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6/30/2008
At its June 27th meeting, the Illinois Student Assistance Commission (ISAC) approved a revision in the default fee policy for Federal Family Education Loan Program (FFELP) loans guaranteed by ISAC on or after July 15, 2008.
Revised Default Fee Policy (Agenda Item 11)
The Commission approved a revised policy effective for FFELP loans guaranteed on or after July 15, 2008. For ISAC-guaranteed federal Stafford and PLUS loans, ISAC will use its Student Loan Operating Fund (SLOF) to pay one-quarter (25%) of the 1% federally-mandated default fee on behalf of the student borrower. ISAC will no longer pay any of the default fee on behalf of parents borrowing federal PLUS loans. [For loans guaranteed between December 1, 2007 and July 14, 2008, ISAC has paid one-half of the default fee on behalf of student and parent borrowers. Prior to that, and beginning in 1999, no borrower with an ISAC-guaranteed FFELP loan was required to pay any of the default fee.]
These policy changes have become necessary due to information provided in a May 21, 2008 letter from the U.S. Department of Education (ED), indicating that loans it purchases under the lender liquidity provisions of the Ensuring Continued Access to Student Loans Act of 2008 will be transferred to the Federal Direct Student Loan Program servicer. This transfer will remove these loans from ISAC's guarantee portfolio and eliminate the revenues that would otherwise support our ability to pay a higher percentage of the default fee.
ISAC will continue to closely monitor its guarantee portfolio situation under the newly enacted lender liquidity provisions, and will keep our school and lender partners informed of new developments.
Other Commission Meeting Agenda Items
At its June 27th meeting, the following items were addressed as part of the agenda. Additional information regarding some of the items is provided in the June 27th Agenda Book, which can be accessed from the ISAC's Governing Board: The Commission page at collegezone.com.
- The Commission approved and adopted the omnibus rules amendments, as modified during the rulemaking process, so that they are effective for the 2008-09 academic year. (Agenda Item 14)
- The Commission received an update regarding the status of ISAC's FFELP portfolio lender servicing.
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