SPRINGFIELD, Ill. - Eight credit unions have agreed to help plug the growing hole in student loan funding by investing $100 million in securities to fund new Stafford loans for Illinois students.
The securities will be issued by the Illinois Student Assistance Commission, the government agency that funds educational assistance in Illinois. The plan is expected to be voted by the Commission Sept. 19.
The agreement, which could provide funding for as many as 20,000 students, was brokered by the Illinois CU League, which worked with several large credit unions to obtain financing, including Alliant CU, Baxter CU and Motorola FCU, among others.
The Stafford loans will range from $3,500 to $20,500; carry an interest rate of 6.8%; and up to 97% of the principle and interest of each loan will be guaranteed by the federal government. To sweeten the pot for participating credit unions, the state agreed to guarantee the remaining 3%.
The deal is the latest by credit unions to help troubled state student loan agencies. In July, State Employees CU agreed to provide $1.1 billion in funding to the North Carolina State Education Assistance Authority. Last month, Northeast CU pledged $10 million to help fund loans through the New Hampshire Higher Education Assistance Foundation.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
