In January 1982, when the bond market was at its weakest, the variable rate on loans was approximately 9.3 percent, while the Prime rate was over 20 percent. By the end of 1982, the variable rate had dropped back to about 6 percent. Historically, loan rates for tax-exempt financing have been approximately 50 percent of the Prime rate. The loan term may be up to 15 years, but is limited to the average remaining useful life of the assets being financed. The loan term is also determined by the credit support extended to each borrower.
Borrowers can prepay their loans without any penalty.
Borrowers may also choose to shorten their amortization period rather than pay off their debt entirely. No, the credit support institution would be obligated to pay the defaulting hospital's loan. To date, no borrower has defaulted on a HELP loan. Loans are limited by the amount approved by the Michigan State Hospital Finance Authority and the credit support institution. Hospitals achieve economies of scale for any amount of borrowing by sharing costs with other hospitals in the program.