ISAC Supports Student Loan Reform Proposal

Option Preserves Consumer Choice, Taxpayer Savings, and Jobs
 
CHICAGO—The Illinois Student Assistance Commission (ISAC) and its student lending division, the Illinois Designated Account Purchase Program (IDAPP) joined a diverse coalition of lenders, guaranty agencies, secondary markets, and servicers representing all sectors of the student loan community – non-profit, for-profit, and state-based – in supporting a reform proposal that builds on President Obama’s student loan plan.  The Student Loan Community Proposal should achieve the same level of taxpayer savings for student financial aid, while preserving consumer choice, borrower default-prevention programs, and jobs here in Illinois.
 
In a joint statement, coalition members said, “The student loan community’s proposal offers the best of both worlds -- it melds the President’s proposal’s cost-saving features with tried and true program elements that have served families well since 1965: consumer choice, superior service, innovation, local administration and borrower default prevention programs.”
 
The Student Loan Community Proposal endorses the core principles of the Administration’s reform effort -- using federal funds to guarantee the stability of student loan financing, eliminating subsidies to private lenders, and generating historic savings for student financial aid -- while maintaining choice, competition, superior service for students and schools and preserving Illinois jobs.
 
In addition, the proposal meets these goals without the significant transition risk assumed by 4,500 schools that comes from the Administration’s planned government takeover of more than $60 billion in private-sector-originated student loans in less than six months. It guarantees taxpayer savings will be available to deliver on the Administration’s proposal to expand the Pell Grant program by establishing a fee-for-service system for loan originations, servicing, and collections to be performed by student loan service providers of a student’s or school’s choice.  
 
This Student Loan Community Proposal also achieves the following:

• Allows schools to maintain the ability to choose Illinois not-for-profit and state-based agencies to provide originations or servicing in their state;
  
• Permits current originators to continue to provide origination services if schools or students choose them, eliminating the massive transition risk that comes from requiring thousands of schools to immediately change programs;
  
• Incorporates “risk sharing” incentives on loan servicing, generating further savings and significantly reducing defaults;
  
• Expands default prevention assistance, counseling, financial literacy, and advocacy programs from guaranty agencies to all students and families; and,
  
• Preserves the 35,000 jobs that comprise the existing student lending infrastructure.

“The consensus plan presents the best solution for Illinois students and families, allowing them to stay with their current student loan provider and eliminating the massive transition risk that comes with forcing thousands of schools to immediately change course,” said ISAC Executive Director Andrew Davis. "We are proud to support this comprehensive student loan reform effort because it is in the best interest of students, families and schools here in Illinois."
 
Aside from ISAC and IDAPP, the initial list of signatories to the plan includes Citizens Bank, Brazos Higher Education Service Corporation, Edfinancial Services, Educational Credit Management Corporation, Edsouth, Finance Authority of Maine, Florida Department of Education – OSFA, Georgia Higher Education Assistance Corporation, Georgia Student Finance Authority, Kentucky Higher Education Assistance Authority, Kentucky Higher Education Student Loan Corporation, Missouri Department of Higher Education, Missouri Higher Education Loan Authority, National Student Loan Program, Nelnet, New Mexico Student Loans, New York State Higher Education Services Corporation, NHHEAF Network, North Carolina State Education Assistance Authority, Northwest Education Loan Association, PNC Bank, Rhode Island Higher Education Assistance Authority, Sallie Mae, Student Loan Guarantee Foundation of Arkansas, SunTrust Banks, Inc., Tennessee Student Assistance Commission, The Student Loan Corporation, USA Funds, Utah Higher Education Assistance Authority, and the Wyoming Student Loan Corporation.
 
The Illinois Designated Account Purchase Program was started in 1977 and is the student loan division of ISAC.  Last year, IDAPP originated $177 million in student loans to more than 32,000 borrowers, providing expert loan service and advice to students, schools and financial institutions in Illinois.
 
The Illinois Student Assistance Commission provides students of all ages and backgrounds with the resources and support to obtain financial aid for higher education. A state agency, ISAC has paved the path to post-secondary education with innovative programs for over 50 years. Last year alone, ISAC continued its mission to make college accessible and affordable for Illinois students by issuing more than 186,000 grants and scholarships totaling nearly $431 million. 
 
The Commission provides educational funding with student loans, as a loan guarantor and via numerous public programs such as the Monetary Award Program (MAP), the Illinois Veterans Grant and College Illinois!® , the Commission’s groundbreaking 529 prepaid college tuition program. Students and families have free access to a wealth of financial aid and college planning information at ISAC’s family of websites available at www.knowhow2goillinois.org/.