Eight Illinois credit unions have agreed to help plug the growing hole in student loan funding by investing $100 million in securities to fund Stafford loans for Illinois students.
The securities would be issued by the Illinois Student Assistance Commission, the government agency that funds educational aid in Illinois. The plan is expected to be voted on by the commission on Friday.
The agreement, which could fund as many as 20,000 students, was brokered by the Illinois Credit Union League. Participants in the talks included Alliant Credit Union in Chicago and Baxter Credit Union in Vernon Hills.
The Stafford loans would range from $3,500 to $20,500 and carry an interest rate of 6.8%; up to 97% of the principal and interest of each loan is to be guaranteed by the federal government. The state agreed to guarantee the remaining 3%.
The deal is the latest by credit unions to help troubled state student loan agencies. Last month, Northeast Credit Union pledged $10 million to help fund loans through the New Hampshire Higher Education Assistance Foundation.
