Encino, CA (PRWEB) October 12, 2007
Paul Joseph, CFO of the southern California student loan company StudentFirst, has issued a statement about the impacts of recently passed federal student loan legislation. The legislation, which President George W. Bush signed on September 27, 2007, cuts federal subsidies to lenders that provide student loans.
"Lenders have substantially scaled back benefits and discounts that have long been passed along to borrowers," said Joseph. "This new legislation has squeezed margins industry-wide in such a significant manner that banks have no choice but to cut borrower benefits almost completely.
"Many lenders are reinstating default and origination fees and raising rates. I'm sure that Congress had students and their families at heart when voting on this legislation, but I think this is a perfect example of what happens when legislatures don't fully realize the end result of the process. It's a shame that the people they were trying to help wind up being the people that get hurt the most. Hopefully we can avoid this type of thing in the future."
Some analysts say that the legislation, which passed through Congress on September 7, 2007, will reduce lenders' profits, hindering their ability to offer discounts to student borrowers. Experts say that some smaller lenders might not be able to offer student financing at all any more. The overhaul of the federal student loan system specifically cuts "special allowance payments" to nonprofit companies that provide federally guaranteed loans by 0.55 percent.
The new law does cut interest rates on need-based loans by approximately 50 percent, to 3.4 percent, over the next four years. The legislation also caps student loan repayments at 15 percent of borrowers' monthly incomea, and raises the annual student Pell grant ceiling to $5,400 a year by 2012 from the previous ceiling of $4,310. Lenders like StudentFirst, however, say this comes at the expense of the student loan industry, obstructing their ability to offer the discounted loans that have been available to students for years.
For more information about StudentFirst and the student lending industry, visit http://www.studentfirst.com
StudentFirst is a student loan consolidation company that prides itself in providing the best customer service in the industry. Their commitment to service has given them the ability to grow at a wonderful pace through a strong referral base. Their sales teams are highly trained and supported by a dedicated customer service department. StudentFirst encourages clients to call sales or customer service at any time with any question.
At the current time, StudentFirst is committing all of its efforts to the federal loan consolidation program. Their company mission statement is to be the most knowledgeable company in the industry on the federal loan consolidation program.
StudentFirst does, however, plan to provide both federal and private new loans, as well as private loan consolidations, in the future.