The Iowa College Student Aid Commission has voted to transfer the portfolio of the federal student loans it guarantees to the Great Lakes Higher Education Corporation. The federal Health Care and Education Reconciliation Act — often referred to as Health Care Reform — eliminated new loan originations on July first of 2010.
Student Aid Commission executive director, Karen Misjak, says that meant the number of loans in their portfolio would continue to go down. “Our portfolio at the time was around 3.4-billion-dollars, and over that time period, our outstanding portfolio now is about 2.5 billion dollars. So, we get paid based on outstanding loans and the amount that we’re able to collect as far as defaulted loans,” Misjak says.
She says the commission felt with the continued drop in income from servicing the loans, it was better to sell the portfolio to another entity. Misjak says there are around 630,000 loans in the portfolio, and the borrowers on those loans will not see much difference once the transfer is completed.
Misjak says they will be notified so they know where to send their payments and if they default they will deal with the new owner of the portfolio. “So it will not negatively impact the students,” Misjak says. The sale of the portfolio ends the commission’s 34-years of guaranteeing loans for students.
Misjak says they are discussing how that will impact what they do. “We’re looking at our business plan and how we’re going to move forward as an agency. Right now we administer all the state grants and scholarships. And then we also perform a lot of outreach activities, and we administer the statewide Gear up grant for low-income, underepresented students across the state,” Misjak says.
She says their goal will remain the same as it has when they guaranteed loans for students. “Our focus is to ensure that students know their options when they graduate from high school to go on and get training beyond high school in the post-secondary education arena,” Misjak says. The transfer of the loan portfolio is expected to be completed around October first of this year.