MERIDEN, Conn. (6/10/09)--Connecticut Gov. M. Jodi Rell Tuesday signed into law the Credit Union League of Connecticut's student loan bill, which provides a college student loan program through credit unions. SB 842, An Act Concerning A Student Loan Guarantee Program Reserve Fund, takes effect immediately. Tony Emerson, league president/CEO and Kelly Fuhlbrigge, league vice president-government relations, will participate in a bill-signing ceremony soon. The league and officials from Connecticut’s credit unions met with Rell in December to discuss the state’s economic situation and to propose a new partnership between the state and its credit unions for a college student loan program. Credit unions pledged support of the governor’s concept and estimated that up to $17.5 million could be committed to the program. The program offers low interest rates at no higher than 6% or 5.75%. Institutions offering 6% loans can defer interest payments for one year; credit unions offering 5.75% loans would not defer interest payments. The loans are for students who may not qualify for traditional loans or who already used all their resources and are having difficulty funding tuition. The Connecticut Health and Education Facilities Authority (CHEFA) will provide 20% loan guarantees on the loans. "Credit unions remain healthy in the current economy due to key differences in our structure," said Emerson. "As cooperative financial institutions, credit unions are not reliant upon the capital markets for funding, but are instead funded through member deposits. Therefore, as the credit crunch hit much of the economy, credit unions by contrast have money that they are ready to lend out to their members." Emerson also noted that credit unions' mission of helping people makes credit unions an excellent choice for such a program. The league will administer the program with CHEFA. The program will be open to all students who live or go to school in Connecticut. The funds will not be pooled. Individual credit unions will allocate their own funds. To participate, credit unions must allocate a minimum of $100,000 of their funds. The program will run for one year, with the possibility of extending that period, based on demand and available resources. So far, 21 credit unions have committed to the program, said the league.