Governor Taft Launches Low-Cost Loan Program To Help Students Pay For College

COLUMBUS - Governor Bob Taft launched a program to offer students reduced-rate loans in order to drive down the cost of higher education and increase college-going rates in Ohio. The program was announced in the Governor’s State of the State Address (see text of speech at www.taftnews.com).

“We know that Ohioans with a college education earn higher salaries, experience greater job satisfaction, and have more employment opportunities,” said Taft. “No Ohioan should be denied a college education because they cannot afford it.”

The Ohio Student Lending Initiative, a partnership between the State of Ohio and KnowledgeWorks Foundation, will offer reduced-rate student loans to students and their families beginning this fall. $100 million in student loans will be available this year and within five years, up to $200 million could be made available annually.

In his State of the State address, Taft mentioned other initiatives he will introduce in his biennial budget proposal to make college more affordable for Ohioans. Those initiatives include:

* An expansion of the state’s needs-based college grant program. The program will be aligned with Federal Pell Grant standards and will expand eligibility to an additional 11,000 students.
* An expansion of the Ohio College Access Network, which provides young Ohioans and their families with access to college information and financing options.
* An annual tuition cap of six percent at state colleges and universities, to be exceeded only for the purpose of funding needs-based scholarships.

Governor Taft designated KnowledgeWorks as the nonprofit student lending organization for the State of Ohio. As a result of the designation, KnowledgeWorks will be able to finance student loans with tax-exempt debt allowing them to offer the loans at reduced interest rates. One hundred percent of any net revenues from student lending activities will be reinvested in Ohio and remain dedicated exclusively to charitable activities that further the State’s educational goals.

KnowledgeWorks has formed two subsidiaries, Student Lending Works, Inc. and KnowledgeFunding Ohio, Inc., to direct its student lending activities. Student LendingWorks’ activities will include the origination of Federally guaranteed student loans to Ohio residents and students studying at Ohio colleges and universities.

KnowledgeFunding Ohio will serve as Ohio’s issuer of qualified scholarship funding bonds, proceeds of which will be used to fund reduced-rate student loans for Ohio students. KnowledgeWorks will make a $3.5 million capital investment to expand its student lending operations in Ohio, resulting in new jobs in southwest Ohio.

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Media Contacts:
Mark Rickel, Governor’s Office, (614) 644-0957; or,
Emily Hedrick, KnowledgeWorks Foundation, (513) 929-1132