ISAC Closes Third Student Loan Portfolio Sale

STATEMENT BY ANDREW DAVIS, EXECUTIVE DIRECTOR OF THE ILLINOIS STUDENT ASSISTANCE COMMISSION ON TODAY’S $1.03 BILLION STUDENT LOAN PORTFOLIO SALE

“Today, the Illinois Student Assistance Commission (ISAC) closed the sale of $1.03 billion in student loans to National Education Servicing, LLC a Delaware company with offices in downtown Chicago.  Most of the sale proceeds will be used to retire a portion of ISAC’s existing debt.  The remaining proceeds will be used to finance new student loans.

“When we began this process of recasting ISAC as an Illinois-focused agency, only 29 percent of ISAC’s student loans were to Illinois borrowers.  Now, three transactions later, 88 percent of the portfolio is comprised of loans to Illinois borrowers.  This sale benefits Illinois taxpayers, students, parents and institutions of higher education.

“In light of changes in the student loan industry, uncertainties in federal higher education subsidies and turbulence in global credit markets, we are even more confident in our decision to exit the business of lending to Utah students who attend college in Boston. 

“So, as ISAC celebrates its 50th anniversary, we are returning full circle to our origins: an agency dedicated to ensuring that no Illinois resident will be denied a quality education due to financial limitations.  Our focus going forward is entirely on Illinois students.”

FACTS ABOUT TODAY’S SALE:

• About $1.03 billion in loans were put out for bid.  More than 30 entities were invited to bid, from which three bids were received.  National Education Servicing, LLC of Wilmington, Delaware (with offices in Chicago) submitted the winning bid.  As with the first two transactions, Morgan Stanley and Gardner, Underwood and Bacon acted as financial advisors on this sale. 
  
• This sale represents 151,770 loans made to 86,818 borrowers.  About 80 percent of the loans carry an interest rate ranging between 6.5 and 7 percent.   The borrowers’ average indebtedness is $11,480.
  
• The sale will provide the Commission in excess of $1 billion in proceeds.  The sale, plus some refinancing, will also enable ISAC to retire about $500 million in outstanding bonds and refinance long-term an additional $500 million in bank-based loans.
  
• This is ISAC’s third major loan portfolio sale.  In January, 2007, ISAC sold $648 million in loans to Sallie Mae and National Education Loan Network (Nelnet).  In July, 2007, ISAC sold $1.38 billion in loans to the Brazos Higher Education Service Corporation and Panhandle-Plains Higher Education Authority.
  
• Once this transaction is completed, ISAC will hold $1.2 billion in loans.  This revised portfolio will be heavily Illinois-nexus.  Today’s transaction helps ISAC further simplify its capital structure.

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.