State agency to leave federal student loan program
COLUMBIA, Mo. (KMIZ)
The Missouri Department of Higher Education said Friday that it will exit a federal student loan program that last issued loans in 2010 because of a continued freeze on student loan payments.
The Missouri Student Loan Program is getting 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 ongoing pause on 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 U.S. Department of Education this month. The federal department will pick a successor agency to guarantee loans, which could take up to a year.
It wasn't immediately clear what, if any, effect the change will have on borrowers.
Assets from the program have helped fund student financial aid programs and other activities, the state higher education department said. The department has continued to service loans taken out since 2010.
Over the years, assets from the Missouri Student Loan Program have been used to fund state student financial aid programs, default prevention activities, school and lender training, and financial awareness and outreach activities to high schools and colleges. Specifically, the program helped fund the FAMOUS System used to administer Missouri’s 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 guaranty agency through the Federal Family Education Loan Program since 1979. Although the federal Health Care and Education Reconciliation Act eliminated the ability of the state to guarantee new student loans in 2010, the department continued to service the loans it guaranteed prior to that date.
