NEW YORK HIGHER EDUCATION LOAN PROGRAM (NYHELPS) gives access to low-cost education loans

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NEW YORK HIGHER EDUCATION LOAN PROGRAM (NYHELPS)

The New York Higher Education Loan Program (NYHELPs) will give New York students and families access to low-cost education loans not currently available in the private loan market. If approved and signed into law, the program will help fill the growing gap between rising college costs and available State and federal aid.

Public/Private Partnership for Fixed and Variable Loans
At the core of NYHELPs will be a public/private partnership that leverages lender funds to make both fixed and variable rate student loans to New York State residents attending participating New York colleges. Lenders will make fixed rate student loans, supported using $350 million in private activity bonds issued by the State of New York Mortgage Authority (SONYMA). NYHELPs also allows for unlimited participation by lenders making variable rate loans.

Pool to Protect Against Default Will Encourage More Dollars to Lend
Governor Paterson has proposed devoting $50 million in State General Fund support in the initial year and $10 million a year thereafter to a pool that protects against borrower default. Colleges will contribute with a nominal fee based on loan volume participation. This essential support will provide leverage to encourage lenders to make many more dollars available in student borrowing and enable favorable borrower interest rates and fees.

Interest Rate Estimated to Be Student and Family Friendly
Students could receive an estimated interest rate between 7.5 and 8.5 percent, subject to market conditions at the time of bond issuance. Most private student loans currently offer interest rates ranging from 12 to 17 percent.

Financial Literacy Education Will Be Integral
The Program will require that borrowers complete a comprehensive Web-based financial literacy education program. The e-learning component of the loan program will help students make smart borrowing decisions, provide guidance on the pitfalls of credit card debt, and emphasize the student’s responsibility for paying back their student loans.

Application Procedure Will Include Transparent Loan Comparisons
NYHELPs borrowers will apply online through the New York State Higher Education Services Corporation’s (HESC) Student Loan Marketplace. HESC Student Loan Marketplace is a dynamic interactive Web site that educates students on best borrowing practices and provides students with a simple interface for comparing and contrasting loans using trustworthy information.

NYHELPs will provide relief from tightening credit markets for families struggling to obtain private loans and find affordable ways to pay for college.