ISAC Awarded University of Chicago Loan Plan

For Immediate Release               Contact:

12 September, 2000               Michael Adams
                     Public Information Officer
                     Illinois Student Assistance Commission
                     1-847-831-8299
                     madams@isac.org

ISAC Awarded University of Chicago Loan Plan
Over $60 Million Anticipated To Benefit More Than 2,200 Student-Borrowers Per Year

DEERFIELD, IL -- Senior executives of the Illinois Student Assistance Commission (ISAC) and the University of Chicago announced today a long-term comprehensive student loan agreement that reduces customary fees by 50 percent and lowers interest rates for borrowers who repay loans on time. The agreement to fund and service the University of Chicago Loan Plan" was awarded via competitive bid, and can extend through June 2007. ISAC, represented by the Illinois Designated Account Purchase Program (IDAPP, the agencys loan servicer), was the incumbent in the bidding process.

   In 1996, ISAC presented us with a unique, comprehensive loan program designed to put the student-borrower first," commented Michael Kocelko, Bursar of the University of Chicago. We are, of course, very pleased at the prospect of continuing our partnership with ISAC and IDAPP for the long-term."

    The four-year base agreement has no cap on the amount to be loaned, although the partners anticipate lending amounts in excess of $60 million per year. More than $40 million is expected to be provided as guaranteed Stafford loans under the Federal Family Educational Loan Program (FFELP), which will make the University of Chicago one of the five largest educational lenders under FFELP. An additional $20 million or more is expected to be provided under the University of Chicago Alternative Loan Program.

   Generally speaking, graduate and professional school students may borrow up to $18,500 annually under the Stafford program. Interest rates on Stafford loans vary, but are based on the 91-day Treasury Bill, and are adjusted each July 1. Interest on both subsidized and unsubsidized loans (the federal government pays the interest on subsidized loans while the student is in school) is capped, however at 8.25%.

   Under the University of Chicago Alternative Loan Program, graduate students (who need not be full-time students if they are employed full-time) will be able to borrow amounts equal to the cost of education minus financial aid awards. Undergraduate students may borrow up to $10,000 annually. Interest rates are based on the 91-day Treasury Bill (plus 2.5% - 3.4%) and are adjusted quarterly.

   Apart from the significant volume of loans and competitive interest rates, ISAC is especially pleased to be able to offer such a comprehensive package of financial terms and services to the students of the University of Chicago," noted Larry E. Matejka, Executive Director of ISAC. In particular, we are very proud that, in cooperation with the University of Chicago, ISAC is able to reduce fees to student- borrowers by 50 percent."

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ISAC/University of Chicago -- 2

Both loan programs present features that should ease student debt management. Stafford loans feature: the exclusion of the customary 1 percent guarantee fee; an origination fee 1 percent lower than the usual 3 percent; and; an interest rate reduction for borrowers who make timely payments. Alternative Loans feature a zero percent insurance fee for most borrowers.

   While the University of Chicago will make the Stafford Loans directly available to students, IDAPP will make loans directly to students under the Alternative Loan Program. IDAPP will also provide a single point of contact" for both guaranteed and alternative loans and life of the loan" servicing. To help achieve the single point of contact" IDAPP will offer University of Chicago students the ability to make a single monthly payment for all loans serviced by IDAPP, even in those cases where students have multiple loans that are not eligible for consolidation.

   The Illinois Student Assistance Commission is a state agency whose work is overseen by ten Commissioners appointed by the Governor. With offices in Springfield, Deerfield and Chicago, the agency has been in the business of helping Illinoisans afford college for more than 40 years, and is the primary provider of state and federal student financial assistance in Illinois.
   

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