By Melany Miller
The Utah Higher Education Assistance Authority has announced a new Origination Fee Credit Benefit.
The benefit will provide debt relief to students and parents who have Federal Stafford and Federal PLUS loans guaranteed between May 1, 2000 and April 30, 2001.
Brent Hoggan, chairman of UHEAA board of directors, said his committee is constantly looking for ways to relieve the burden on students who have to borrow money to finance their education.
“The action by the UHEAA board today is a significant step in reducing a student’s cost of borrowing,” Hoggan said.
The benefit is available to any student attending school in Utah or any Utah resident that is attending school out of state.
Origination Fee Credit Benefit will credit the borrower’s account with two-thirds of the amount of the origination fee that is deducted from the loan proceeds by the lending institution and remitted to the U.S. Department of Education as required by federal law.
A first year undergraduate student with a loan amount of $2,625 can save $52.50. A graduate student with a loan amount of $8,500 can save $170.
The loan benefits will affect several students at BYU. Steve Olsen, federal programs coordinator at BYU said Stafford and PLUS loans have been awarded to 7,732 students.
“Not only does this action of the board of directors reduce borrower costs to needy students, but it demonstrates the continuing efforts of UHEAA to make its programs the most competitive in the market for student loans,” Hoggan said.
The total savings for a federal Stafford loan borrower with a loan balance of $10,000, who takes advantage of the borrower benefits, would amount to $1,560.
Chalmers Gail Norris, executive director of UHEAA, said that this benefit is far above what comparable institutions in the same market are offering.
According to Norris, the closest competitor offers $247 less than the UHEAA benefit.
“We guarantee that these benefits will be available for any loan that’s given this year, no matter when the student graduates. Other programs can’t offer that guarantee,” Norris said.
The Origination Fee Credit Benefit is one of five borrower benefits that the UHEAA board of directors has established.
UHEAA pays a Guarantee Fee Benefit that waves the 1 percentage point fee charged on the loan for a student or parent loan borrower.
Loans that have entered repayment are eligible to receive the Automatic Payment Benefit, which provides a 1.25 percentage point reduction in the interest rate of the loan if the borrower agrees to have the monthly payment automatically withdrawn from a checking or savings account.
Loans disbursed between January 1, 1995 and April 30, 2000, with balances exceeding $8,000 can earn the Origination Fee Benefit by making the first 24 payments on time.
Likewise, loans that entered repayment after January 1, 1993, can qualify for an additional interest rate reduction of 2 percentage points with the Timely Payment Benefit by making 48 payments on time.