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Student Lending Analytics Blog: Connecticut Student Loan ...

In a sign of consolidation in the federal student loan guaranty business, the Connecticut Student Loan Foundation (CSLF) has put their guaranty business up for sale, according to the Journal Inquirer .  As posted earlier on this blog , EAC, the designated federal loan guarantor in South Dakota recently sold their business to Great Lakes.  The CSLF has struggled in recent years and one board member, Michael Meotti, described the problems as growing more dire:

Here is the letter that the President of CSLF sent to its school partners last week:

March 13, 2009

Dear School Partners:

Recent erroneous reports appearing in one media outlet have questioned the viability and business practices of the Connecticut Student Loan Foundation (CSLF) .  Regrettably, this media outlet made no attempt to contact CSLF leadership or staff prior to publishing this information.  Had they done so the release of misinformation and inaccurate reporting could have been avoided.  We feel it is important to set the record straight.

First and foremost, CSLF has funding readily available to make Federal Stafford, Federal PLUS, and Federal Graduate PLUS loans for the 2009-2010 academic year.  In fact, CSLF presently has more than $150 million in funding which we are ready to lend to students.

Further, improving the services we offer to our clients remains a top priority.  We are nearing completion of a major system conversion that will provide state-of-the-art products and services to all of its clients.  These upgrades to our operational processes will help us continue to provide high-quality services to all members of the FFELP community.

CSLF is a non-profit organization dedicated to providing access to funding for higher education.  We are neither an agency nor a quasi-public agency of the State of Connecticut, and as such receive no funding from the State.  Additionally, CSLF has no debts or obligations that are a liability of the State.

Media reports also failed to make clear that the present challenges are solely in the guarantee component of CSLF and were not in any way created by CSLF’s spending, but rather by the current capital market crisis and cuts to student loan programs through the Higher Education Reconciliation Act of 2005 and the College Cost Reduction and Access Act of 2007.  CSLF is working diligently to address these challenges and it bears repeating: CSLF has more than $150 million in funding readily available to make Federal Stafford, Federal PLUS, and Federal Graduate PLUS loans for the 2009-2010 academic year.