Arvest Bank to Cease Student Loan Program

Arvest Bank, chartered in Fayetteville, said it will no longer be able to originate federally-insured student loans after June 30, a result of the congressional decision last week to eliminate tshe Federal Family Education Loan Program.

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In a news release, Arvest said it’s sending a letter to current student loan customers, colleges and universities to tell them about the change and provide information about the new legislation. It is also encouraging all students to contact their school’s financial aid office or Web site for assistance in obtaining future student loans.

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Arvest also said the new legislation won’t affect current outstanding student loans.

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Arvest is not alone in having to leave the program. Under legislation approved by Congress in mid-March, banks will no longer be able to originate new federally-insured student loans after June 30.

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Instead, lending will to shift from private banks to the federal government. The move will end bank participations in collegiate financing that totaled nearly $600 million in Arkansas during the 2009-10 school year.

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Proponents of the bill believe bringing the 40-year-old program in-house will produce more money to fund other federal programs. That proposition was attached to the health care reform reconciliation bill approved recently in the U.S. Senate.

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The FFELP is the largest federal source of student loans in the United States. Arvest says it is the largest student lender in Arkansas and the third-largest lender in Oklahoma.