Connecticut Democrats are advancing a plan to raid the states emergency reserves to underwrite a new graduate student loan scheme after a federal program was curtailed under President Donald Trumps Big Beautiful Bill."
According to Western Journal, lawmakers in Hartford want to tap the states emergency fund to stand in for the discontinued federal GradPLUS program, which had allowed graduate students to borrow up to the full cost of attendance, minus the $20,500 per year already available through unsubsidized federal loans. The move would effectively shift risk from Washington to Connecticut taxpayers, using state-backed borrowing to preserve a pipeline of easy money for higher education that federal officials have deemed excessive.
According to the Connecticut Education Association, $20 million of the programs cost would be covered by the Connecticut Higher Education Supplemental Loan Authority, a quasi-public lending entity. Another $10 million could be drawn from the states $500 million emergency reserve fund, which was created in November in response to federal cuts toward health and human services by the Trump administration.
Democratic state Rep. Gregg Haddad, co-chair of the Higher Education and Employment Advancement Committee, framed the federal rollback as an attack on opportunity rather than a long-overdue correction to runaway borrowing. 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, Haddad said at a Jan. 6 news conference.
Haddad also cast doubt on the private sectors ability or willingness to lend responsibly to would-be graduate students, implicitly arguing for continued government intervention in a market already distorted by federal guarantees. 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, he added, suggesting that taxpayers should assume risks that private lenders might reject as unsound.
The Department of Education, by contrast, has defended the reform on fiscal and policy grounds, noting that the GradPLUS program fueled unsustainable student loan borrowing because it lacked meaningful caps and encouraged institutions to hike tuition. With universities confident that Washington would foot the bill if students could not pay, costs soared, even though graduate students may still borrow up to $100,000 in federal aid for advanced degrees and as much as $200,000 for professional programs.
Haddad insists Connecticut should step in where federal officials have chosen restraint, signaling a broader ideological clash over the proper role of government in higher education finance. While Washington retreats from their responsibilities, Connecticut is ready to lead, he said, according to CEA.
We have a proposal that can directly mitigate the damage and protect our students from these federal cuts, Haddad continued, portraying the state-backed loans as a shield against reforms enacted in Washington. The proposal will receive formal consideration when the Connecticut legislative session convenes in February, setting up a debate over whether emergency reserves should be diverted from true crises to subsidize graduate degrees.
The federal changes are scheduled to take effect in July 2026, giving states ample time either to adjust to a more disciplined lending environment or, as in Connecticuts case, to recreate the same incentives that drove borrowing to unsustainable levels. For taxpayers concerned about fiscal prudence and the proper use of emergency funds, the coming legislative session will test whether Connecticut prioritizes long-term financial stability over short-term political symbolism in the student loan arena.
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