We at NorthStar Education Finance, Inc. regret to report that, due to the ongoing disruption in the global markets, the T.H.E. Bonus will be temporarily suspended, through the Total Higher Education (T.H.E.) Loan Program. As we have stated on our web site: T.H.E. Bonus amount is based on current financial market conditions and portfolio performance and is therefore subject to change.
This temporary action is a result of the ongoing disruption in the global credit markets. NorthStar’s President, Taige Thornton, said, “We are disappointed that the mortgage debt market crisis has spilled over into the student loan debt markets and are now affecting the cost and availability of funds for education loans.” The costs of some of our debt instruments have absolutely skyrocketed and unfortunately, there is not a viable financing alternative at this time.
We will be contacting our borrowers over the next several weeks to let them know of this development. Please contact us with any questions you may have and feel free to have your students contact us directly.
We are in a comparatively strong position with the T.H.E. Loan Program, as there have been no credit issues with our high quality education loans, to date. Nonetheless, to protect the integrity of our debt instruments, we are forced to temporarily suspend the bonus until the markets recover or alternative financing structures are in place. The situation in the securities market is so severe that Congress and the US Treasury have begun to explore solutions. It is still our strong hope that a solution will be found and we can resume the T.H.E. bonus program.
This change will in no way affect NorthStar’s tradition of delivering superior service to its students and schools. Now more than ever, it is vital for an education lender to provide guidance and counseling to student borrowers. The T.H.E. Loan Program has always put students first, by being the first to offer zero-fee loans, in-school consolidation, the highest qualification rate for repayment benefits, and first-of-its-kind debt counseling services.
NorthStar created the T.H.E. Loan Program in 1997 to provide students a low cost option to financing their education by using the excess margin generally earned on education loans to buy down origination fees and to return that margin to student borrowers during the repayment phase of the loan. We’ve met that commitment for the past 10 years:
| Fiscal Year* | Origination Fee Buy Downs | Repayment Bonus | Qualification Rates | Total Student Cash Benefit(s) |
| 1999 | $121,613 | 0¹ | $121,613 | |
| 2000 | $5,179,069 | 0¹ | $5,179,069 | |
| 2001 | $9,694,645 | $516,605 | over 95% | $10,211,249 |
| 2002 | $12,631,003 | $1,358,478 | over 95% | $13,989,481 |
| 2003 | $16,048,231 | $2,602,203 | over 95% | $18,650,433 |
| 2004 | $19,847,376 | $4,391,012 | over 95% | $24,238,388 |
| 2005 | $22,067,658 | $7,325,998 | over 95% | $29,393,657 |
| 2006 | $20,200,955 | $10,332,386 | over 95% | $30,533,341 |
| 2007 | $20,931,990 | $12,824,000 | over 95% | $33,755,990 |
| Oct 07-Jan 08 | $8,492,340 | $5,102,075 | over 95% | $13,594,415 |
| $179,667,635 | ||||
¹ New loan program – no loans in repayment
* October through September
Click here to view Student version of T.H.E. Loan Program Announcement.
This is nonsense. These guys should be sued, and if I don't get my bonus by the time my time comes, I will be pursuing them.
This is so freakin bogus it is not even funny. I signed on to this lender when I consolidated my loans because of this incentive. If I had gone to any other lender, the incentive would remain and not be taken away. NorthStar better figure out how to live up to the terms of its loan because can you say... CLASS ACTION?!