Governor M. Jodi Rell has signed a bill that will help more students get access to low-interest loans for higher education through a financing partnership the Governor helped establish last year with Connecticut credit unions. (Senate Bill 842: An Act Concerning A Student Loan Guarantee Program Reserve Fund.)
Under the new law, the Connecticut Health and Education Facilities Authority (CHEFA) can allocate up to $3.5 million from its reserves to guarantee qualifying student loans issued by credit unions participating in the Credit Union League of Connecticut (CULC) Student Loan Program. The new law allows credit unions to provide affordable loans to Connecticut college students unable to get funding through traditional student loan programs or whose families had been paying for college through home equity loans that are no longer available.
“The best way that our state can position itself for a bright economic future is to continue to invest in an educated and diverse workforce,” Governor Rell said. “We know that household budgets are strained and parents are already bracing for the fall tuition bills that will begin arriving over the next several weeks. This credit union student loan program is another tool, a bridge loan if you will, to help families and students through this weakened economy.”
The Governor said the participating credit union members have committed as much as $17.5 million in loans for the program. (For more information on participating credit unions, visit http://www.ctcua.org/ctcua/Public_News.asp?id=8751&lid=15 )
As cooperative financial institutions, credit unions are not reliant upon the capital markets for funding, but are instead funded through member deposits. Therefore, as the credit crunch hits much of the economy, credit unions by contrast have money that they are ready to lend to their members. The Credit Union League of Connecticut is charged with administering the student loan program along with CHEFA. The program is open to all students that live or go to school in Connecticut.
The new student loan program offers very low interest rates at no higher than 6 percent or 5.75 percent. This legislation, which takes effect immediately, will allow CHEFA to provide 20 percent loan guarantees on the loans.
“In this time when it is difficult for students to get loans, these reserve funds will help more students to get loans at lower rates,” Governor Rell said.
