New Program in New York State to Offer Low-Interest Loans to College Students From Low-Income Families

New York Governor David Paterson has proposed an extensive new student loan program for low-income college students in the state. The program would disproportionately apply to black and Hispanic students. Paterson made the proposal despite the fact that the state is facing a $15 billion budget shortfall. And the decision came on the heels of the first tuition increase in four years at the State University of New York and City University of New York campuses.

Under the new program, students from low-income families who are enrolled at two-year colleges would be eligible for up to $20,000 in loans from the state with interest rates lower than they could receive from private lenders. Students at four-year institutions would be eligible for up to $50,000 in loans.

The state estimates that New York’s one million college students currently are holding $2 billion in private loans at interest rates that average around 12 percent.