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The Connecticut Student Loan Foundation says it won’t be issuing any new loans for the coming school year, and looks likely to be wound up in the near future. The Foundation has been in dire financial straits for at least the last year.

The Foundation had been issuing about $130m in loans each year, but has been dogged with problems. A substantial number of staff have been laid off and the Foundation’s Rocky Hill headquarters are in foreclosure. Officials say current loans are not affected, and there should be little impact on students. They’re in the process of contacting a few hundred applicants who had sought loans for next year, but all colleges have now been notified that the foundation is no longer operating as a lender.  Connecticut’s higher education commissioner Mike Meotti has been on the board for the last year.  He says the Foundation was becoming increasingly irrelevant. 

"I think with a different management approach over the last three to five years, the circumstances would not be so dire in terms of the finances right now, but it’s not clear that even with better management over the last few years that this really was an organization with a future given all the changes proposed in the student lending environment nationally." 

Many students get their loans through banks, and many campuses are now moving towards direct lending where colleges themselves arrange federally backed loans for students.