Kentucky Set to Buy $50 Million Bond So Students Can Get College Loans

Student Loan Girl — Mon, 18 Aug 2008 22:57:00 GMT

To ensure that Kentucky students get the money they need to pay for school, Kentucky Gov. Steve Beshear has authorized the state to buy a $50 million bond from the state’s student loan agency just before fall classes get underway, reports the Lexington Herald-Leader (“State Using $50 Million Bond to Solve Student Loan Crisis,” Aug. 16, 2008).

Affected by the ongoing credit crunch, the Kentucky Higher Education Student Loan Corp., also known as the Student Loan People, ran out of money last week, but with the “bridge loan,” will be able to begin issuing $35 million in loans to about 16,000 students by Thursday.

Although the recently passed Ensuring Continued Access to Student Loans Act (H.R. 5715) was designed to give the U.S. Department of Education the authority to buy student loans from cash-strapped lenders, the Education Department requires that lenders first obtain short-term “bridge” financing to initially fund new loans. After lenders secure the preliminary financing, the Education Department will buy these college loans, giving lenders the liquidity they need to continue making new loans.

Kentucky is thought to be the first state in the nation to purchase a private placement bond to meet the state’s student-loan needs. Massachusetts has unsuccessfully looked to its public pension funds for relief, while other states have simply shut down their student loan operations, according to an article in the Kentucky Post (“Gov. Orders State Purchase $50M Bond to Ensure Student Loans,” Aug. 15, 2008).

The Student Loan People’s bond sale must be approved by the State Property and Building Commission, an executive branch panel that meets today, and the General Assembly’s Capital Projects and Bond Committee, which will meet Tuesday.

If the bond sale is authorized, the nonprofit state loan agency will have a loan term of 445 days that would be payable on Nov. 15, 2009. The agency will be charged a variable interest rate, currently set at 3.32 percent, which means the agency would pay $1.9 million in interest to the state, on top of the $50 million principal.

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Western Kentucky University Students to See 9-Percent Jump in Tuition

Student Loan Girl — Thu, 01 May 2008 23:50:00 GMT

Students at Western Kentucky University will see higher tuition costs after the school’s board of regents approved a 9-percent tuition hike on April 25, for the 2008–09 academic year.

Under the new tuition rate, in-state undergraduate tuition will increase by $284 to $3,492 per semester. Out-of-state undergraduates will see an increase of $629, bringing tuition costs to $8,364 per semester.

The tuition increase, which coincides with a 6-percent reduction in the university’s 2008–09 budget, will help pay for increased school costs, salary increases for university employees, and scholarships and financial aid, university President Gary Ransdell told local news station WNKY (“WKU Regents Approve Tuition for 2008–09,” April 25, 2008).

This announcement just comes a few weeks after the state’s student loan agency, the Kentucky Higher Education Student Loan Corp., announced it would temporarily suspend making loans to first-time student loan borrowers (“Kentucky Lender Puts Brakes on Student Loans to New Borrowers,” April 21, 2008).

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Student Loan Blog : Student Loan People

Kentucky Set to Buy $50 Million Bond So Students Can Get College Loans

Western Kentucky University Students to See 9-Percent Jump in Tuition