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Just in time for the 2008-09 academic year, several Illinois credit unions are investing in securities issued by the Illinois Student Assistance Commission (ISAC) that will provide more than $100 million in student loans, filling the void where other private lenders have stopped providing this critical financial support for college students.
With credit unions providing this significant financial backing, ISAC will be able to continue serving as a financial lifeline for thousands of college students throughout the state. Established in 1957 by the Illinois General Assembly via the Illinois State Scholarship Act, ISAC offers a range of scholarship and grant programs, and manages College Illinois!, the state’s Section 529 pre-paid tuition program enacted into law in 1997. Each year, the agency annually awards in excess of $1 billion to over 250,000 qualified applicants.
The involvement of Illinois credit unions began after other financial institutions that previously backed ISAC informed the agency they would no longer provide funding for its loans, a trend that is being felt by similar agencies across the country. After scrambling to investigate alternative funding options, ISAC executive director, Andrew Davis, learned through a credit union industry trade publication article that college funding agencies in North Carolina were working with a local credit union there to solve that state’s funding crisis. As a result, Davis contacted the Illinois Credit Union League (ICUL) and an initial meeting was set to discuss the possibility of working together.
After meeting with Davis, ICUL determined that investing in the bonds would be permissible under applicable provisions of the Illinois Credit Union Act, an opinion in which the Illinois Department of Financial and Professional Regulation (IDFPR) concurred. ICUL then met with several of its credit unions to determine their interest in investing in ISAC securities, and they in turn committed the $100.5 million. The credit unions that are stepping up to provide this essential investment support are:
- Alliant CU, Chicago
- Baxter CU, Vernon Hills
- CEFCU, Peoria
- Corporate America Family CU, Elgin
- Credit Union 1, Rantoul
- I.H. Mississippi Valley CU, Moline
- Motorola ECU, Schaumburg
- Scott CU, Collinsville
Without the support of Illinois credit unions, tens of thousands of students would have otherwise been forced to scramble to find an alternative financial package,” said Davis. “Our mission is to make college affordable for all Illinois students, and as not-for-profit financial cooperatives and their ‘People Helping People’ spirit, credit unions were a logical choice to help us fill the void.”
“We are pleased to team up with ISAC and back their efforts to help students get a quality education,” said Dan Plauda, president/chief executive officer of the Illinois Credit Union League (ICUL), the state association of credit unions.
“Earning a college diploma is crucial and on top of all of the other pressures of attending college, students should not have to additionally worry about whether or not their loan will fall through.”
The participating credit unions will purchase bonds issued by ISAC. The bond offering will consist of three series – funded in September 2008, December 2008, and March 2009. Participating credit unions will be requested to fund all three series for the 2008-09 school year. The maturity date of all three series is August 20, 2009.
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