The Illinois state treasurer’s office has introduced a new private loan program aimed at helping students pay for their college education. The Funding U Illinois No-cosigner Loan is designed for Illinois residents who are attending either public or private institutions within the state.
The loan offers fixed annual percentage rates ranging from 7.99% to 9.49%, providing a flexible option for students struggling to secure traditional college loans.
One of the key features of this loan is that it does not consider the student’s credit score, which can often be a barrier for many young individuals.
Treasurer Michael Frerichs highlighted the importance of this initiative, emphasizing that it aims to provide an opportunity to students who do not have access to a co-signer and are often excluded from other loan options.
He believes that talent is spread equally across different socioeconomic groups, but unfortunately, universities tend to be filled with children from privileged backgrounds.
This loan program seeks to address that imbalance by helping all students reach their greatest potential, regardless of their financial background.
The loan program is particularly helpful for students who have already exhausted other financial aid options, such as scholarships, grants, or other forms of assistance. It is part of the state treasurer’s Student Empowerment Fund, which was launched in 2023.
The fund is designed to make investments with student loan providers that offer lower interest rates than those provided by private entities. The lenders involved in this program make interest payments to the treasurer’s office, which in turn helps fund more loans for Illinois students.
Jeannie Tarkenton, the founder and CEO of Funding U, also supported the initiative, stating that those who benefit the most from completing higher education or specialized training are the young people that should be invested in.
She emphasized the role of education in improving economic mobility, which can have long-lasting benefits for individuals and communities.
In addition to the No-cosigner Loan, the Illinois treasurer’s office also offers loans to families. The Illinois College Family Loan offers lower interest rates, ranging from 3.45% to 6.77%, which are significantly lower than the federal Direct PLUS Loan’s 9.08% fixed rate.
However, borrowers or their co-signers must have a credit score of at least 660 to qualify.
Chelley Jackson, the president-elect of the Illinois Association of Student Financial Aid Administrators, pointed out that private loans can come with interest rates ranging from 3.35% to 17.99%, depending on creditworthiness and the availability of a co-signer.
She also stressed the importance of students understanding their options and making the best financial decisions for their future.
The availability of various loan options can be beneficial, as it allows students to find terms and conditions that best suit their individual needs.