See update here regarding Chapter 7 Bankruptcy filing on February 9, 2009
After the close of trading today (Friday afternoon is always a good time to release bad news), MRU Holdings announced that they would be "pausing" their origination of private loans. They cited the common refrain these days that "unprecedented and continued disruptions in the capital markets" led to this decision. They also indicated that "While we regret that we will have to pause receiving new applications, we continue to work with our existing families in 2008." This presumably implies that loans in the pipeline would be funded. This contrasts with the fate which has befallen College Loan Corp. borrowers who discovered that their loans which had been approved recently were not going to be funded.
Quick facts on My Rich Uncle
- My Rich Uncle originated $227.3 million in private loans for calendar year 2007 based on public filings from the company.
- Completed a $140 million securitization in July of 2008.
- Last quarterly report was filed on May 15th.
MRU has added a message to their website this evening. I was particularly interested in their suggestion "to find funding alternatives...through the financial aid office of your institution." This seems to conflict with the marketing message splashed on their home page "I didn't think about saving thousands on a student loan. I went to the financial office instead." It seems like the financial aid office may not be such a bad place to go after all.
Here is the message on their site:
Thank you for your interest in MyRichUncle. At this time, we have paused our private student loan program. Due to continued disruptions in the capital markets, combined with the continued demand we have experienced this year, we are reaching funding capacity limits.
As a result, we are unable to receive new applications at this time. We regret not being able to serve you, but hope to in the near future. We are working to try to obtain funds that would enable us to continue to accept new customers.
Although the credit crunch is a concern for many families, we want to emphasize that you have options when it comes to paying for education. We encourage you to use the educational tools on MyRichUncle.com to better understand your choices and make prudent decisions in paying for your education. You may still be able to find funding alternatives for this school year, such as grants, scholarships, lower-cost federal student loans and private student loans, through other websites, other lenders, and through the financial aid office of your institution. We encourage you to pursue and fully utilize the least expensive funds that may be available to you and to not borrow more than you need.
We sincerely appreciate your interest in MyRichUncle, and we share your view that education is one of the most worthwhile investments you can make. We look forward to serving you in the near future.
If you need further assistance from us, please email us at firstname.lastname@example.org.
- MRU delinquency rates violate loan covenants; general counsel resigns (December 22, 2008)
- MRU in the balance? (November 14, 2008)
- MRU's 10-Q highlights immediate need for capital (November 11, 2008)
- Clear and upfront information: You be the judge (September 9, 2008)
- My Rich Uncle ceases federal loan programs for 2008-09 (June 30, 2008)