As I continued to work my way through the state alternative loan programs today, I came across this announcement on the Vermont Student Assistance Corporation (VSAC) website for their private (non-federal) loan product:
VSAC Advantage Loan – 2009-2010 Academic Year
For Loans Approved by 2/12/10*
*Funds for VSAC private loans are limited. All funds could be expended before 2/12/10. VSAC cannot guarantee availability of funds until final loan approval.
Based on their bond servicing reports, VSAC's last bond offering where proceeds were used to fund alternative loans came in their Series 2007 WW-YY offering, with $7.8 million in beginning principal value of alternative loans on the books at the end of September 2009.
Meanwhile in the 12 month period ending June 30, 2009, VSAC saw a $24.4 million increase in the size of their non-guaranteed loan portfolio which should provide a sense of the scale of their private loan activities.
The Rutland Herald (a paper I came to rely upon during summer vacations in Vermont to track the baseball pennant races; skimpy sports section is all I recall) highlighted VSAC's issues with the auction-rate security market:
"Meanwhile, VSAC has another potential problem. The non-profit used to
issue bonds through the so-called auction rate security market. That is
– or was – a system that allowed holders of bonds to get their money
back without waiting a decade or two for the debt to mature. Instead
the bonds went up for auction to a new holder, but in the recent
financial turmoil the system collapsed.
There are still about $1.7 billion of those kinds of securities in VSAC's name out there. Despite some short spikes in interest on those bonds, that has not been a huge problem – yet – because interest rates are so low, VSAC officials said. But the future of those bonds needs to be resolved before interest rates go up, they said."