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CHESLA Proposes State‑Backed Grad Loan to Replace Federal Grad PLUS
Summary
The Connecticut Higher Education Supplemental Loan Authority told the subcommittee SB 85 would authorize $10 million in GO bonds to help CHESLA launch an affordable graduate student loan product to substitute the soon‑ending federal Grad PLUS program; CHESLA estimates a first‑year need of about $30 million to serve roughly 1,200 students.
Jeanette Weldon, executive director of the Connecticut Higher Education Supplemental Loan Authority (CHESLA), asked the bonding subcommittee to support SB 85, a bill authorizing up to $10,000,000 in state general obligation bonds to allow CHESLA to offer a fixed‑rate, state‑backed supplemental graduate loan program.
Weldon and deputy director Josh Herlock explained the request responds to the scheduled elimination of the federal Grad PLUS program and would combine CHESLA bond financing with $10 million in state support in the first year. CHESLA estimated annual Grad PLUS volume in Connecticut is between $90–100 million and forecast initial year demand of roughly 1,200 students (400 using state dollars, 800 supported through CHESLA bond issuance).
CHESLA said the proposed product would aim to be more cost‑effective than the current federal Grad PLUS rate (8.94%) and would use underwriting that assesses future earning potential rather than current income; credit checks would screen for red flags (severe delinquencies, collections, bankruptcies) rather than rely solely on FICO scores. CHESLA officials asked that sections of the bill be made effective upon passage so the authority could meet graduate enrollment timelines.
Committee members asked about related programs CHESLA administers (the Alliance District teacher refinance program, high‑priority occupation subsidies) and whether CHESLA coordinates with the student loan ombudsman; CHESLA said it has been publicizing the Alliance program and will pursue closer coordination with the ombudsman.
Next steps: CHESLA requested the subcommittee consider SB 85 and the committee discussed timing to match bond closings and academic cycles.
