WASHINGTON, Nov. 13, 2015 /PRNewswire-USNewswire/ -- Education Finance Council (EFC), the national trade association representing nonprofit and state-agency student loan organizations, applauds the U.S. Department of the Treasury for issuing guidance that will expand education loan borrowers' opportunities to refinance their loans by permitting nonprofit and state-based agencies to use the proceeds of qualified student loan bonds to refinance loans regardless of their originating lender. This change will help reduce the burden of student debt nationwide while providing an economic boost to students, families, and their communities.
Currently, nonprofit and state-based student loan organizations are allowed to use tax-exempt bonds to refinance only those student loans which they originated. This guidance clarifies that state student loan programs can use tax-exempt bonds to fund parent loans for students and that tax-exempt bonds can be used to refinance loans for state residents or for students who attend a school in their state, regardless of the original lender. This will provide families with a refinancing tool that consolidates high-interest rate student loans into a single loan, reducing monthly payments and, in many cases, overall debt burden.
"As student loan debt surpasses the $1.3 trillion mark, students and families should not be denied the ability to refinance their loans in a way that benefits them," said Education Finance Council President Debra Chromy. "With this announcement, Treasury is acknowledging that allowing nonprofit and state-based student loan organizations to consolidate and refinance loans at today's low rates is essential to the financial well-being of our nation's hardworking students and families."
"We know that more student loan borrowers could use help with lowering their loan interest rate, monthly payments, or total debt service," said Rhode Island Student Loan Authority Deputy Director and Chief Financial and Compliance Officer Noel Simpson. "This guidance will help us achieve that goal."
Education Finance Council (EFC) is the national trade association representing nonprofit and state-agency student loan organizations. These entities operate as student loan servicers, alternative student loan originators, and the go-to sources in their states for college planning. EFC members work within their communities and states to provide counseling to students and families to encourage college attendance, saving for college, selecting and paying for college, and managing student loan debt. EFC members – while considered part of the private loan market – are distinct from traditional commercial financial institutions that make and service student loans. As state-based, nonprofit entities, EFC members are driven by a public purpose mission to expand borrowers' financial knowledge, prevent over-borrowing, and promote positive repayment behavior.
CONTACT: Michele Streeter
SOURCE Education Finance Council