Q1. How are taxpayer dollars used for student loans?

A1. Taxpayer dollars are used to cover a portion of the default costs when high risk borrowers don’t pay back their loans. Taxpayer Federal dollars are used to subsidize student loan interest while the students are in school.


Q2. What advantage is a non-profit NMSL?

A2. Whereas for-profit corporations exist to earn and distribute taxable business earnings to shareholders, a nonprofit corporation exists solely to provide programs and services that are of public benefit. Often these programs and services are not otherwise provided by local, state, or federal entities. While they must earn a profit to stay in business, earnings must be used by the organization for its future provision of programs and services. Earnings may not benefit individuals or stake-holders, nor be used to purchase unrelated businesses.


Q3. Why is the fact that you are a non-profit company matter in this case?

A3. In 27 years, NMSL has not received any state appropriations but instead has run the Federal Family Education Loan (FFELP) ** program, lender, guaranty and servicing programs on revenues generated by the FFELP.


Q4. How can you forgive loans and still be profitable?

A4. The New Mexico Student Loan organization makes revenue from loan proceeds. That money is first used to cover costs incurred while funding loans. Monies left over are returned to NMSL borrowers through loan forgiveness and other borrower benefits.


Q5. How do you finance the loans to New Mexico’s students?

A5. NMSL is privately funded, selling private activity bonds to finance loans made to New Mexico residents.


Q6. Are New Mexico and its residents different than other states regarding student loans? How?

A6. New Mexico has one of the lowest average household incomes in the country. Thus, promotion of college accessibility and affordability is even more critical in order to get students to think realistically about higher education.


Q7. What exactly do you mean by outreach activities?

A7. Outreach activities include community events such as application workshops for students and families; aid to high school guidance counselors; financial planning and education for college recruiters; and many more. All activities promote college accessibility and affordability to New Mexico students and parents. Last year, NMSL staff personally participated in 151 events in all parts of New Mexico that assisted nearly 25,000 students and parents.


Q8. What is your default rate and how does it compare to the national rate?

A8. NMSL's targeted programs and support services have allowed the lender arm of NMSL to achieve its default rate of 3.3% – well below the national average of 6.7% – in a state with one of the lowest average household incomes in the country. The default rate is the percentage of borrowers that do not make their student loan payments for a given year. A low rate shows the success of the organization in helping borrowers pay their student loan debt.