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Ky. buying bonds to help student loan program

August 16, 2008 @ 06:30 AM

The Associated Press

Herald-Dispatch.com

FRANKFORT, Ky. (AP) — Kentucky state officials have a way to help thousands of college students banking on a student loan to help finance the coming fall semester, Gov. Steve Beshear said.

The state is buying a $50 million bond to help the Kentucky Higher Education Student Loan Corporation, also known as The Student Loan People, offer students loans in time for the coming academic year. The bond will serve as a “short-term bridge” until federal money arrives later, Beshear said.

“This is a very innovative approach, and an innovative solution to a difficult problem,” Beshear said at a Friday afternoon Capitol news conference. “It’s a solution that many other states have not found.”

Without the help, the Kentucky loan corporation would have run out of money and ceased making new loans. Now, however, it will continue offering loans to about 110,000 students across the state, CEO Edward Cunningham said.

Cunningham said the corporation had run out of money as of Thursday and was unable to offer students new loans.

States across the country have faced similar problems in the wake of the national mortgage crisis, collapse of credit markets and overall sour economy, Cunningham said. Other states have stopped issuing loans or considered tapping their public pension systems for help.