Blue Mass Group

Reality-based commentary on politics.

Mass Ed Financing Authority today said it will not be able to provide ANY student loans this fall

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This is a bad one

The Massachusetts Educational Financing Authority today said it will not be able to provide any student loans this fall, which could leave tens of thousands of families in the lurch just weeks before college classes begin.

MEFA does over 40,000 loans per year for MA students. How did they screw this up?

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  1. I did not get a chance to call the Governor or the Joseph F. Hunt (Chairman of the Board at MEFA) so I can’t claim first hand that this information is rock solid truth (Sorry KBusch).

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    p>I also did not consider that this news announcement may have positive aspects such as increasing the business for many of the private sector funding sources.

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    p>I also copied the note about this announcement coming ” just weeks before college classes begin.” and to be honest I didn’t call any of the local colleges to find out when they in fact start classes so this is also un-corroborated (Sorry again KBusch).

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    p>What do I propose? That’s a tough one too. I have been thinking about this and maybe I could take out some of my savings and buy Lottery tickets. If I win, I could send the winnings over to MEFA for new loans (although, I should save some of the winnings to help poor people who lost their money playing the Lotterry pay their heating bills this winter).

            • At least this time, there was no reference to Number Twos.

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              p>To give praise where praise is due, JohnD does seem to bring interesting articles to our attention.

              • The post is definitely an attack, or, if you want to get technical, a pre-attack.

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                p>He may bring interesting articles, sure, but it seems like he’s only doing it to frame the discussion in the worst light possible.  

                • … in general, been his M.O.  But I think I detected a glimmer of him wanting to actually hear other opinions in his last post.  It was just a glimmer and later it devolved into the usual stuff, but it was an improvement.

                • He is bent out of shape over this exchange  and this challenge, but his comments here, coming as they do out of the blue, seem crazy or even pathetic. You’d think asking people to help look up evidence for extraordinary claims or to provide a coherent account of their views were some kind of cruel, unfair interrogation.

                • … that as he gains exposure in his posts and comments he comes to realize that challenges to show evidence are par for the course in the blogosphere.  We all know that if you don’t want your opinions challenged that the blogosphere is no place to hang out, but we shouldn’t assume that JohnD knows that.  Even if he does, he apparently doesn’t know on an instinctive level otherwise the emotionally defensive reaction wouldn’t result.  I figure he’ll either learn or get sick of the ‘attacks’.  I stayed out of the last exchange specifically to see if the trend I was noticing was real.  Indeed the post initially seemed like evidence of progress… but then he went and made that first comment.  Hopefully its just a case of two steps forward and one back rather than one step forward and two back.

              • … some hopes up for him with his last post.  For a second there it genuinely seemed like he wanted to hear opinions from people.  It didn’t turn out as smoothly as I had hoped, but it’s an improvement from what I’ve read from him when he started out.  I’m hoping as time goes on, he gets more of a handle on how receive challenges to his views and opinions without the whole thing devolving.  

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                p>Not to pat my own back or anything, but when I started I put up this post.  When I first put it up at the time, the vote was fresh in people’s minds and some tempers were running hot, so I knew when I brought up what I did in the post it had the potential to devolve into a shouting match.  I’m actually quite proud of how well it went in retrospect.  But it took some effort on everyone’s part to pull off.  

                • I just noticed the resemblance between your original poster’s “I am an incredibly strong advocate of rights of the majority.” and JohnD’s “I sometimes đŸ™‚ generalize about Liberals, Democrats, minorities, immigrants… and I read bloggers generalizing about Conservatives, Republicans, Whites, Rich people, Corporations… What’s good for the goose is good for the gander.”   Just sad.

    • however obtuse to the original post. I just read this same news item in the Boston Globe so we can accept it now as “irrefutable”.

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      p>Anyway… does anyone have any ideas or thoughts about this news item?

