The Brazos Higher Education Service Corp. and NorthStar Education Finance Inc., two of the largest nonprofit lenders that ceased providing loans through the Federal Family Education Loan program, announced yesterday that they would resume originating loans to students in light of a Department of Education buyout plan that was formally unveiled Wednesday, according to officials at both lenders.
"Based on what we have seen so far, we feel comfortable that we will come back in and start offering loans to students," said Ellis Treadway, Brazos' executive vice president.
The announcements come after the Education Department said Wednesday that it will advance money, through Treasury borrowing, to FFEL lenders to ensure that they can originate new loans during the coming academic year. Once the loans are made, if the lenders are subsequently unable to securitize them, they will be able to sell them to the department through September 2009.
Some details of the plan were met with concern from certain lenders, who, among other things, want to maintain servicing rights on any loans that they sell to the department. The department said it will service any loans it purchases.
The debt issuance wing of Waco, Tex.-based Brazos was the largest issuer of tax-exempt student loan bonds between 1998 and the beginning of 2008, when it sold $14.15 billion of bonds, according to Thomson Reuters, while St. Paul-based NorthStar was the 10th largest issuer, with $3.02 billion during that period.