New Low-Cost Loan Program for New York Students

The economic recession affected not just financial sphere, it also affected politics, and even education. The US government hurled pretty much all effort into surmounting the crisis and restoring the economic sector. Other sectors are paid less attention at the moment. But New York State Authorities try to control all sectors and departments and react to the emerging problems on time.

The Governor of New York David A. Paterson announced the upcoming launch of a low-cost student loan program created to help 45,000 students of public and private colleges in New York State cope with tuition increases and secure credit. The final version of the program is still being discussed. But its appearance is just a matter of time.

The program is supposed to provide $350 million in loans every year. The state is planning to spend $50 million to start the fund next year, and $10 million each year after. The state is planning to buy loans underwritten by US banks, using revenue from tax-exempt bonds.

Mr. Paterson stated that he was planning to finance the program notwithstanding the fact that New York State's estimated budget deficit made up $15 billion. The Gov. noted that it was crucial for the state to stand the competition with other states that offer similar programs. But alongside with this nearly charity-based intention, Mr. Paterson is going to raise tuition by $350 per semester at the City University of New York and the State University of New York. This will be the first tuition increase over the past 4 years.

The government clearly realizes the importance of easy access to education. Keeping the brightest young minds is in the country' best interests, for it is them who will bring the US back to economic prosperity.

The Governor unveiled the program's basic terms.

New York residents attending one of state's colleges are eligible for the program. Students with a two-year course of studies could receive a loan of $20,000 maximum. Students who stay at college for four years would be eligible for $50,000. Combined - undergraduate and graduate - students would be able to take out a loan of up to $70,000.

This program promises to become a good alternative for student credit cards with high APR. The state officials assured that this program would come up with lower interest rates. The APR is expected to be about 8% in the first year; afterwards it will change every year in line with the market conditions.

The launch of a low-cost loan program or students was originally the initiative and a major recommendation of the Commission on Higher Education. The Commission has been studying the condition of higher education in New York for over a year. Around 1 million students of the New York State approximately owe $2 billion they have in private loans. Students in New York typically pay 12% APR on their loans, while students in Texas pay 6% on the average.

This program will probably become much more popular and wanted credit product than credit card deals, especially those with high card charges. Fewer students will spend time reading latest credit card news and new credit card rules, browsing through new credit cards, trying to find credit card with the most favorable terms and apply online. The best credit card is really hard to find, and even harder to qualify for. And a low-cost student loan seems to be a really good and beneficial substitute of a credit card.