LANSING – A plan introduced by State Representative Pam Byrnes (D-Lyndon Township) amending the Higher Education Loan Authority Act (HELAA) to allow the Authority to establish special reserve funds was signed into law Wednesday by Gov. Jennifer M. Granholm. The purpose of the plan is to allow the state of Michigan to refinance its student loan portfolio to lower the borrowing costs for debt that's owed.
"This is a very important program that the state had to halt last year due to the lack of liquidity in the market," Byrnes said. "It is vital that we get this program back up and running in order to ensure access to a quality education for all Michigan students. This legislation restores the confidence for Wall Street to reinvest in this program."
The new law provides additional security and will be beneficial in restructuring existing debt of the Michigan Higher Education Student Loan Authority (MHESLA). Due to the decline of the market from the credit crisis, debt service costs for the MHESLA have increased.
By creating a reserve fund for student loans, this law makes the loan program more attractive to investors during the current state of the economy, since investors view the addition of this structure as an enhancement to the overall security of their investment.
"My legislation is critical to the economic resurgence of our state," Byrnes said. "It will help create a well-educated, well-paid workforce that will bring businesses to Michigan. With this law in place, our students will have access to the funds needed to advance their education. I applaud my colleagues in the Legislature and Governor Granholm for passing this important plan and quickly getting it signed into law."