Tax-exempt bonds will provide funding for a new student loan program aimed at California's middle-class families.
The "California Alternative Loan Program," unveiled by state Treasurer Kathleen Brown last week, could provide up to $80 million in student loans next fall.
If approved by the legislature and the governor, the program may help an estimated 20,000 students from middle-class families each year supplement financial aid packages with fixed-rate loans of as much as $25,000.
Sen. Patrick Johnston, D-Stockton, has sponsored S.B. 1477, the legislation needed to get the program started. While the state Senate unanimously approved the bill, it still must be passed by the Assembly and the governor.
The legislation expands the scope of the state Student Loan Authority so the agency can issue tax-exempt bonds to fund the program.
Under the current tax code, the state can use tax-exempt bonds for direct loans to students, says Nathan Brostrom, executive director of the California Industrial Development Financing Advisory Commission.
Mr. Brostrom said California's new program is modeled after those in 10 other states.
If the legislation is passed by July, the first bonds could be sold in mid-July, he said.
