Too often we read about the failures of taxpayer-funded programs or the excessive cost to administer them. We also hear about duplication of missions in which protection of turf becomes more important than efficiencies. But the Maine Educational Loan Authority and the Finance Authority of Maine have a different story to tell.
Recently, at the request of two state authorities, Gov. Paul LePage and the Legislature agreed to merge these two entities for the benefit of the people of Maine. The merger took effect Oct. 15. In recognition of this change, we felt it was important to reflect on the long history of MELA and highlight some of the noteworthy accomplishments of the organization.
In 1988, MELA was established by then-Gov. John McKernan and the Legislature to fill an existing need for additional higher education financing options for Maine students and families. As a result, MELA created supplemental education loan programs to help families bridge the gap between the total cost of a college education and federal education loan limits. The Maine Loan offered financing assistance to undergraduate and graduate students who were Maine residents or attended college in Maine. The Maine Medical Loan filled the need for additional higher education financing for students attending the University of New England’s College of Osteopathic Medicine and for Maine students attending out-of-state medical schools pursuing a Doctor of Medicine degree. The scope of The Maine Medical Loan program was later expanded to include other medical degrees, such as dentistry, optometry, chiropractic and veterinary medicine.
Through these programs, MELA disbursed more than $300 million in student loans, assisting thousands of Maine students and families to pay for college expenses that exceeded traditional forms of financial aid. All MELA loans were funded with the proceeds from tax-exempt bonds or obligations. No state monies were ever allocated to fund the program.
MELA never sold any of its loans. This enabled the authority to maintain long-term relationships with its borrowers and provide them with the continuity of service for the life of their loans, a rarity in the consumer loan market. High-quality, personalized customer service was a true hallmark of the program. These services were expertly provided by Maine Education Services, or MES, which administered MELA’s loan program during a time of significant changes in the student loan industry coupled with unprecedented turbulence in the capital markets and a prolonged, challenging economic period. MES’ proficiency was invaluable in sustaining the loan program and in maintaining a remarkably low average annual gross default rate of less than 1 percent on MELA’s outstanding loan portfolio. In addition, the cost to administer this program was nominal compared to the loan volume and the public purpose it fulfilled.
Since inception, MELA’s sole mission has been to assist Maine students and families achieve their higher education goals by providing supplemental education financing. For 27 years, MELA did just that. Though the merger with FAME dissolves MELA as a standalone entity, its mission will live on through FAME. Dedicated to making higher education more accessible and affordable, it is anticipated that FAME will build on MELA’s past success with The Maine Loan and The Maine Medical Loan programs and continue to provide quality service and value for Maine students and families.
The merger of MELA with FAME ensures students and their families continued access to affordable student loans at a time that Maine desperately needs to attract and retain young, educated talent. With this ongoing commitment, we may begin to bend the curve of our aging demographics.
Governors, legislators, administrators, volunteer board members and others over the years have supported financing higher education through this state authority, a public policy decision that long ago under promised and has over delivered.
John Atkinson served as a MELA member from 2011-2015 and as chair from 2012-2015. Shirley Erickson served as MELA’s executive director from 2001-2015.