RALEIGH, N.C. State Employees CU said it has bought $7 million of second-chance student loans from the North Carolina State Education Assistance Authority, helping finance the college education of students who have defaulted on their federally insured Federal Family Education Loans.
The loans are federally insured to approximately 97% and carry an average yield of about 4%, according to Mike Lord, chief financial officer for the $25-billion credit union. The average life remaining on the loans is approximately 10 years.
“Financially it is a very strong program for us and it helps student lending and the financing of college educations,” Lord told Credit Union Journal Monday afternoon.
The Loan Rehabilitation Program was put in place to help student borrowers who defaulted on federally insured Stafford, PLUS or consolidation loans to earn a second chance to repay the loans, repair their credit histories and improve their lives. Certain program qualifications must be met by participants, including remittance of nine consecutive voluntary payments at an amount the borrower can sustain in the future.
SECU has committed to buy up to $25 million of the loans from the North Carolina Authority. All of the borrowers are North Carolina residents.
