Student Empowerment Fund
Idea Category: 2025 Ideas Challenge, Economic Opportunity & Affordability
2025 Ideas Challenge Entry
With federal student debt relief ending and tuition costs rising, states face mounting pressure to make college more accessible and affordable. The Student Empowerment Fund (SEF) addresses this challenge by investing up to 5% of a state’s investment portfolio in qualified, nonprofit student loan providers. The goal: lower interest rates, improve loan terms, and expand financing options for residents after federal aid is exhausted.
The Treasurer’s Office partners with traditional and alternative private student loan lenders after students exhaust federal options. While predatory lenders can charge over 15% interest, SEF offers diverse, low-interest loan products—capped at 7% for most borrowers and 9.99% for those facing financial barriers. Future plans include partnering with lenders to offer competitively priced refinancing solutions.
The program targets residents attending nonprofit colleges and universities, aiming to reduce private loan costs, close funding gaps, and expand access to higher education—benefiting both students and the state’s workforce pipeline.
Impact or how it will be measured:
As of July 2025, SEF has invested $27.5 million, helping issue roughly 700 loans to 515 borrowers at an average interest rate of 5.79%—compared to the 10.63% average for major private lenders—saving each borrower thousands in interest over the life of their loan. The initiative has also diversified the state’s portfolio, contributing to record returns of $1.5 billion in 2024 at a 4.2% return, exceeding the 3% target.
While the student debt crisis remains a national challenge, SEF demonstrates that targeted state investment can lower borrowing costs, improve protections for students, and strengthen long-term economic growth.
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