SAN FRANCISCO - December 17, 2010
As part of ongoing enhancements in the area of education financing, Wells Fargo announced today a more formalized program around forgiveness of student loans in the event of a student beneficiary’s death or permanent disability.
“Borrowers of student loans are a very unique subset of customers for us. They are typically first-time credit customers that we are lending to, based on a future ability to repay resulting from the education they are funding,” says Kirk Bare, head of Wells Fargo Education Financial Services. “When a death or permanent disability occurs, their future ability to repay is compromised. We believe it is important to be responsive to events that affect these unique customers, and their ability to obtain financial independence and repay their loan.”
Loan forgiveness will be an enhancement added to existing and future Wells Fargo private student loans used to directly cover education-related expenses. The forgiveness covers the death or permanent disability of the student beneficiary of the loan. In the past, WF consumer credit agreements clearly stated the customer’s and co-signer’s obligation to repay the loan, even in the event of a student’s death or disability. In the future, new WF consumer credit agreement language will explain the new benefit.
“A student loan is acquired as an investment in education that is intended to prepare a student for a career and financial independence. Our student lending underwriting process is based on a future ability to repay, rather than a borrowers present ability to repay. When that future ability to establish financial independence, acquire assets, and build an estate is compromised by a death or permanent disability, loan repayment becomes especially burdensome,” added Bare. “Formalizing this into our standard policies and procedures ensures that customers and their families who are impacted by these types of unfortunate situations are provided needed relief.”
Wells Fargo’s new policy requires verbal or written notification of the student beneficiary’s death or permanent and total disability followed by receipt of acceptable documentation. Once Wells Fargo is notified, a representative from Wells Fargo will work with the family to complete the required steps necessary to legally forgive the loan obligations. Once acceptable documentation is received, future or pending loan disbursements and pending or in process loan applications are canceled.
Additional changes announced earlier this year by Wells Fargo included an announcement in May of a new financing solution designed to better meet consumer needs and a rate reduction in July.
The new funding option, called Wells Fargo® Student Loan for Parents, was introduced as a one-of-a-kind solution that helps parents and other sponsors cover their students’ education costs. The option was offered to support consumers facing an environment with less available credit than in years past. During July, Wells Fargo reduced variable interest rates for all pricing tiers for the Wells Fargo Collegiate® Loan and Wells Fargo® Student Loan for Parents. The rates were lowered to offset rising tuition costs and a challenging economic environment, helping to ensure consumers still had options for achieving their dreams of higher education.
Wells Fargo Education Financial Services serves more than 2.4 million student and family customers in all 50 states and is committed to helping customers make smart borrowing decisions to finance education. Education Financial Services provides customers with financial tips and tools to keep their finances on track while in school and prepare them financially for when they finish college. Wells Fargo markets its education products to colleges and universities, directly to consumers and through Wells Fargo Bank and Wachovia Bank.
Wells Fargo & Company
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.2 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With more than 278,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked #19 on Fortune’s 2009 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.