The Illinois state treasurer’s office is launching a new private loan program for students attending Illinois colleges and universities.
The Funding U Illinois No-cosigner Loan is open to Illinois residents attending public or private institutions. The fixed annual percentage rate ranges from 7.99% to 9.49%.
The loan does not take the student’s credit score — or lack thereof — into account. The idea is to give students who don’t have access to a co-signer and struggle with obtaining traditional college loans another option, Treasurer Michael Frerichs said.
“I’m a firm believer that talent is spread out equally amongst different socioeconomic groups,” Frerichs said. “But, if you look at our universities, they’re overwhelmingly children of privilege, and we want to make sure that everyone has an opportunity to reach their greatest potential.”
Frerichs said it’s an attractive option for students who may have maxed out on their financial aid, grants and scholarship opportunities. The loan is part of the state treasurer’s Student Empowerment Fund. Launched in 2023, the fund makes investments with student loan providers that lend to Illinois residents, in an effort to provide loan options at lower rates than other private entities. The lenders then make interest payments to the state treasurer’s office that go back to providing more loans for Illinois students.
“Those who can most benefit from the economic mobility that comes from completing a secondary degree, a post secondary degree or training, are exactly the young people that we should be investing in,” Funding U Founder and CEO Jeannie Tarkenton said.
Frerichs’ office also offers loans for families. The Illinois College Family Loan has interest rates that range from 3.45% to 6.77%, lower than the federal Direct PLUS Loan’s 9.08% fixed rate. Borrowers or their co-signers must have a credit score of at least 660.
Chelley Jackson, the president-elect of the Illinois Association of Student Financial Aid Administrators, said a student could see an interest rate of anywhere between 3.35% and 17.99% for private loans, and that rate is based on creditworthiness or lack of a co-signer.
“In the private student loan industry, there are various options available, each with different terms and conditions,” Jackson said. “The thing to note is that it is important for students to act in their best interest, and having more options available can be beneficial.”
Contributing: Shannon Tyler