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The sale enables ISAC to continue funding the new MAP Plus program,
first proposed by Governor Blagojevich and then approved by the
General Assembly in 2006, in which recipients are eligible for
grants up to $250 per semester to cover tuition and mandatory fees
for the 2006-07 academic year. Funding for MAP Plus is projected at
$34.4 million, which will assist 70,000 middle-income students make
their college education more affordable. The winning bidders are
Sallie Mae and Nelnet (National Education Loan Network).
Voting "yes" on the proposal were ISAC Chairman Don McNeil
(Chicago), Vice-Chairman Warren "Bo" Daniels, Jr., (Chicago), and
Commissioners Sharon Alpi (Decatur), Dr. Lynda Andre (Edwardsville),
Dr. Mary Ann Louderback (Cary), Hugh Van Voorst (Union Hill), David
Vaught (Naperville) and Student Commissioner Ashley Dearborn
(Chicago).
The sale signals the beginning of a process to make ISAC's loan
operation more "Illinois-centric" by selling some of the existing
portfolio's older loans, many issued to students from other states,
and ensuring that sale proceeds are directed to MAP Plus grants,
which benefit Illinois students attending Illinois schools.
"We're pleased with the terms of this sale," said ISAC Executive
Director Andrew Davis. "This is the first step towards the ultimate
goal of offering a suite of financial assistance programs that
jointly comprise a comprehensive solution to the financial problems
that routinely block Illinois students from pursuing and completing
a college education."
The sale was supervised by the consulting firms Morgan Stanley
and Gardner, Underwood and Bacon. Terms of the sale required
purchasers to keep in place all the benefits borrowers enjoyed while
their loans were held by ISAC, including reductions in interest
rates awarded for prompt payment.
"This was the right time for this sale, and these revenues are
going for the right purpose," Davis said. "The MAP Plus payment will
ease the pain of tuition inflation for 70,000 college students and
their families across Illinois."
All of the loans in the sold portfolio are federally guaranteed.
The sale affects 42,446 borrowers with 75,370 loans. The "average
borrower indebtedness" is $15,280. Notification of the borrowers by
ISAC will occur in the next two weeks.
"This sale protects the borrowers, benefits Illinois students and
redefines ISAC's place in an increasingly competitive student loan
industry," ISAC Chairman McNeil said. "This is an opportune time for
ISAC to gradually exit the business of helping students from Utah to
attend college in Boston. We want to focus on keeping good Illinois
students right here in Illinois."
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 "In the highly competitive student loan market, ISAC's place is
in its home. We do not have to be players in a nationwide market
increasingly dominated by big private lenders," McNeil said. "After
a thorough analysis by our financial advisors, we identified
specific portions of the $4 billion loan portfolio that could be
sold without any adverse impact on borrowers to generate funds for
innovative programs such as MAP Plus."
Portions of the portfolio sold by ISAC were already serviced by
these two nationwide lenders
-- Nelnet and Sallie Mae -- and that remains unchanged.
Another partial sale of ISAC student loans is expected later this
spring to fund need-based FY2007 Monetary Award Program (MAP)
appropriations.
Inspired by the unparalleled success of MAP, legislation creating
MAP Plus was first proposed by Governor Blagojevich in early 2006,
approved by the General Assembly and signed into law by the Governor
in July 2006, to directly aid college students from Illinois
middle-income families. MAP Plus provides up to $500 to each
eligible college sophomore, junior and senior not receiving
need-based MAP grants. The typical household income of a MAP Plus
recipient is $81,000.
At the bill-signing, Governor Blagojevich said, "MAP Plus is the
first grant program ever in Illinois specifically designed to help
middle-income families afford the high cost of college. Imagine if
you're a parent working hard, trying and struggling to afford to
send your child -- or children -- to college. This $500 will make a
difference."
Students do not need to complete a separate application for MAP
Plus; their eligibility is automatically determined based on
information provided on the FAFSA (Free Application for Federal
Student Aid).
Sallie Mae is the nation's largest provider of student loans,
owning or managing loans for more than 10 million customers.
Originally created in 1972 as a government-sponsored entity, Sallie
Mae completed its privatization in 2004.
Nelnet is among the nation's leaders in student loan asset
management, with more than $22.9 billion in net student loan assets.
Founded in 1978, Nelnet serves students in all 50 states. Its
software is used to service $65 billion in student loans.
Created in 1957, ISAC is the state's central provider of college
aid. The agency oversees the successful Monetary Award Program
(MAP), as well as the new MAP Plus program, Illinois Veteran Grant
program, and service-related programs to encourage more students to
pursue careers in teaching or nursing. Last year, ISAC issued
185,000 grants totaling $400 million and guaranteed $1.24 billion in
loans to 232,631 students. Its 529 prepaid tuition program --
College Illinois! -- has enabled Illinois families to prepay more
than $1 billion in tuition and fees.
(Text copied from
Illinois Student Assistance
Commission news release received from the
Illinois Office of Communication and Information) |
