State Program Helps Defaulted Borrowers Pay Off Student Loans

SPRINGFIELD - The Illinois Student Assistance Commission is offering a unique opportunity to borrowers who have defaulted on their student loans. Between now and January 31, 2002, borrowers who pay off the principal and interest balance of their federal student loans will have their collection costs waived.

The Illinois Student Assistance Commission (ISAC) is the State’s guarantee agency for educational loans made under the Federal Family Education Loan Program. This 60-day period of opportunity is available to all defaulted borrowers in ISAC’s portfolio, totaling approximately 85,000 individuals.

Under ordinary circumstances, borrowers who have defaulted on their federal student loans are required to pay the principal, accrued interest, and collection cost amounts attributable to their loans. Collection costs are incurred by the agency for the expense of collecting payments from defaulted borrowers. These costs include making telephone calls, generating and sending payment notices, and ordering wage garnishments. Federal law allows ISAC to collect up to 25% of the amount due to offset these costs.

By taking advantage of this opportunity to have the collection costs waived, borrowers will save an average of approximately 20% of the total amount due on their accounts. In addition, by settling their student loans, borrowers will prevent future collection activities, including possible wage garnishment, suspension of a professional license, denial of any future student financial aid, and withholding of any state or federal tax refunds or other government-issued checks.

Borrowers who would like to take advantage of this opportunity should call the Illinois Student Assistance Commission’s Collection Services office toll-free at 800-934-3572. Account representatives are available between 8:00 AM and 8:00 PM Monday through Friday.

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.