ISAC To Boost National Credit Education Week

Don’t play “Texas Hold ‘em” with your college student loan, agency warns

SPRINGFIELD, IL – The Illinois Student Assistance Commission (ISAC) will observe National Credit Education Week (September 18-23) by highlighting the importance of paying back student loans on time and the severe consequences of defaulting on college loans.

The theme of this year’s National Credit Education Week is “Play Your Cards Right: Don’t Gamble with Your Credit”.  Sponsored by the Association for Credit and Collection Professionals (ACA), in conjunction with the Jump$tart Coalition for Personal Financial Literacy, the nationwide public service campaign is in its fifth year.

“As college tuition costs continue to increase nationwide and more students face debt on graduation day, the need for credit literacy has never been greater,” said ISAC Executive Director Larry Matejka. “Student loan default can usually be avoided. Repaying a student loan on time can help a young person establish a good credit history and start their career on the right path.”

To boost consumer awareness across the state, Governor Rod Blagojevich issued a proclamation declaring September 18-23, 2006 as “National Credit Education Week in Illinois”. “National Credit Education Week is a public service campaign intended to help consumers develop good money management habits…and I urge all Illinoisans to educate themselves on being good consumers,” Blagojevich’s proclamation stated.

To observe National Credit Education Week, ISAC sent 200 “Play Your Cards Right” posters to Illinois colleges along with a credit quiz, and will post information on its Web site: collegezone.com. Thousands of partners will be notified electronically. And as part of the “Play Your Cards Right” theme of National Credit Education Week, collegezone.com will link visitors to an online quiz on credit basics which uses poker hands to score the quiz-taker’s credit aptitude. 

“If you want to play ‘Texas Hold ‘em’ with your buddies, go ahead, but don’t gamble with your student loan. It’s just not worth the risk,” cautioned Donald McNeil, ISAC Chairman. “Play your cards right by paying off that debt on time and in full, and you’ll be a winner.”

Last year, 11,081 Illinois borrowers defaulted on college loans which were all reported to national credit agencies. Each defaulter faces severe long-term consequences, including:

• a tarnished credit rating;
• difficulty in financing a car or home;
• jeopardized employment opportunities;
• a loss of certain professional licenses;
• additional collection costs of up to 25 percent;
• loss of loan deferment and additional financial aid;
• referral to a collection agency;
• garnishment of wages, and
• possible legal action.

The student loan cohort default rate in Illinois has declined from 15.1 percent in 1991 to the current rate of 4.3 percent, slightly below the national average of 4.5 percent.

The default rate measures the percentage of borrowers who have defaulted within 24 months of entering into repayment.  Default occurs when a student is scheduled to make loan repayments and repeatedly fails to do so. The typical defaulter is 28 years old and employed in a lower-income job. About four of every five defaulters completed fewer than four years of college.

“The steady decline in student loan defaults despite higher tuition costs suggests that default prevention efforts have been effective and students appreciate the importance of paying their debts on time,” Matejka said. “I encourage students and their families to visit collegezone.com where we offer a range of tools to help avoid default.”

The Default Prevention Outreach Department at ISAC conducts personal financial literacy and loan repayment seminars at colleges around the state. During the past school year, thousands of students attended more than 100 seminars focusing on financial literacy, credit card use, budgeting and the perils of loan defaults. The agency has earned national recognition from the U.S. Department of Education and National Council of Higher Education Loan Programs (NCHELP) for its default prevention activities.

The default prevention outreach activities performed by ISAC are funded through ISAC’s role as a federal student loan guaranty agency and secondary student loan market. The agency receives no state funding for administration, operations or outreach.

For a copy of ISAC’s default prevention brochure – “Repay my College Loan? No Question” – visit collegezone.com or call ISAC at 800.899.ISAC (4722). Bilingual phone representatives are available.

About ISAC
The Illinois Student Assistance Commission is the State’s centralized provider of financial assistance aimed at helping students and families access postsecondary education and/or training. Each year, the Commission awards an estimated $400 million in scholarship and grant aid to nearly 185,000 qualified students, and also provides an additional $740 million to borrowers through its student loan programs. The agency offers credit-based alternative loans, a 529 prepaid tuition program known as College Illinois!, and a broad array of outreach and informational services to ensure that families have access to the information they need to pay for a college education. More information is available by calling toll-free 800.899.ISAC (4722) or visiting the agency’s Web site at www.collegezone.com.