The Arkansas Student Loan Authority will have until the end of September 2010 to repay the State Board of Finance for its draw on an $80 million line of credit after the agency was unable to issue bonds for its student loan program.
The board’s trustees approved the line of credit plan in May and set the initial interest rate on the money at 2.03%. The resolution extending the deadline also re-set the interest rate to 1.56%.
The finance board approved the extended terms last week after authority director Tony Williams asked that the repayment deadline be moved from Dec. 1, 2009, to Sept. 30, 2010. The loan agency has taken $41 million from the line of credit, he said.
The authority had planned to fund its student loan program for 18 months with the proceeds from $250 million to $270 million of bonds originally set for sale in early 2008 by the Arkansas Development Finance Authority. The state did not sell the bonds due to market conditions at the time, and Williams told the board last week he has no indication that the student loan bonds can be sold in the next six months.
The authority has used the credit to make 14,651 loans to students at 44 colleges and universities in Arkansas and to Arkansas students attending 21 schools outside the state, Williams said.
The line of credit is provided by the finance board from some $300 million of state funds that otherwise would be invested in six-month certificates of deposit in Arkansas banks.
