| Investor
Information
The New Mexico Educational Assistance
Foundation ("NMEAF") DBA New Mexico Student
Loans, from time to time, issues bonds, the proceeds
of which are used to originate or acquire student loans
and to pay certain costs of issuance. The student loans
originated or acquired with the bond proceeds serve
as collateral for the bonds. All bonds issued by NMEAF,
except the Series 1998 A-3 bonds 2006 A-3 and
A-4 bonds and 2007 A-3 and A-4 bonds have been tax-exempt.
As an investor in NMEAF student loan bonds, you play
a vital role in NMEAF's mission of helping students
finance a post-secondary education. NMEAF is pleased
to provide current and potential investors with information
relating to its student loan bond issues and the underlying
assets of those bonds on its web site.
Legal Information
Before viewing or downloading any information in the
Investor's section of the NMEAF web site, please review
the following legal information. Statement Regarding 9.5% Floor Bonds
In the early 1980’s, Congress
enacted a change to the special allowance payments that
allowed nonprofit student loan organizations the ability
to earn a minimum yield on loans they hold in exchange
for ½ of the special allowance payments above the
minimum. This change ensured a 9.5% minimum return on
loans in eligible tax-exempt bonds originally issued
prior to October 1,1993 (“Pre-1993 Bonds”). In October
1993, Congress amended the statute to eliminate the
issuance of new 9.5% floor eligible bonds, but allowed
for the current refunding of Pre-1993 Bonds which
extended the 9.5% floor eligibility.
The New Mexico Educational
Assistance Foundation (the “Foundation”) has been
following U.S. Department of Education (the “DOE”)
guidelines regarding the current refunding of Pre-1993
Bonds, which are eligible for 9.5% floor return
treatment with respect to loans financed thereunder.
The Foundation’s practices include complete adherence to
applicable provisions of the Taxpayer Teacher Protection
Act (H.R. 5186), which eliminated 9.5% floor return
treatment on loans financed under Pre-1993 Bonds that
are refunded after September 30, 2004.
The guidance of the DOE has been,
and continues to be, that refundings of Pre-1993 Bonds
on or before September 30, 2004, extends eligibility for
9.5% floor loan return treatment for the new refunding
bond issue (see attached). This industry practice was
recently reaffirmed in draft guidance issued by the DOE
to its auditors.
It is NMEAF’s understanding from
discussions with the Office of the Inspector General
(the “OIG”) staff that OIG has begun an examination of
nonprofit student loan organizations and their treatment
of Pre-1993 Bonds, including the current refunding of
such bonds. The Foundation was the first such
organization to be examined, and expects to receive a
report from the OIG related to such examination in the
near future. The Foundation has reason to believe that
the OIG will question the Foundation’s ability to extend
9.5% floor loan return treatment on Pre-1993 Bonds
refunded by the issuance of tax-exempt refunding bonds
issued on or before September 30, 2004, despite the fact
that DOE policy statements have clearly supported this
practice since October of 1993. The OIG can only
recommend certain actions to the Secretary; it has no
separate enforcement capability.
The Foundation will continue to
work with the DOE to confirm that it has complied with
DOE policy and applicable law relating to the treatment
of loans financed with bonds issued prior to September
30, 2004 for the purpose of refunding Pre-1993 Bonds. As
the Foundation has followed the guidance of the DOE for
the last twelve years, it does not expect to have any
potential material liability as a result of the OIG
audit or any impact on its ability to pay its
obligations when due.
On May 24, 2005 the OIG issued its audit report
concerning the Foundation to the Secretary of DOE. As
expected, the report contained findings which questioned
the Foundation’s ability to extend 9.5% floor-loan
return treatment on certain pre-1993 tax-exempt bonds
refunded by tax-exempt refunding bonds issued on or
before September 30, 2004. The OIG report recommended
that the Secretary cause certain allegedly inappropriate
interest payments to be recaptured. The Foundation filed
its response to the OIG report with the Secretary; in
this response the Foundation explained its position in
great detail.
On July 8, 2005, the Secretary of DOE issued its
final determination based on the OIG report. DOE’s final
determination supported the Foundation’s position as to
each finding and recommendation contained in the report;
each finding was then closed without further action.
You may view a list of Department
of Education materials referenced in the above 9.5%
Floor Statement.
Reports and
Documents
You may view or download a Summary of Bonds Outstanding,
Parity Reports and Portfolio Reports for each student
loan bond indenture as well as the most recent Offering
Documents.
Contact Information
If you need additional information or have any questions
related to NMEAF student loan bonds, please let us know.
Email
Contact us
about NMEAF student loan bonds.
Call
505-345-3371 or 800-279-5063, extension 1063.
Mail
NM Student Loans
Attn: Investor Relations
PO Box 27020
Albuquerque, NM 87185
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