Senators urge Patrick to act on student loans

Late yesterday, 39 state senators signed a letter urging Governor Deval Patrick to act quickly to assist the Massachusetts Educational Finance Authority, the quasi-public lending concern that this week announced it has no money for private student loans this fall.

The news affects about 40,000 students and their families who have counted on MEFA in the past. The group said in April that it was suspending federal student loans as well.

The senators suggested that the governor act to help loosen up funds for MEFA; the lender has been unable to refinance its outstanding bonds, due to turmoil in the credit markets, and thus has no new money to lend. They said Patrick should try to persuade college administrators to either lend MEFA funds, purchase MEFA bonds, or offer credit to MEFA for use in the sale of its bonds.

At the same time, the legislators urged the governor's office to use its leverage with financial institutions, to encourage them to invest in MEFA's student-loan bonds.

Senator Brian A. Joyce, Democrat of Milton, said the student-loan crisis is complicated in Wall Street terms, but locally, its effect is "starkly simple.'' He said there are "thousands of Massachusetts families, already struggling with higher fuel prices, higher grocery bills, and in many cases higher mortgage and tax bills on depreciating homes, who now must scramble to obtain higher cost loans from for-profit institutions. And heaven help them if their credit scores aren’t very high.”

The governor's office had no immediate response to the letter.
(By Beth Healy, Globe staff)