Market turmoil hits N.H. student loan agency
Citing the volatility of capital markets, the New Hampshire Higher Education Loan Corp. – by far the largest New Hampshire provider of student loan financing — suspended its alternative student lending efforts on March 11.
NHHELCO, one of the NHHEAF Network Organizations, said the decision to get out of the market for alternative lending came after analysis of administrative costs of the program and examination “of the quality and affordability of its current loan offerings against various offerings and programs available in the student loan market today.”
Alternative loans are non-federal loans made to students themselves who need resources beyond that of the assistance they receive from the college itself and through the federal Stafford Loan program.
According to Tara Payne, vice president of marketing and communications at NHHEAF, 4,769 alternative loans were disbursed last year to New Hampshire residents, and another 1,500 were disbursed to non-residents.
“The amount of students borrowing thought the alternative loan program has increased every year. It’s now a critical resource for students to finance higher education,” said Payne.
The decision does not affect existing loans, Payne said.
Payne did say that NHHELCO is committed to return to the market. “Once these markets settle, we will be back offering the full complement of programs,” she said.
The decision to suspend the alternative loans, said Tori Berube, NHHELCO’s vice president of product marketing, “is unfortunate, but NHHELCO is faced with the reality of having to focus its resources on the federal loan programs, which provide critical access to a college education.”
NHHELCO had previously announced in January its decision to suspend its federal consolidation loan program.
According to Rene Drouin, president and chief executive of the NHHEAF organizations, the turmoil in capital markets and the inability of loan agencies to securitize student loan debt or issue bonds has had major effects on liquidity across the student loan industry.
The market turmoil is exacerbated by substantial cuts to the federal-guaranteed student loan program by Congress since 2007, he said.
“Some people have expressed that students should not be concerned about accessing funds. Tell that to the 4,769 New Hampshire residents who borrowed from our alternative loan program last year,” said Drouin. “Through the years, nonprofit student loan providers like NHHELCO have maintained responsible borrowing practices and an excellent borrower benefits program. Students may still have some options for financing, but financial aid delivery will be impacted and the lack of competition from agencies exiting the loan program will ultimately increase the cost and impact access for the students of New Hampshire.”
NHHELCO is by no means alone in suspending some of its loan programs. Private and public loan agencies across the country have suspended operation of one or more loan programs, or even left the student loan program entirely, said Drouin.
In response, some 21 members of Congress — including New Hampshire 2nd District Congressman Paul Hodes – have appealed to the Department of Education and the Treasury to inject funds into the lending system.