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Public Benefit Analysis Student Loan Program July 25, 2007

Student Loan Program bonds are tax-exempt private activity bonds issued by authorized agencies for the purpose of either financing direct loans to college students and their parents or purchasing already-originated loans on the secondary market. When used for direct lending programs, tax-exempt bond allocation allows lenders to pass on interest rate savings to needy students via low cost financing in the form of lower interest rate than a conventional loan. Needy students are borrowers for whom the cost to attend college exceeds their ability to pay, as determined by their school’s financial aid office. The Committee prioritizes awards of allocation to direct lending programs over secondary market loan purchase programs.

The California Debt Limit Allocation Committee (“Committee”) is responsible for administering California’s annual tax-exempt private activity bond program, known as “the annual State ceiling”. For calendar year 2007, California’s State ceiling is $3,098,891,665. Each year the Committee divides the annual State ceiling among several bond programs, known as “Program Pools”, including the Student Loan Program Pool. For calendar year 2007, the Committee reserved $210,000,000, or 6.8%, of the State ceiling for the Student Loan Program Pool.

The Committee awarded $210,000,000 student loan allocation on July 25, 2007 to the Access to Loans for Learning Student Loan Corporation (“ALLSLC”) and Educational Funding Services, Inc (“EFSI”). Both ALLSLC and EFSI operate as direct lenders in California. Overall, the allocation will help to originate approximately 32,409 loans, saving borrowers hundreds of dollars over the life of the loan compared to conventional loans. Approximately $174,300,000 or a combined approximation of 83% of the allocation will benefit needy borrowers.

$210,000,000

83%

$174,300,000

32,409

$180,000,000

83%

$149,400,000

26,570

2.25%

$1,905

$2,183

$30,000,000

83%

$24,900,000

5,839

2.00%

$1,799

unknown

ALL Student Loan Corporation

Direct Lending

Educational Funding Services, Inc.

Direct Lending

1 2 3

Assuming an average loan amount of $10,000. Savings compared to loans without discounts, assuming $10,000 principal balance, over a ten-year repayment period. Ibid.

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