Zak Wood/Colorado Daily

Laila Nguyen, left, a junior in the Biology department, asks a question to financial aid counselor Nathan Klotz, right, regarding her student loans.

Despite some recent bad news from Massachusetts on the college loan availability front, it appears as if many CU and Colorado students can breathe easy for the near-term.

But on July 28, the Massachusetts Educational Financing Authority (MEFA), a self-financing state authority, announced that it would not offer loans for the coming academic year. A July 29 New York Times story said MEFA was unable to secure financing for the 40,000 students it services, and MEFA Executive Director Tom Graf mentioned “disruptions in the capital market” as a reason why it could not obtain money.

With other recent national financial headlines – including news about possible or actual multi-billion-dollar federal bailouts in the investment and mortgage sectors – concern about student loans might also be logical. But Ofelia Morales, Associate Director in CU’s Office of Financial Aid, said Tuesday that availability of federal student loans hasn’t been much of an issue this year at CU-Boulder, largely because it participates in the federal Direct Loan program.

“We participate in direct lending, so our students are borrowing straight from the government – not from a bank or a third party,” said Morales. “More and more, people are trying to get schools to go towards direct lending to avoid these kinds of problems (referring to MEFA), and luckily, we’re already there.”

Laila Nguyen, a CU junior, said Tuesday that she was aware of the MEFA announcement and other difficulties in segments of the world of lending, but she had no problem obtaining her Subsidized Stafford Loan.

“This is the first time I’ve actually applied for a loan, and I got it right away,” said Nguyen. “It was really very, very convenient because I just did it all on the CUConnect Web site.”

CUConnect is an online service that can connect students with many CU entities and forms of information, including CU news and events, financial matters and other categories.

While Nguyen had no trouble getting her student loan, Morales said it might be a different story when it comes to parent loans, largely because parents must pass a credit check. Morales said she didn’t have any statistics on current rates of parents successfully obtaining loans, but she said the Office of Financial Aid had anticipated that parent loans might be harder to get in today’s market.

“The student loans are guaranteed, but the parent loans are all credit-based,” said Morales. “You’re seeing more and more families with foreclosures, or other things that are negatively impacting their credit, and that is a factor in how much they’re able to borrow and the types of loans that they’re able to get.”

Students elsewhere in Colorado might seek loans through private for-profit institutions or not-for-profit organizations such as CollegeInvest, a division of the state Department of Higher Education (DHE). Janet Gullickson, Chief Outreach and Client Relations Officer for CollegeInvest, said Tuesday that it is “pretty well-financed” to provide loans this year, with about $240 million available for the July 1, 2008 to June 30, 2009 academic year.

A May 2008 story in the Denver Post said CollegeInvest was hit hard because it had about 60 percent of its debt invested in the auction-rate securities market, and interest rates spiked after investors pulled out of the auction-rate market. But Gullickson said CollegeInvest was able to put other financing together, and said it has received “recycled money” capital from student payments, so it is in a better position to provide loans now than it was in May.

“We have to be prudent to be sure that we have enough money for all of our students, and we’re doing that,” said Gullickson. “Of course, we can’t guarantee what will happen in the future, but for right now, we’re in good shape.”

Gullickson said she doesn’t anticipate a MEFA-type announcement coming out from CollegeInvest, and she also noted that U.S. Sen. Edward Kennedy, D-Mass., posted a comment on his Web site expressing optimism in that MEFA will be able to offer student loans in the future.

But Massachusetts isn’t the only state in the nation to have had problems. For example, an Aug 4, 2008 story from the University of Texas-Dallas (UTD) Mercury, at www.utdmercury.com, said a total of 79 institutions have stopped issuing federal loans to UTD students in recent months. The story noted that about 10 percent of UTD students have been affected, but also said that students were advised to seek a different lender.

So, it might be wise for students and parents to at least keep an eye on the world of lending. CU-Boulder students can check the Office of Financial Aid Web site, http://www.colorado.edu/finaid, for information and contact information.

Also, Gullickson said the CollegeInvest nonprofit can offer assistance with both obtaining loans and avoiding loan defaults after college, including default prevention programs through its partner agency CollegeAssist.

Contact Richard Valenty about this story at (303) 443-6272 ext. 126, or valenty@coloradodaily.com.