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CoreFirst among banks stopping student loans:
CJOnline / The Topeka Capital-Journal - CoreFirst among banks stopping student loans
By Michael Hooper
The Capital-Journal
Published Saturday, May 10, 2008
CoreFirst Bank & Trust has decided to get out of the student loan business, joining other lenders nationwide that no longer offer such loans.
CoreFirst has participated in the Federal Family Education Loan Program, offering Stafford and PLUS loans, for more than 30 years. But CoreFirst, the No. 1 lender at Washburn University, said its portfolio of student loans lost its profitability after Congress voted last fall to cut about $20 billion from subsidies the government pays to lenders. CoreFirst is among many.
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"There is no monetary benefit to stay in it," said John Fager, spokesman for CoreFirst. "They are paying at a rate they are funded. It's a wash."
CoreFirst sent notices to students this week saying "effective immediately CoreFirst Bank & Trust will no longer accept applications for new Stafford or Plus loans."
Students are advised to contact their school's financial aid office to choose another lender and sign a new master promissory note, the bank said.
Fager said CoreFirst's student loan portfolio ranged between $15 million and $25 million over the years.
The portfolio is in the process of being sold to Sallie Mae Servicing. The sale should be completed by the end of June.
Fager said CoreFirst targeted students at Washburn, Emporia State University, Kaw Area Technical School and other trade schools in the area.
Jerry Farley, Washburn president, said CoreFirst had handled the majority of loans for students at Washburn.
After finding out the bank is getting out of the business, Washburn applied to be part of the U.S. Department of Education's direct loan programs.
Farley said there is ample opportunity for Washburn students to find other lenders before the next semester begins in August.
Farley, a member of the board of directors at CoreFirst Bank, said other lenders, including Capitol Federal Savings, have gotten out of the student loan business as well.
Farley said he has a list of about 24 other lenders that are willing to provide student loans, but they aren't locally owned. The list includes Bank of America, US Bank and Citibank.
The average student loan debt of Washburn graduates is about $13,000.
More than 60 percent of Washburn students have student loans, Farley said.
Farley said that because so many lenders have gotten way from providing student loans, Congress introduced a bill to entice lenders to stay in the business.
President Bush recently signed into law a bill passed by the House and Senate in response to shifts in the student loan markets. While there are no reports of any eligible students or parents being denied a federal loan, Congress and the White House believed it prudent to be prepared for any sudden or drastic shifts in the markets that could affect access to federal student loans, according to a report from the American Association of State Colleges and Universities.
Michael Hooper can be reached at (785)295-1293 or
michael.hooper@cjonline.com.
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Reader Comments
-4 Rating Posted by: kansas51 at May 10, 2008 at 10:46:12 AM
CoreFirst, formally Commerce Bank & Trust, has been ripping students off for a decade. On numerous occasions and with several students had the same loan as Sallie May and no matter how many agencies you had involved would not "get it". Also, I know at least three people that the bank had "debit charges" being made on their accounts that did not belong to them, on two, the customer was out of town, but they said "since you shop at the GAP on a regular basis these charges belong to you" the charges were dates that were not possible. There were numerous other charges which caused the account to be in overdraft status, it is thought to be an inside job by an employee as the problem would not end. Of course, the bank is "always"right so it was horrible experience for a young person just starting out. This scenerio played out over and over. Thankfully the students will be saved from their involvement with this establishment - finally. Also, if the feds keep dropping the interest rate, who is getting the breaks, certainly not the consumer.. interest rates for home loans have not dropped for the homebuyer. The only thing that has happened is fewer and fewer people that have good credit 680 and higher are being denied houses because the banks gouged the consumer previously and now everyone has to pay for it.
-4 Rating Posted by: butthead at May 10, 2008 at 12:13:32 PM
Farley will hump any leg with a buck.
Posted by: Dude at May 10, 2008 at 07:42:49 PM
Is there something wrong here? CoreFirst has a majority of the loans at Washburn. Now that it is not AS profitable it is dumping the students. Farley is President of Washburn and wait he is also on the Board of CoreFirst. Something doesn't smell right.