RALEIGH, N.C. -- State Employees' Credit Union is doing its part to ensure the state will have student loan funding by teaming up to finance education loans for North Carolina families and colleges.
Investing $1.1 billion of members' funds, SECU will help the North Carolina State Education Assistance Authority refinance and provide funding for loans made by College Foundation Inc. to students and parents this year.
The deal has been in the works since April with several cooperatives working together in N.C. to make it happen for the students including: North Carolina Education Assistance Authority, College Foundation of North Carolina and SECU.
"Helping students get an education is one of the most important investments we can make to boost their future income and continue to grow our state's economy," said SECU Board Chairman Shirley Bell. "CFI, NCSEAA and our credit union are natural partners, since we all focus on providing low-cost financial services to benefit North Carolinians."
Here is how it breaks down, $700 million will be refinancing existing bonds for the N.C. State Education Assistance Authority, resulting in a NCSEAA savings of some $5 million per year in interest costs. Over $300 million will be in new funding for students loans--which will be used to finance federal guaranteed student loans and North Carolina EXTRA Loans.
The investment is well timed since the auction rate bond market has pretty much collapsed and gone away leaving some states with no funding for student loans. At the same time, LGFCU will be offering student loans for their members as well.
One of the special benefits of this funding relationship to SECU and LGFCU members, who have applied for federal and state student loans, is that their membership entitles them to a half percentage point discount in the interest rate on North Carolina's EXTRA Education Loan, a supplemental loan available to help pay educational expenses. Members will also receive information and programs on other financial aid for college, such as grants and scholarships and the overall process for career and college planning.
"What SECU has done here is magnificent. We are pleased to partner with SECU in such a groundbreaking effort," said LGFCU CEO Maurice Smith. "For some students, this opportunity will mean the difference between going to college or not. This program is that pivotal. One would have to believe that lives will be changed forever."
College Foundation Inc., a nonprofit corporation serving North Carolina students and families since 1955, administers a portfolio of more than $3 billion, including low-interest federal education loans, the state's college grant programs and the tax-free 529 college savings program on behalf of NCSEAA.
With the SECU investment now providing funding for North Carolina's program for 2008-2009, nonprofit lender CFI and SEAA, the state agency that guarantees CFI loans, it continues more than 40 years of assistance to North Carolinians in meeting higher education costs.
According to SECU, the investment will carry a good rate of return and is a safe investment, as the bulk of it is secured by student loans primarily
guaranteed as to repayment by the federal Department of Education. There is a variable interest that will adjust over time to provide a competitive rate of return.
"Loan proceeds are reinvested in N.C.; students go to school in N.C. and spend the money in our state," said Bell. "SECU also believes in investing in education--we have done so through CFI for 30 years. Our credit union also continues to grow and has funds available to make such an investment and still meet member borrowings."
Since its inception, CFI has processed 1.8 million college loans, for a total of $7.5 billion lent to more than 530,000 student and parent borrowers.
"As our organizations work together to make loan money available, we also share a commitment to educate families about the best ways to pay for college," said Steve Brooks, NCSEAA executive director. "We want to make sure that families understand the financial aid process and the availability of federal and state scholarships, grants and low-cost federal loans before they consider other options."
NCSEAA is the state agency that promotes access to higher education by administering financial aid and savings program, informing students and families about paying for college, teaching educators about financial aid administration and advocating for resources to support students.