Response to MEFA Announcement: Virgin Money Waives “Student Payback” Set-Up Fee for All Massachusetts Students

WALTHAM, Mass.--(BUSINESS WIRE)--The social lending firm Virgin Money wants to make sure college students can still access affordable loans despite the Massachusetts Education Financing Authority’s (MEFA) announcement that it is unable to secure funding for 2008-2009 academic year education loans. Waltham-based Virgin Money is waiving its $199 “Student Payback” set-up fee between now and August 31, 2008 for all Massachusetts residents that set up a loan between a student and a relative or friend to pay school bills exclusively available through www.virginmoneyus.com/freesp.

The impact of MEFA’s announcement is highlighted by a recent research report commissioned by Virgin Money which reveals 85 percent of families with college bound or recently enrolled students depend on outside financing to pay for college. Given that over 60 lenders have exited the student loan market this year alone, many of these families are scrambling to meet their obligations just weeks before the start of the school year.

“MEFA has long been the first stop for college loans in Massachusetts. This is unlikely to be the case this year.” said Asheesh Advani, Virgin Money CEO and founder. “When we heard the announcement we knew we had to do something to make sure that students could still borrow what they need, possibly from relatives with access to other low-cost funds.”

Student Payback is a new financial service that helps families collaborate on the cost of college. Parents or other relatives can borrow from their most affordable sources of capital –home equity, federal PLUS Loans—then use Student Payback to formalize an agreement whereby students pay them back for all or a portion of that debt. Instead of a “loose” agreement with no set terms, Student Payback lays out a clear repayment schedule and provides formal documentation and automation. This, coupled with the neutrality of third-party management, greatly increases the likelihood that the debt will be paid back.

“It’s been clear for quite some time that college students have not been spared the squeeze of the credit crunch. MEFA’s recent announcement is just the latest chapter in this saga and has added a whole new set of obstacles for Massachusetts families with college bound students,” said Advani. “In this recent announcement, MEFA encouraged families to ‘understand all of their financing options before seeking private loans.’ Student Payback represents a financially smart option that gives students and their families’ options to structure the best loan mix possible.”

About Virgin Money USA, Inc

Virgin Money USA, Inc helps people access affordable and flexible credit, offering unique financial services and a customer experience that most banks cannot match. Having originated over $300M in loan volume, Virgin Money is the leader in managing loans between relatives and friends and a pioneer in the emerging social finance sector. Visit us at www.virginmoneyus.com.