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Low-cost, Interest-free Loans for College Students


August 17, 2007

MONTGOMERY, Ala., August 16, 2007 – Students headed to college often find the cost of tuition, fees, books, etc, can be overwhelming. State Finance Director James Allen Main says there are options for funding education.

“Realizing the ever-growing demand for teachers and nurses in Alabama, we revitalized a very viable loan program a few years ago that many students are taking advantage of,” explains Main. “The Alabama College Loan Program (ACLP), available to all college students, offers zero origination fees and low-interest rates, as well as the opportunity for interest to be ‘forgiven,’ or removed from the payback amount on some loans.”

The ACLP interest-forgiving loans originally targeted college students pursuing an education in teaching or nursing who committed to working within the State following graduation. It was expanded to cover graduate students in both areas, as well as to fund the education of National Guard members in good standing who were called into active duty on or after September 11, 2001.

“It is not uncommon for a student to graduate college with more than $20,000 in student loans,” continued Main. “With interest on loans averaging more than 6 percent, interest savings on $20,000 of debt can be greater than $1,200 per year for a 10-year period.”

Loans convert to repayment six (6) months after the student graduates from or leaves school or drops below half-time student status. Incentives for the loan program differ by type of loan; for instance, some loans offer a credit applied to the original loan principal after one makes the first 30 consecutive payments on time. Other loans offer an interest-rate reduction for automatic payments.

Alabama residents attending college in other states may still qualify for the ACLP, as long as they return to Alabama to teach in public school, work as a nurse in our health care system or serve in Alabama’s Army or Air National Guard.

This program differs from Alabama’s Pre-paid Affordable College Tuition (PACT) program and the 529 Fund. PACT is basically a contract to ‘pre-pay’ college tuition, whereas the 529 Fund is an investment program from which education expenses can later be withdrawn. These options are managed by the State Treasurer’s Office.

To learn more about the ACLP or apply for funding, students and parents can contact the financial aid office of their college or university, connect to the College Loan Program through the website of the Department of Finance (www.finance.alabama.gov) or call (888) 678-4625.



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