College Illinois!® Capstone Loan Program (Pilot)

Beginning with the 2007-08 academic year, college seniors who are enrolled at institutions participating in the College Illinois!® Capstone Loan pilot program may be eligible to borrow money to help them complete the final semester(s) prior to graduation. ISAC has designed this new alternative loan program to help the students of Illinois complete their undergraduate degree programs. It provides major benefits for borrowers who pursue crucial but lower-paying jobs (such as teachers or social workers) in Illinois.

College Participation

For the initial pilot phase of this program, a small number of Illinois colleges (representing a cross section of the sectors, geographic locations, demographic make up, and cohort default rates that exist within the state) have been chosen to participate. As the program becomes more established, ISAC will consider adding additional colleges.

If you would like your institution to be considered for future participation in the College Illinois!® Capstone Loan Program, please contact Sam Nelson, Managing Director of Marketing and Communications, at sam.nelson@isac.illinois.gov or 847.948.8500 (extension 3707).

College Principal Rebate Requirement

A participating institution with a cohort default rate (CDR) in excess of six percent (6%) must rebate up to one half of the original amount of loan principal in the event the borrower does not complete the degree program for which the College Illinois!® Capstone Loan was borrowed.
 
Eligibility

To be eligible, an individual must:

• Be a U.S. citizen or an eligible non-citizen
• Be an Illinois resident
• Be enrolled in a degree program at a participating college on at least a half-time basis (unless they are in the final term of study before graduation, during which time enrollment can be less than half time) as an undergraduate student at the senior class level (as determined by the college)
• Be a recipient of the loan for no more than two academic years
• Apply for federal student financial aid to determine the expected family contribution (EFC) for Federal Stafford Loan eligibility
• Maintain satisfactory academic progress as determined by the college

Students who are interested in applying, and are attending participating colleges, will contact their financial aid offices. Colleges will then provide their pre-qualified students with access to the online application (via either e-mail or a link on the college’s Web site).

Interest Rate

The interest rate for the College Illinois!® Capstone Loan is fixed at 8.0%. Interest begins to accrue at the time of disbursement, and can either be paid during the in-school and grace periods or be added to the principal balance of the loan when repayment begins.

Borrowers who qualify for certain borrower benefits may earn interest rate reductions.

Fees and Disbursements

There are no front-end (i.e., origination) or repayment fees associated with this program.

Loan proceeds will be sent directly to the college, on behalf of the borrower.

Once a loan enters repayment, a late fee of up to 5% of the installment payment will be charged if any part of an installment payment is not received within 15 days after it becomes due.

Borrower Benefits

Certain incentives are offered to encourage borrowers to work in Illinois, and especially to assist those pursuing careers in lower-paying jobs (e.g., teachers, social workers) that are crucial to the welfare of the citizens of Illinois.

In order to qualify for any of these College Illinois!® Capstone Loan Program borrower benefits, the borrower must reside and be employed in the state of Illinois:

• Regardless of income, a 1% interest rate reduction can be earned immediately for obtaining Illinois employment. Eligibility begins once the borrower has graduated, entered repayment and become employed in Illinois. Annual proof of Illinois employment is required.
• A rate reduction of 1% will be applied if the borrower’s income is between $30,001 and $50,000 per year. Annual proof of income is required.
• A rate reduction of 2% will be applied if the borrower’s income is $30,000 or less. Annual proof of income is required.
• If the borrower works full time and has annual income of $30,000 or less, the outstanding principal on the loan may be reduced by 2% upon the completion of each series of 12 consecutive, on-time payments.

The repayment period begins the day after the grace period ends. Borrowers will receive an electronic monthly statement during the repayment period. Consecutive monthly payments, in the amounts and on the payment due dates indicated on the electronic statements, must be made until all of the principal, interest and any other charges have been paid in full.

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