ILLINOIS (IRN) — Illinois’ state treasurer could soon become the lien holder of your student loan debt.
An initiative of Treasurer Michael Frerichs’ office would allow him to refinance an Illinois resident’s college loans at low-interest rates in hopes that it will help them better afford their payments. The office could extend up to 5 percent of the $31 billion it manages to help with student loans. That’s about $620 million.
State Rep. Carol Ammons said the program would help reduce the number of local student loan defaults.
“The goal is to get the interest rate low enough so that people can really afford to make their payments,” she said.
Ammons said the interest rate would be set by the treasurer once the bill passes.
The treasurer’s office said there would be an upfront cost of $150,000, but the interest on payments from students should then cover the administrative costs thereafter.
State Rep. Mark Batinick, R-Plainfield, told Ammons that while helping those with student loan debt is laudable, he said the state shouldn’t put taxpayer dollars at risk given the high rate of defaults on student loans.
“We’re broke,” he said. “And, we’re asking the treasurer to become a lender.”
The bill appears to allow the treasurer’s office to pursue those who default on their loans with the same abilities that a bank would.
The bill could be changed once it is handed off to the Senate.