Connecticut Student Loans
CT Higher Education Helps Students with Low-Interest Loans
The state of Connecticut has maintained its low-cost student loan program since 1982, providing supplemental loans to those Connecticut students who have borrowed the most they can using other types of loans but still need educational financing. The program is administered by the Connecticut Higher Education Supplemental Loan Authority (CHESLA), which is the first place a Connecticut student needing extra loan funding should apply.
Conventional wisdom states that before applying for any supplemental loan, you should always borrow as much as you can under the federal student loan programs, because their interest rates are typically lower and their terms are more flexible. However, you should always compare federal and state loan rates before making your decision.
For example, as of November 2012, CHESLA is offering a 5.95% fixed rate with an annual percentage rate (APR) varying between 6.32% to 6.46% during the loan term, whereas the rate for a federal Direct Unsubsidized Loan is 6.8%.
Eligibility For CHESLA
Here are the criteria for securing a CHESLA loan:
- If you are attending school in Connecticut, you must be pursuing a degree or certificate, enrolled at least half-time in an accredited nonprofit institution. If you are a Connecticut resident at school elsewhere in the U. S., that school must also be an accredited nonprofit.
That means students in schools like DeVry University or University of Phoenix are not eligible.
- Your grades must be satisfactory.
- You and the person who applies with you (the co-applicant), if you have one, must have good credit, and your monthly installment payments must not exceed 40% of gross income.
- You and your co-applicant must have at least $20,000 in adjusted gross annual income, and be either U. S. citizens or eligible non-citizens.
CHESLA Rates, Features, and Terms
Other than the 5.95% fixed rate and APR of 6.32%-6.46%, there are some other important details about how CHESLA works. There is only one fee, the 3% reserve fee: you will not be charged to apply or prepay. You can borrow anywhere from $2,000 to the lifetime limit of $125,000 to fund undergraduate, graduate, or professional studies.
You may borrow to cover expenses from either this year or the year before. You pay only the interest while you’re in school, and there is a six-month grace period after you leave school. If you are a graduate or professional student, you may opt to defer paying the interest until six months after you leave school, but that interest will be capitalized, or added to the balance of your loan.
Take that option only if you must, because it will make your loan more expensive.
Who Manages Your CHESLA Loan?
While the state of Connecticut is the lender for CHESLA loans, they have contracted the loan servicing business to Firstmark Services, a private loan servicing company located in Nebraska. Firstmark will process your application and perform the necessary credit checks on you and your co-applicant.
Any questions about your application should be referred to them, and you can create a user account to manage your loan online at Firstmark’s site. You can also sign up to have your monthly payments debited from your bank account.
When your loan is approved, Firstmark sends the money directly to your college or university, and your financial aid office will be able to verify those payments for you. Your financial aid office will need to do that via the FirstApp system, and if your school has never used it Firstmark will be happy to help them set up an account.
You will need to sign a promissory note, and be sure to sign any paper checks mailed to your school as quickly as they arrive, because failure to sign promptly could cause your loan to be canceled.
Private Student Loans In Connecticut
If you and your parents have a satisfactory relationship with a local bank, that would be a natural place to start your search for a private loan. Some Connecticut schools do provide lists of private lenders to give you a point of reference, although others do not. The University of Connecticut has a very sensible method of selecting the lenders on its list, and you should look for similar guarantees on the other lists. There are also a number of regional lenders that seek to make student loans to Connecticut students, like Citizens Bank headquartered in Providence, Rhode Island.
You should use private loans as a last resort and a means to borrow the last few dollars you need to finance your education, because in the private market rates are higher and terms are less advantageous to the borrower.