ISAC to sell $1.3 billion in student loans

Sun Jun 24, 2007

Following up on a similar but smaller deal earlier this year, the Illinois Student Assistance Commission plans to sell about $1.3 billion worth of its student loan portfolio next month.

ISAC Chairman Don McNeil said Friday that agency officials estimate the "premium" on the sale will be between 4 percent and 5 percent, which means ISAC would make between $52 million and $65 million. The winning bidder or bidders would pay the premium in addition to the $1.3 billion face value of the loans.

The affected borrowers, mostly people outside of Illinois, won't see an increase in interest rates as a result of the sale, McNeil said. As was the case in January when ISAC sold a $648 million chunk of its portfolio, a condition of the pending sale will prohibit the winning bidder from diminishing borrowers' benefits.

He said proceeds from the sale would go to the Monetary Award Program, which provides need-based grants for college tuition and fees; to state government's general revenue fund, which is basically its checkbook account, and to ISAC.

Resource: http://www.macombjournal.com