OK of College Loan Plan for Middle-Class Students Pushed

State Treasurer Kathleen Brown called on Gov. Pete Wilson and the Assembly Tuesday to immediately approve an “alternative” loan program that would help thousands of middle-class college students who might not be able to attend college next fall.

Brown held news conferences at the Capitol steps in Sacramento and at state universities in Northridge and Berkeley to call attention to her proposed California Alternative Loan program. If approved by early August, the program would provide up to $80 million in student loans by next fall, with much of the money going to middle-income families struggling to keep up with skyrocketing college costs and declining federal aid, Brown said.

“This quite extraordinary program will provide access for students who have the will but not the wallet, for middle-class families that have been left out of other programs . . . and caught in the squeeze,” Brown said at a noon news conference at Cal State Northridge. She was joined by student leaders, higher education officials and state Sen. Patrick Johnston (D-Stockton), who sponsored the legislation to get the program under way.

The program is designed to help about 20,000 qualified students a year supplement their financial aid with fixed-rate loans of as much as $25,000.

The program would be funded through the sale of tax-exempt bonds, and loans would be based on the income, assets and credit histories of students’ parents.

The interest rate for the loans would be about 8.5%--lower than other private loan programs and with far more money made available than through other publicly subsidized programs, Brown said. The money could go toward fees and tuition, room and board and other expenses.

Legislation enabling the state to finance the program has passed the state Senate unanimously, but needs the approval of the Assembly and Wilson, who has yet to comment publicly on the program, Brown said.