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VOL. 23, NO. 10L
April 2006
Welcome to the April 2006 ISAC Update for Lenders and Servicers, which is a compilation of e-Messages sent through College Zone’s e-Messaging service throughout April. This e-Messaging service has replaced ISAC's use of printed newsletters and special e-mail lists as our primary means of communicating information to you.
The articles in this Update have been organized according to the Lender Zone subscription groups to which the messages were distributed via College Zone’s e-Messaging service.
Questions?
Questions regarding information in this ISAC Update can be directed to Lender Services by sending an e-mail message to lenderservices@isac.org or calling 800.899.ISAC (4722) and speaking with one of the following staff members:
- Sharon Bankston, extension 2826
- David Barinholtz, extension 2822
- Sondra Gardner, extension 2827
- Julie Henschel, extension 2823
On occasion, you may be directed to a specific contact person or area; when this occurs, we will provide the appropriate information in the individual article or message.
Multiple Subscription Groups
ISAC to Pay Default Fee on Behalf of Borrowers
Sent to Marketing News, Announcements and Operational Updates, Announcements on April 28, 2006
ISAC is pleased to announce that we will pay the 1% default fee (previously the guarantee fee) for all ISAC-guaranteed Federal Stafford and PLUS loans for the
2006-07 academic year. Although the recently enacted Higher Education Reconciliation Act of 2005 requires guarantors to assess this fee and deposit it into the Federal Student Loan Reserve Fund for loans guaranteed on or after July 1, 2006, ISAC has chosen to pay this fee on behalf of borrowers rather than pass the cost on to students and their families.
Maintaining a policy that began in July of 1999, paying this fee on behalf of borrowers reduces the cost of borrowing and results in a greater percentage of loan proceeds being available to offset educational expenses. This subsidy is estimated to save Illinois student loan borrowers and their families $13 million per year, or approximately $50 per loan.
This benefit for borrowers, as well as all other agency programs and activities which facilitate access to education, are supported solely by ISAC's loan operations. All state funds allocated by the General Assembly are awarded to students and paid directly to colleges and universities on their behalf. Therefore, we greatly appreciate the support received through participation in ISAC's loan programs, as the revenue generated is reinvested into programs and benefits for students.
ISAC Loan Options Expand for Graduate Students
Sent to Marketing News, Announcements and Operational Updates, Announcements on April 27, 2006 Previously available only to parents of undergraduate college students, the Federal PLUS Loan Program, as part of the Federal Family Education Loan Program, has now been expanded to include graduate and professional students, giving those pursuing advanced degrees more options for financing their higher education. This new category of student loan borrowers is a result of the recently enacted Higher Education Reconciliation Act
of 2005 (HERA).
To help you become better acquainted with the provisions of the HERA, we are preparing a series of Q & A's. The first of the series addresses Federal PLUS loans for graduate students and is posted in the Federal Information area of collegezone.com's e-Library. As more Q & A's on other topics are posted, we'll notify you via our usual communication avenues of e-Messages and Message Board postings.
The expansion of the Federal PLUS Loan Program will begin with loans certified by the college on July 1, 2006, at which time students classified at the graduate level by their colleges will be able to borrow Federal PLUS loans guaranteed by the Illinois Student Assistance Commission (ISAC). Here's how the loans will work:
- ISAC will accept and immediately process loan applications for this new group of borrowers beginning on July 3rd.
- Like parents borrowing PLUS loans, graduate and professional students with no adverse credit history will be eligible to borrow an amount equal to the difference between the cost of attendance and any expected financial aid.
- Eligibility for both subsidized and unsubsidized Stafford loans will be determined by the student's completion of the Free Application for Federal Student Aid (FAFSA) before consideration of a PLUS loan.
- Graduate students will apply using the current Federal PLUS Loan Application and Master Promissory Note, and an addendum provided by the U.S. Department of Education (available through the Order Materials area of collegezone.com).
- The interest rate is fixed at 8.5%.
- Repayment on the Federal PLUS loan for graduate students will begin within 60 days after the final loan disbursement, although students will be eligible for an in-school deferment.
- The student is responsible for interest payments during the deferred period.
 Commission Meeting to be Held Friday, April 28, 2006
Sent to Marketing News, Announcements and Operational Updates, Announcements on April 14, 2006 The next regular meeting of the Illinois Student Assistance Commission is scheduled for 9 a.m. on April 28th at Parkland College in Champaign.
The tentative agenda for the meeting includes:
- Fiscal Year (FY) 2007 IDAPP budget,
- FY2007 College Illinois! budget, and
- Proposed Rules Amendments.
The Agenda Book, which confirms each meeting's start time and provides a final agenda with a full description of each agenda item, will be available four to seven days prior to the meeting via the ISAC's Governing Board: The Commission section of the e-Library at collegezone.com.
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ISAC Update
Electronic ISAC Update for March 2006 Available at College Zone
Sent on April 4, 2006 The March 2006 edition of the ISAC Update is now available for your review within the ISAC Publications section of College Zone's e-Library. This version of the monthly electronic ISAC Update is a compilation of e-Messages sent to lenders and servicers in March via College Zone's e-Messaging service.
Topics covered in the March 2006 ISAC Update include:
- Change in Requirements for Claim Requests Submitted to ISAC - Effective April 3, 2006
(sent March 27, 2006)
- Electronic ISAC Update for February 2006 Available at College Zone
(sent March 1, 2006)
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