Federal Student Loans Suspended
Mortgage Crisis, Changes Make Securing Funds Difficult
POSTED: 7:02 am EDT April 16, 2008
UPDATED: 9:14 am EDT April 16, 2008
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BOSTON -- The Massachusetts Educational Financing Authority is suspending all federally guaranteed student loans effective July 1.The move affects thousands of families who have already filled out applications for the 2008-2009 school year. MEFA said the mortgage crisis and a series of federal changes have made it difficult for the nonprofit state organization to secure funds for its federal education loan programs.
VideoIt means 14,700 Massachusetts students who qualified for the low-interest Stafford Plus loans through the Massachusetts Education Finance Authority, or MEFA, will not be getting the money.MEFA said it will not be accepting any new federal consolidation applications. Private loans will still be offered, but those carry higher interest rates. The financing crisis has led more than 50 student lenders to stop making federally guaranteed student loans nationwide, either temporarily or permanently. Congress is being pressed to help the distressed market. Executive Director Tom Graf said MEFA will not accept any new Federal Consolidation applications, urging parents and students to make alternative plans for the fall 2008 semester. Graf said private lenders are expected to take up the federal loans, which accounted for 20 percent of loans worth $500 million provided to students in Massachusetts this year. State agencies in Iowa, Michigan, Montana and Pennsylvania have suspended college loan programs.
VideoIt means 14,700 Massachusetts students who qualified for the low-interest Stafford Plus loans through the Massachusetts Education Finance Authority, or MEFA, will not be getting the money.MEFA said it will not be accepting any new federal consolidation applications. Private loans will still be offered, but those carry higher interest rates. The financing crisis has led more than 50 student lenders to stop making federally guaranteed student loans nationwide, either temporarily or permanently. Congress is being pressed to help the distressed market. Executive Director Tom Graf said MEFA will not accept any new Federal Consolidation applications, urging parents and students to make alternative plans for the fall 2008 semester. Graf said private lenders are expected to take up the federal loans, which accounted for 20 percent of loans worth $500 million provided to students in Massachusetts this year. State agencies in Iowa, Michigan, Montana and Pennsylvania have suspended college loan programs.Copyright 2008 by TheBostonChannel.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
