After providing students and parents federal and private loans for years, the Vermont Student Assistance Corporation (VSAC) will go to the bond market within the next two weeks to raise finances for about $23 million in private student loans for the 2010-11 academic year.
Up until now, VSAC has offered students and parents both federal education loans and private loans to supplement federal borrowing. Because of federal legislation, as of July 1, federal loans are available only through the federal government, while private loans continue to be the domain of financial institutions and nonprofits like VSAC.
“Given the demand, VSAC is very happy to be able to offer a private student loan this year,” said Don Vickers, VSAC president and CEO. “We are especially pleased that our private student loan will carry a lower interest rate than the federal PLUS loan for parents and grad students.” The PLUS loan for 2010-11 has a fixed interest rate of 7.9 percent and a 4 percent fee.
The Vermont Advantage Loan, VSAC’s private student loan, will offer a fixed interest rate that varies according to the repayment option chosen.
"This loan is different from loans VSAC has offered in the past because previously our loans were adjusted," said Irene Racz, director of public affairs at VSAC. The options are: paying principal and interest while enrolled; paying only the interest while enrolled; or deferring payment until leaving school. Fees range from zero to 5 percent, based on the credit rating of the student and his or her cosigner.
VSAC still encourages students and parents to look into federal loans first, then look to VSAC.
"Federal limits on loans are often too low. Often parents will look into parent loans. VSAC's interest loan is lower than the Federal Parent loan," Racz said.
With the popularity of the loan yet unknown, VSAC is still uncertain as to how this change will affect its employment. By losing federal loan origination, VSAC could be forced to reduce employment. Racz said if necessary, VSAC will first try to reduce payroll through attrition rather than lay-offs.
Racz is optimistic about the new loan and job security for those who have been with VSAC for some time, “This [new loan] helps keep some of the folks here who are traditionally in the loan business,” Racz said.
Students eligible to borrow from VSAC are Vermont residents attending any college, nonresidents attending Vermont institutions, and previous VSAC borrowers.
VSAC expects to have the Vermont Advantage Loan application available later in July. Students or families who want to be notified when the application is ready may email VSAC at [email protected]. Periodic updates will also be available on the VSAC Web site at www.vsac.org.
Source: VSAC. 7.7.2010
VSAC offering $23 million in private student loans for 2010-11
Submitted by tim
on