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      p>Where are the 40,000 kids/families going to go for $$ for the Fall( OTHER BANKS BUT INT RATES WILL BE MUCH HIGHER AND MUCH LESS MONEY WILL BE LENT OUT? Can the legislature back them up like they did for the Turnpike? (YES THEY COULD) Should they? (YES THEY SHOULD, BUT THEY NEED TO ENFORCE STANDARD CREDIT STANDARDS) How can they go from 40,000 to ZERO? (BAD MANAGEMENT, TOUGH MARKET CONDITIONS). This Authority was created to help people get loans and now they have failed so should someone be held responsible? (FIRE THE PEOPLE RESPONSIBLE OR/AND REPLACE THE BOARD FOR NOT HAVING FORESIGHT OR FOR MISMANAGING PREVIOUS LOANS).

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      p>Some bloggers have commented that I “bait” people with posts like this and then do a “gotcha” when people answer… and sometimes I do. Some also say I have pre-conceived answers for many of these questions… and sometimes I do. I have answered (IN ALL CAPS) above if I have a thoughts about the questions I ask, but I have to be honest and admit I haven’t spent the week researching my answers or read any books to back up my answers. That is why I refer to them as “thoughts”.

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      p>I also have to admire many of you for sticking closely together and supporting each other. I have often commented about the group being very monolithic. But I still say there needs to be more debate on the issues I bring up and less “intolerence” to my views. And maybe loosen up a little and stop getting so pissy.

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      p>I’ll steal some thoughts from the next President of the US delivered in 2006 printed in the Boston Globe today…

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      p>

      “When I was a young man, I was quite infatuated with self-expression, and rightly so, because, if memory conveniently serves, I was so much more eloquent, well-informed, and wiser than anyone else I knew,” McCain said. “. . .With my superior qualities so obvious, it was intolerable to suffer fools gladly. So I rarely did. All their resistance to my brilliantly conceived and cogently argued views proved was that they possessed an inferior intellect and a weaker character than God had blessed me with, and I felt it was my clear duty to inform them.”

      McCain went on to say: “It’s funny, now, how less self-assured I feel late in life than I did when I lived in perpetual springtime.”

      This newfound humility, McCain said, led him to the realization that “love of freedom” requires “more than tolerance,” but rather mutual respect, and is furthered when people of common ideals engage in disagreements.

      “We must love [freedom] enough to argue about it, and to serve it, in whatever ways our abilities permit and our conscience requires, whether it calls us to arms or to altruism or to politics,” McCain said. And in case the message was unclear, he added: “Americans should argue about this [Iraq] war.”

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      p>I, for one, don’t have the excuse of “youth” to defend my intolerance. But I will continue to attempt to be more open, in will ask that dialogue continue on many subjects to either enforce my views on issues or show me to be wrong. I am not alone in being very busy with life, with work and with raising kids (5). I don’t have the luxury of researching Ad infinitum on issues and will “reply to posts” or post a new subject as I see fit within the rules and guidelines of this site.

      • from another thread that has carried over here. I would encourage poeple to give 0’s to all the previous irrelevant posts, including this one, so they can be deleted and readers won’t have to scroll past all that garbage in order to read about and discuss a very important and interesting topic.

  2. To finance loans they sell bonds at a rate lower than the rate they charge for the student loans. These loans are backed by the student loans and insured by bond insurance companies.

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    p>I’m not sure its entirely a “screw up” on their part as there is now a perfect storm of problems. Some of which are difficult to control.  The market for the bonds they use to raise money to finance these loans has dried up, the bank they used has “exited” the market and the insurance company they use (as well as many others) to guarantee those bonds is also in trouble.

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    p>This is all fallout from the mortgage crisis and a series of new and exotic financial instruments that are all crashing as they enter into uncharted waters.  This ties into the Turnpike Authority debt although one could argue that their problems were caused by mismanagement. Which is why some people (including me) are concerned that a bailout of the turnpike without adding some transparency and reform is reward for bad behavior and may hurt the states bond rating which would cost all of us more money.

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    p>

    • … a snippet on this on Greater Boston tonight, but I didn’t catch most of it.  The short part of the discussion I caught seemed to agree with your assessment.

