Decision on selling student loans near
A state panel is nearing a decision on the potential sale of Illinois’ student loan portfolio, an idea some lawmakers describe as financially foolhardy.
But the Illinois Student Assistance Commission, which manages the state’s student loan portfolio, needs to find a way to pay for a new $34 million grant program Gov. Rod Blagojevich signed into law last weekend. The MAP Plus program, in effect only for the 2006-07 school year, will provide grants of up to $500 to college sophomores, juniors and seniors with family incomes below $200,000.
ISAC chairman Donald McNeil said Friday that the panel’s options are to sell the entire student loan portfolio, sell part of it or restructure it. McNeil said that restructuring, which is analogous to refinancing a home mortgage, would result in cost savings.
ISAC is in the “final stages” of selecting one or more financial advisers to help it negotiate on whatever it chooses to do, he added.
“It’s not just the sale of some or all of the loan portfolio,” which is about $3.8 billion, McNeil said. The commission also will consider possible outsourcing of current agency work, such as servicing student loans.
Commission members are committed to doing their best to ensure that in the event of a sale, ISAC employees wind up with “substantially equivalent positions,” he said.
“We’re very sensitive, very concerned about preserving jobs” as much as possible, McNeil said, adding that the panel will not do anything to endanger the quality of ISAC services.
ISAC spokesman Claude Walker said the sale or restructuring process should be wrapped up by the end of this year, so MAP Plus grant money can be distributed for the fall 2006 and spring 2007 semesters. He said schools would be reimbursed later for grants that cover the approaching fall semester.
Some Republican lawmakers, especially those who live close to college towns, have expressed opposition to the notion of selling the student loan portfolio. The idea first surfaced when Blagojevich’s budget director discussed it on the second-to-last day of the spring 2005 legislative session.
Rep. Chapin Rose of Mahomet, near the University of Illinois at Urbana-Champaign, said his main concerns are whether students and taxpayers will get a fair deal.
“The governor has made a promise (with MAP Plus), and they still don’t know how they’re going to pay for it,” he said. “This is exactly why this is such a disastrous idea to begin with.”
Rep. Richard Myers, a Colchester Republican whose House district includes Western Illinois University, said his views on selling the student loan portfolio remain unchanged from a year ago.
“I still think it’s wrong,” he said. “I think we need to hang onto as many assets as we can.”
Myers fears that by selling the student loan portfolio, the state would be opting for a quick infusion of cash while sacrificing future assets and jeopardizing loans to the next generation of students. The same risk exists with the governor’s proposal to sell or lease the state lottery to generate extra money for education, he said.
Source: http://www.sj-r.com/sections/news/stories/92639.asp
But the Illinois Student Assistance Commission, which manages the state’s student loan portfolio, needs to find a way to pay for a new $34 million grant program Gov. Rod Blagojevich signed into law last weekend. The MAP Plus program, in effect only for the 2006-07 school year, will provide grants of up to $500 to college sophomores, juniors and seniors with family incomes below $200,000.
ISAC chairman Donald McNeil said Friday that the panel’s options are to sell the entire student loan portfolio, sell part of it or restructure it. McNeil said that restructuring, which is analogous to refinancing a home mortgage, would result in cost savings.
ISAC is in the “final stages” of selecting one or more financial advisers to help it negotiate on whatever it chooses to do, he added.
“It’s not just the sale of some or all of the loan portfolio,” which is about $3.8 billion, McNeil said. The commission also will consider possible outsourcing of current agency work, such as servicing student loans.
Commission members are committed to doing their best to ensure that in the event of a sale, ISAC employees wind up with “substantially equivalent positions,” he said.
“We’re very sensitive, very concerned about preserving jobs” as much as possible, McNeil said, adding that the panel will not do anything to endanger the quality of ISAC services.
ISAC spokesman Claude Walker said the sale or restructuring process should be wrapped up by the end of this year, so MAP Plus grant money can be distributed for the fall 2006 and spring 2007 semesters. He said schools would be reimbursed later for grants that cover the approaching fall semester.
Some Republican lawmakers, especially those who live close to college towns, have expressed opposition to the notion of selling the student loan portfolio. The idea first surfaced when Blagojevich’s budget director discussed it on the second-to-last day of the spring 2005 legislative session.
Rep. Chapin Rose of Mahomet, near the University of Illinois at Urbana-Champaign, said his main concerns are whether students and taxpayers will get a fair deal.
“The governor has made a promise (with MAP Plus), and they still don’t know how they’re going to pay for it,” he said. “This is exactly why this is such a disastrous idea to begin with.”
Rep. Richard Myers, a Colchester Republican whose House district includes Western Illinois University, said his views on selling the student loan portfolio remain unchanged from a year ago.
“I still think it’s wrong,” he said. “I think we need to hang onto as many assets as we can.”
Myers fears that by selling the student loan portfolio, the state would be opting for a quick infusion of cash while sacrificing future assets and jeopardizing loans to the next generation of students. The same risk exists with the governor’s proposal to sell or lease the state lottery to generate extra money for education, he said.
Source: http://www.sj-r.com/sections/news/stories/92639.asp
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