by Caleb Fort
Daily Lobo
Woody Farber, president of New Mexico Student Loans, said a flier in the Daily Lobo on April 28 could cause students financial harm.
The flier was an advertisement for student loan consolidation through the company Nelnet.
"It puts students in a predicament, if you will," he said. "If they get turned down by Nelnet, they may have missed the deadline to lock into low interest rates with us."
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Farber and the flier said interest rates are expected to go up July 1. However, by consolidating loans, students can keep the current low interest rates for the life of the loan, Farber said.
He said most students from UNM will be ineligible for Nelnet's program because of a federal law called the single holder rule. The rule means students who have loans from only one lender can consolidate their loans with that lender.
"The reason for that was to save borrowers the headache and heartache of being inundated with seemingly wonderful offers," Farber said.
The flier is simply intended to generate revenue for Nelnet, a for-profit company, even if it hurts some students, he said.
Sean Heyen, a member of Nelnet's consolidation team, said he is aware of the single holder rule. He said although his company is for-profit, as opposed to the nonprofit NMSL, it is still concerned with the well-being of students.
"Our intention with the flier is not to mislead anyone but just to generate some action," he said.
Nelnet will tell students with loans from only one lender to consolidate with that lender, he said.
"We're in the business to help the students," he said. "Certainly we have a business to run, but we try to do what's best for the borrower."
He said there should be no worries that students might miss the deadline because they are applying with Nelnet.
"I don't believe that that's a valid concern," he said. "The ad is out there well in advance of the deadline. There's plenty of time for borrowers to realize they can't consolidate with us."
Nelnet is a partner with the UNM Alumni Association. Karen Abraham, director of the association, said she did not see a problem with the flier.
"It looks pretty straightforward to me," she said. "We're not trying to be in competition with NMSL on any level."
Farber said the flier gives the impression that students can consolidate with Nelnet to get extra-low interest rates. However, all student-loan organizations use the same formula to determine interest when consolidating loans, he said.
He said it is in the best interest of students to consolidate with NMSL.
"There's nothing in this flier that was handed out that tells students exactly what they can expect from Nelnet," he said. "The students really don't have enough information to decide which way to go."
He said NMSL is a better choice because as a nonprofit agency, it is required to give excess earnings back to borrowers. This year NMSL forgave $4.45 million of debt, he said.
Heyen was not familiar with NMSL's programs but said Nelnet's size means it can offer advantages in terms of customer service.
