Credit Unions Step in, Thaw Frozen NC Student Loan Program

(Edit 7/11 to clarify and correct: State Employees’ is the sole investor in the loan program. As part of the agreement, SECU and LGFCU members will get a reduced interest rate on NC EXTRA Education Loans. I regret the error.)

Over the last year, news about the credit crunch has largely revolved around subprime mortgages. But as banks and other institutions tighten their lending standards in order to repair their balance sheets, other facets of consumer lending have been impacted as well.

Here in NC, the loan money to help college students finance their education was threatened when the Auction Rate Securities market failed earlier this year. Since the agency that oversees many of these loans in NC uses the ARS market to access capital, students needing education loans were facing a lot of uncertainty in the upcoming school year.

Today, that uncertainty is gone thanks to State Employees’ Credit Union & Local Government Federal Credit Union. The credit unions invested $1.1 billion in the NC State Education Assistance Authority so that North Carolina students will be able to get loans at low rates.

Of course both these credit unions have been leading the pack on the credit crisis, helping thousands of NC families refinance out of abusive and potentially lethal mortgages. Even as the financial headlines darken, these credit unions are proving how powerful, positive and relevant a force the cooperative charter is.

The Raleigh News and Observer ran an article today detailing the credit union response to the loan program dilemma. You can read it by clicking here.

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