Out-of-state student loans at risk

By Whitney Blair Wyckoff

The head of the state’s student loan agency has proposed selling a large portion of the over $3 billion loan portfolio. This sale will not impact Illinois residents going to Illinois state schools. However, future loan packages for Illinois residents attending out-of-state colleges and out-of-state students attending Illinois schools may be in jeopardy.

Andrew Davis, commissioner for the Illinois Student Assistance Commission, announced a plan that would sell 80 percent of the shares of the commission last month. This announcement follows a sale of part of the loan portfolio in January to pay for this year’s MAP Plus grants. Claude Walker, director of state relations and media affairs for the commission, said that last year they lost $7.5 million, often because students consolidated loans or paid off loans early.

“We need to stop the hemorrhaging,” Walker said. So, he said the commission plans to refocus its efforts on Illinois students attending Illinois schools.

This sale would offset the cost of this academic year’s MAP Grants, which is their flagship program. While this sale will pay for this year’s MAP grants, the commission has no official plan to pay the bills from last year.

“At this point, they’re looking at a funding mechanism,” said Dan Mann, director of financial aid for the University, of the proposed plan.

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Walker said that students whose loans will be sold will have the same benefits they had with the commission.

He said that the only difference would be students that take out loans would send their checks to a private company instead of the commission.

If this is approved, the commission will also cease giving loans to out-of-state students attending out-of-state schools. As recently as three years ago, the commission was profiting $20 million through this type of loan.

“We were the only ones in this ball game, and now there are so many others,” Walker said. “Now we’re not making money off of that because there’s so much competition.”

Walker said that the commission would continue wit its outreach efforts.

They will continue to operate their Web site, www.collegezone.com, will not downsize their customer service staff, and will continue to hold workshops and events that help families understand the financial aid process.

Walker said that the commission will implement a public alternative loan program that will start in September to encourage Illinois students to stay in-state after graduation. If a graduate gets a job in Illinois, the commission will subtract one percent off of his or her interest rate.

If a graduate makes less than $50,000, the commission will take off one percent; the commission will take off two percent if the graduate makes less than $30,000.

This program will be piloted at seven or eight smaller Illinois universities this fall.