Important News For MSU Stafford, PLUS, And GradPLUS Borrowers
Background of the changes
See also: Frequently Asked Questions about the changes
Michigan State University has participated in the State of Michigan’s Michigan Students First (MSF) program since it began in fall of 2003. This is a version of the federal Stafford and PLUS loan programs that provides zero origination fees for everyone and 0% interest after 36 months for those making payments on-time. Certain lenders agreed to make loans to our students and sell them to the Michigan Higher Education Student Loan Authority (MHESLA) under Michigan Students First provisions. MHESLA provided the discounts described above once they acquired the loans.
Due to the unstable national credit markets, MHESLA has been unable to acquire funds to purchase loans after April 16, 2008. MHESLA representatives are unable to say if or when this situation might change. This means that the disposition of any loans not sold to MHESLA by this date are subject to the origination fees and interest charges established by your lender. These rates cannot exceed established federal maximums and must be disclosed to you by your lender. These new conditions take effect immediately and apply to all loans taken out for summer 2008.
It is possible that some lenders may decide to offer new loans only to their own current borrowers or they may decide to accept no new loan applications. MSU has served as a lender to graduate students under the federal Stafford loan program but is ceasing participation immediately due to the inability of MHESLA to purchase its loans. Comerica Bank has notified us that they will accept loans only for students and parents who have borrowed from them previously, again because MHESLA is unable to purchase its loans. Any borrower who voluntarily elects to change lenders, or who is forced to do so because of lender participation changes, must complete a loan promissory note for the new lender. We will notify MSU student and parent borrowers when we learn that their lender has changed their participation arrangement.
Currently participating lenders (as of late April 2008):
- Chase
- Fifth Third
- Bank of America
- National City
- EdAmerica
You are not restricted to these lenders, but may choose any lender who participates in the federal loan programs.
