HARRY HUGHES, Governor                               2215

President of the Senate

State House

Annapolis, Maryland 21404

Dear Mr. President:

In accordance with Article II, Section 17 of the
Maryland Constitution, I have today vetoed Senate Bill 80.

This bill increases from $40 to $60 the service fee
that the Maryland Higher Education Loan Corporation may pay
a lending institution for services performed in providing a
student loan.

This is the very same fee which was increased from $25
to $40 as recently as 1977. In addition to this $40 fee the
lending institution also receives both an additional $40
when the student begins to repay the loans, 7% interest from
either the student or the federal government, and a special
allowance from the federal government on a quarterly
basis. 1/

Finally the loans made under the Higher Education Loan
Program are not normal personal loans and the interest and
fees paid on these loans cannot be evaluated as they would
be for normal loans. The lender of these loans operates
without the risk attendant other personal loans. The loans
in question are 100% guaranteed loans.

I am not persuaded that the cost of processing these
100% guaranteed loans warrants a further increase in this
fee only two years after its last increase.

For these reasons I have decided to veto Senate Bill
80.

Sincerely,
Harry Hughes
Governor

1/ E.g., in addition to the two $40 fees, the institution
receives, for calendar year 1978, the 7% plus a special
allowance from the federal government of 4.0313%, or a
total of 11.0313%.

Senate Bill No. 164