at an average size of $6,100, according to the organization's 2007 annual report.
The number of lenders available to Maine consumers has dropped in recent months as financial institutions nationwide without access to funding have retreated from the student loan market, Finance Authority of Maine acting CEO Elizabeth Bordowitz said. But that largely has not affected students' ability to secure private financing.
''For the most part, the lenders that stopped lending in Maine did not do a lot of business here,'' she said.
The small number of students affected by lenders pulling out of the Maine market, Bordowitz said, were able to secure loans from other lenders.
When students at the University of Maine at Augusta can no longer secure financing from private sources, they are shifted to the university's direct loan program, Dean of Enrollment Services Jon Henry said.
As a direct lending university, UMA offers loans through the federal government.
''We've got an immediate fix,'' Henry said.