Program with State Credit Unions
Governor Meets with Credit Union Officials from Across Connecticut;
Launches $17.5 Million Public/Private Student Loan Program
This news release was issued by the governor's office
November 18, 2008
Governor M. Jodi Rell today met with top officials from Connecticut’s credit unions to discuss the state’s economic situation and to propose a new partnership between the State and Connecticut’s credit unions that will provide new and current students with access to higher education through a new student loan program. The credit union officials pledged support of the Governor’s concept and estimated that up to $17.5 million could be committed to the program.
The new student loan program would offer very low interest rates at either 6 percent or 5.75 percent. Institutions offering 6 percent loans will be able to defer interest payments for one year; credit unions offering 5.75 percent loans would not defer interest payments. The Governor said the Connecticut Health and Education Facilities Authority (CHEFA) would provide 20 percent loan guarantees on the loans.
“Household budgets are already strained by the effects of our struggling national economy,” Governor Rell said. “Many families have seen the funds they set aside for college evaporate – and they are now hard-pressed to come up with tuition for their children.”
“These loans will be made to students who may not qualify for traditional loans or who may have already used up all their resources and are now having trouble paying for college costs,” the Governor said. “This program will be another financial resource for our families and it will serve important needs that in many cases are currently unmet by existing loan programs.”
After the meeting, Governor Rell noted that Connecticut’s credit unions remain healthy in the economic environment. They are unique in the financial services industry and provide service to their members at the lowest possible cost. Credit unions have funds to lend and are willing to target funds for higher education.
“Helping Connecticut families and their children by making sure they have access to loans for higher education is one of the best ways to support those families and to ensure that our state continues to have one of the most educated labor forces in the nation,” the Governor said. “We know that with a highly skilled workforce we can attract business and create the jobs that will help us pull our economy from the doldrums.”
“During tough fiscal times, we need to employ creative solutions to issues and we rely on our private sector partners more than ever. I applaud our state’s credit unions for stepping up to the plate to help us meet this important need.”
At today’s meeting, the credit unions agreed to provide low interest student loans to provide new and current students of all ages who live or go to school in Connecticut assistance with higher education costs. The funds will not be pooled and the individual credit unions will allocate their own funds. Credit unions must allocate a minimum of $100,000 of their funds to participate and the loan program will run for one-year with the possibility of extending that period, based on demand and available resources.
Also at the meeting, the Governor discussed the national economic downturn and the turmoil in the financial industry and specifically, their effects on Connecticut financial institutions including credit unions. In October, Governor Rell met with representatives of about 50 community banks and outlined a five-point plan to ensure that credit is available to consumers and small businesses. A few weeks later, the Governor met representatives of Connecticut foreign banking organizations.
Governor Rell also shared her concerns about Connecticut’s economy and asked the credit unions for feedback about the lending climate, whether they are experiencing a slow-down in loans and how they can best serve their members. The Governor noted that in prior discussions with the Credit Union League of Connecticut, it was agreed that there should be a focus on education loans.
“Making sure that families sending children to college have access to credit is about more than borrowing money,” Governor Rell said. “It is about creating jobs and the credit unions understand that. The state is facing some of the leanest economic times in our history, but there are some bright spots -- including our local banks and credit unions who play a vital role in our state’s economic strength.”