Governor M. Jodi Rell today announced she has signed a bill that will help more students get access to low-interest loans for higher education through a financing partnership the she helped establish last year with Connecticut credit unions. Rep. Penny Bacchiochi supported the legislation during a May 22 vote, which saw the House of Representatives unanimously approve it.
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.
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.
(For more information on participating credit unions, click here.