Politics

Blue State Taps Massive ‘Emergency’ Fund To Hand Out Student Loans

(Carol M. Highsmith via Wikimedia Commons)

One blue state legislature is rolling out a statewide student loan program that will tap the state’s “emergency” fund to replace a federal program slashed under the One Big Beautiful Bill Act (OBBBA).

Connecticut lawmakers are calling for the use of state emergency funds to replace the federal GradPLUS program, which offered graduate students up to the cost of their degree minus the $20,500 a year already available through unsubsidized loans. According to the Connecticut Education Association (CEA), $20 million of the cost would be fronted by the Connecticut Higher Education Supplemental Loan Authority (CHESLA), a quasi-public organization. Another $10 million would potentially come from the state’s $500 million emergency reserve fund, originally created in November in response to “federal cuts toward health and human services” by the Trump administration.

“The federal government is closing the door on opportunity by canceling the federal GradPLUS loan program, ending an essential program that has allowed thousands of students to afford to earn a graduate degree,” Democratic state Rep. Gregg Haddad, co-chair of the Higher Education and Employment Advancement Committee, said at a Jan. 6 presser. “There is no way of knowing if the private loan market will offer loans to people with no credit history or who come from low and moderate-income families.”

The Department of Education (ED) has stated the GradPLUS program “fueled unsustainable student loan borrowing” due to its uncapped nature, allowing universities to inflate the cost of their degrees with the knowledge the federal government will foot the bill if students cannot afford it. Even with the cut, graduate students can borrow up to $100,000 in federal aid for their degrees, and students seeking professional degrees can borrow up to $200,000.

“While Washington retreats from their responsibilities, Connecticut is ready to lead,” Haddad said, according to CEA. “We have a proposal that can directly mitigate the damage and protect our students from these federal cuts.”

The proposal will be formally reviewed once the Connecticut legislative session begins in February. The changes to the federal student loan program are set to go into effect in July of 2026.