MOHELA to discontinue rate reduction on automatic withdrawals

Tuesday, May 27, 2008 | 2:56 p.m. CDT; updated 7:27 a.m. CDT, Tuesday, July 22, 2008

JEFFERSON CITY — Missouri’s student loan authority is ending its discounted interest rates.

The decision by the Missouri Higher Education Loan Authority comes as student loan agencies nationwide are under increased financial pressure because of changes in federal law and tightening credit markets.

MOHELA Executive Director Ray Bayer says that as of June 1, the agency will no longer provide a 2-to-3 percentage point interest rate reduction for people who pay with automatic withdrawals.

He says MOHELA will also stop offering interest rate breaks for students in public service professions, such as teachers, police officers, nurses and social workers.

The changes will apply to new loans. People who receive such breaks on existing loans will continue to get them.

In the 2006-2007 fiscal year, 389 MU students received MOHELA loans, said Joe Camille, MU's director of student financial aid.

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