Student Loans

The North Carolina State Education Assistance Authority, the largest provider of student loans in the state, says it will have the money to meet demand for student financial aid after the State Employees Credit Union agreed to invest $1.1 billion in the student loan market. The money will replace some of the money that had been generated through the auction-rate securities market, which failed earlier this year as part of the bigger credit crunch. Auction-rate securities were used to finance about $2 billion a year in student loans in North Carolina. "We will use this investment from the credit union to refinance some of our taxable auction-rate bonds," said Steve Brooks, director of the state authority. "We also are using it to finance some new loans for this year."
The $1.1 billion investment allows the authority to provide loans with better rates than other available options. The authority backs about 60 percent of the student loans made in the state. As part of the agreement, credit union members are eligible for supplemental student loans at reduced rates once they have exhausted the federally guaranteed loans available to them, said Leigh Brady, a spokeswoman for the credit union. (Tim Simmons, THE NEWS & OBSERVER, 7/08/08).