State agency leaves federal student loan program

COLUMBIA, MO (KMIZ)

Missouri’s Department of Higher Education announced Friday that it will quit a federal student loan program that last issued loans in 2010 due to an ongoing freeze on student loan repayments.

The Missouri Student Loan Program comes out of the Federal Family Education Loan program, which guarantees student loans from private lenders taken out before 2010, when federal law changed.

“The decision to exit was made due to the continued pause in federal student loan payments and collections that began in 2020 in response to the COVID-19 pandemic,” the department said in a news release.

In addition to the ongoing payment freeze, President Joe Biden is considering canceling some student debt.

The agency says it notified the US Department of Education this month. The federal ministry will choose a replacement agency to guarantee the loans, which could take up to a year.

It was not immediately clear what effect, if any, the change would have on borrowers.

Assets from the program have helped fund student financial aid programs and other activities, the state Department of Higher Education said. The department has continued to service loans contracted since 2010.

Over the years, Missouri Student Loan Program assets have been used to fund state student financial aid programs, default prevention activities, school and lender training, as well as financial outreach and awareness activities in high schools and colleges. Specifically, the program helped fund the FAMOUS system used to administer Missouri state financial aid programs and outreach materials to help students and families plan and pay for college.

The department has served as a student loan guarantee agency through the federal Family Education Loan Program since 1979. Although the federal Health Care and Education Reconciliation Act eliminated the ability to government to guarantee new student loans in 2010, the department continued to administer the loans. he guaranteed before that date.

Ryan H. Bowman