THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 3, 1995 TAG: 9512030082
SECTION: LOCAL PAGE: B8 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Short : 38 lines
The Virginia Education Loan Authority completed the sale this week of $300 million in student loans to Sallie Mae, the nation's largest loan company.
The General Assembly ordered that the loans be sold to save the state money, shrink the state bureaucracy and improve service to students, said the authority's acting director, John H. Huston.
The 65,000 students who have loans administered by the authority will keep the same repayment terms. They will just send payments to a new address.
The state loan authority is scheduled to close completely June 30. About half of the 200-member staff has been laid off; at the end of December, about 35 employees will remain.
Proceeds from the loan sales will revert to the state's general fund. The sale is expected to save the state about $59 million, Huston said. Proceeds already have been figured into the state's current budget allocations and will not create a windfall for the coming 1996-98 budget.
Washington-based Sallie Mae, the nation's largest source of student loan funds, was selected by the state from five groups interested in purchasing the loans.
A U.S. District Court judge denied Crestar Bank's move to block the transfer of any assets from the sale to the state's general fund.
Crestar contended that if the assets were transferred to the general fund, the bank would lose a substantial amount of money it is due. That's because lenders such as Crestar are entitled to receive interest benefits and special allowances from some student loans. by CNB