Starting in October, thousands of people repaying their federal student loans will begin sending their checks to the Missouri Higher Education Loan Authority.
The Missouri agency says it is the first state-based nonprofit organization to be approved to handle federal loan payments since a 2010 law required the U.S. Department of Education to originate all federally backed student loans. That education provision, which was tucked into the federal health care overhaul law, essentially eliminated the ability of banks and private lenders to serve as middlemen for federally backed loans.
Missouri's loan authority has been in the business of buying bundles of federally backed loans issued by private lenders. It also has functioned as a service center that handles billing and collection for loans. As a result of the change in federal law, the agency is trying to take on a greater role as a loan servicer. Although it bears Missouri in its name, the organization has - and will continue - to handle loans issued to people from across the country.
The agency was holding a ceremony Wednesday marking the renovation of a portion of its Chesterfield headquarters to handle the federal loans. It expects to begin processing its first batch of federal loans - for about 100,000 accounts - around Oct. 20, said Will Shaffner, director of business development and governmental relations for MOHELA. He said the federal contract calls for the authority to eventually service up to 10 million accounts, if its performance merits an increased caseload.
Shaffner said MOHELA has hired more than 60 people to handle the federal loans and expects to continue hiring about 20 additional employees every couple of months as the work load increases.