ConSern can help with college fees - private-sector educational loans

Nation's Business, Feb, 1988 by Harry Bacas

Fletcher Hanson III, 20, is studying finance at the University of Arkansas and is learning the real-estate business from his father. His sister Elizabeth, 18, is going for a bachelor of fine arts degree in fashion design. Last summer she entered Parsons School of Design in New York City; in the fall she transferred to Memphis College of the Arts.

Their father, who has a master's degree in business, says the two $15,000 loans are needed for a car, clothes and other living expenses as well as tuition, books and fees. "But I may not get any more loans after this year," he says. "If I sell some property, I'll pay the loans off. I call these 'bridge loans.'"

Hanson says the representatives of ConSern with whom he talked about the loans "were super people." He says when he reported that college officials had told him he didn't need $15,000 for one year of school, the ConSern representative said, "Don't worry about them. We're lending you the money, not them."

Whalen says the ConSern program is expected to expand rapidly, now that the U.S. Chamber is making it available to all its members. There were fewer than 600 loans totaling less than $4 million in 1987, he says, but ConSern should issue 15,000 loans worth $100 million this year, $130 million next year and $150 million the following year, he predicts. He says that joining forces with the Chamber represented a natural confluence of interests.

U.S. Chamber President Lesher said: "We hear a lot about competitiveness. Well, one of the things that will help America be more competitive is more and better education. And this is a private-sector program entirely." He said the loan program will be "one of the more important employee benefits, and employers will be pleased they are in a position to offer it to employees who need it."

An employer can participate for as little as $25 a year, based on the number of employees. The employer must distribute information to employees, but will not process or guarantee the loans, assume liability or do any administration.

All contact is directly between ConSern and the employee, who pays $45 to apply for a loan. The student applicant must be accepted or enrolled at least half time in courses leading to a degree or a diploma, must maintain satisfactory academic progress and have good credit or have a cosigner with good credit. The good-credit requirement means having fixed monthly payments of no more than 40 percent of income or having net worth 10 times the amount of the loan.

The borrower pays a one-time discount fee of 3.5 percent to cover administration and insurance. The monthly interest rate, which is the three-month commercial paper rate plus 3.6 percent, has been running at 9 to 10 percent.

Loans can be for any required educational expenses, including computers and transportation.

Maximum amounts are $25,000 a year and $100,000 total, with repayment in up to 15 years. Existing debts can be consolidated. ConSern anticipates a default rate of 0.6 percent.