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      p>Interesting thought on the Turnpike Authority.

    • Bailing the Pike out to lower their int rate was a good move IMO. However. doing “anything” for the Pike without getting some control over their spending, even as a simple oversight is totally irresponsible. How can the Pike expect us to back them up when we have no oversight into their business practices? There is ample rumor out there about their political patronage, mismanagement and misuse of budgets/funding to easily require some reporting before the Pike jeopardizes our strong bond rating.

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      p>As for the MEFA funding… I would be curious if MA is alone here or is every other state going through this type of student loan problem? Also, how was the MEFA bond ratings before this year?

    • The credit markets have no one interested in investment, and therefore no capital, at the moment.  No capital, nothing to lend.

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      p>For the same reason that it is getting harder to borrow to buy a house, even with good credit, it is getting harder to borrow student loans.  There are simply fewer dollars available to be lent.

      • it seems (?) like MA is borrowing more — bonds for biotech, etc.

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        p>how does tightening credit market affect that?

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        p>basically —

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        p>i recommended post (didn’t understand the KB references) because this seems like one of those “big deal” things that is too complicated to be easily sorted into partisanship, and therefore doesn’t get much attention — but should.  

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        p>i’d like to propose a CMD-and-Gary thread, or even where one of you guys interviews the other, that is a back and forth on the “financial state of MA”, one that kind of sorts out the big issues vs newsy but less important ones.  

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        p>housing market, credit market, migration outward of population, unfunded pension liability, big dig liability, what happens if sales tax referendum passes, etc.  

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        p>big picture stuff.  how does it all fit together?  BMG’s top 2 guys who seem to know something about money explain.  reality based commentary and all that.  

        • Remember:  http://vps28478.inmotionhosting.com/~bluema24/s…

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          p>and:  http://vps28478.inmotionhosting.com/~bluema24/s…

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          p>and:  http://vps28478.inmotionhosting.com/~bluema24/s…

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          p>Remember, we spend far more on prisons and criminal justice then on higher education.

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          p>Loans to students who attend higher education and post high school vocational training schools [as in the bio sciences] in state schools stay here, and pay taxes.

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          p>Money spent on prisons is money gone into a black hole.

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          p>Student loans get paid back.  As Charley said in promoting one of the above posts a while ago, “Sometimes adults can be stupid”.

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          p>Fund the student loans – the money will come back with post interest – and tax paying citizens who don’t have to move to North Carolina.

      • But just for high quality borrowers.  

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        p>The 40,000 or so hit by the MEFA pullout, principally affects private lending. I bet Bank of America affected even more; it pulled out of the market also.  

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        p>I think there’s plenty of federal loans out there. It’s private loans that are the issue.

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        p>Private lending historically goes to i) who’ve maxed out their federal loans or ii) are attending for-profit colleges (i.e. career/trade schools) and are therefore often atypical students such as lower income, older (and therefore with maxed out credit card debt and mortgages.)

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        p>Because the borrowers aren’t so credit worthy, what with i) the possibility of a recession ii) a historical higher default rate among this group, MEFA, BAC et. al. says the debt auctions are failing, or will fail.  It’s a typical flight to quality that happens during every banking ‘crisis’: loan officers don’t want to be seen lending to poor risks when the back-office is taking write-offs.

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        p>

        • The sums available under the federal programs are (or at least were, ten years ago) well short of the requirements of private school tuition.  Private loans were needed to supplement the federal programs.

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          p>If private lending becomes harder to come by, it might have the effect of putting some downward pressure on private school tuition, or at least on the rate of growth.  The population of students who can pay cash on the barrel, even from middle class or upper middle class families, has got to be somewhat limited.

        • It appears some pols are asking the Gov to help out MEFA.

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          p>Hopefully the Gov can help out MEFA for kids loans. Then we can have MEFA money AND continue to fund our prisons thereby keeping all those violent criminals behind bars.

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          p>

          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.

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          p>

          The governor’s office had no immediate response to the letter.

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