As the nation works through its financial crisis, innovative programs are needed to help keep the doors to higher education open to all New Yorkers. One such program is Gov. David A. Paterson's proposed New York Higher Education Loan Program, NYHELPs.
Because fewer and fewer families are able to completely finance a student's education, many seek out private student loans to bridge the gap between family resources, financial aid and scholarships, and the cost of an education. At Canisius College, 76 percent of our students need this type of assistance. Unfortunately, the cost of private loans continues to skyrocket as lenders exit the higher education loan area. The result is that students and their families are often forced to take on loans with interest rates in the range of 12 percent to 17 percent.
NYHELPs will offer up to $350 million each year in fixed-rate loans, supported by state private activity bonds, as well as additional variable-rate loans to state residents who enroll at least half time in degree or professional certificate programs at participating degree-granting colleges and universities in the state. Students could receive fixed interest rates between 7.5 percent and 8.5 percent on these loans, which is a significant savings from market rates on private student loans. Tens of thousands of students and families at public and private colleges and universities will benefit from this outstanding program.
To ensure that NYHELPs serves New Yorkers efficiently and effectively, a borrower will be required to complete a comprehensive Web-based financial literacy education program that will help students make smart borrowing decisions, provide guidance on the pitfalls of credit card debt and emphasize a student's responsibility to pay back student loans. An educated consumer presents a lower risk, which often translates to better credit terms throughout a student's lifetime. This is just one of many added benefits that will make NYHELPs a strong new alternative in private loans for students.
The New York State Higher Education Services Corp., which administers an array of grants, scholarships and federal loans, will oversee the program. NYHELPs borrowers will apply online through the corporation's Student Loan Marketplace, where they can compare and contrast loans based on interest rates and total costs. This site was designed specifically to preserve student credit scores and ensure that they receive trustworthy information.
As New York faces its considerable financial challenges in the coming year, we must remember that a college education is a cornerstone of our state's future. NYHELPs will allow New York students continued access to the funds they need to attend the best universities, to complete their educations and to establish careers that will provide them with opportunities to contribute to the work force and economic growth of New York State.
The Rev. Vincent M. Cooke, S.J., is president of Canisius College.