State to Offer Students a Financial Incentive on Loans

[Jul 17, 2007.]

A number of government entities these days are trying their best to make school financing a bit easier for college students. Yet, students and recent graduates continue to feel the financial pinch that comes from having to take out several loans to pay for their tuition, books, supplies, housing, and meal costs.

In fact, the student loan burden can almost be unbearable for borrowers, particularly those who enter low-income professions upon graduating from college. While college graduates may value the education they've received, they may be demoralized by their student loan debt.

In light of these facts, the state of Illinois has come up with an innovative reward program for college graduates who are faced with huge student loan debt. It's run by the Illinois Student Assistance Commission, and it's called College Illinois! Capstone Loan.

Here's how the program works: it reduces a student loan balance by two percent for students who earn less than $30,000 and who make their student loan payments on time twelve months in a row. The program offers both an incentive for students to pay their loan bills on time, as well as offering hope to students who are low wage-earners barely able to make ends meet.

This marks the first time the Illinois Commission has actually agreed to cut loan balances, so it represents a milestone in student loan history.

In addition, the Commission is providing lower interest rates to those college students who select to remain in Illinois after graduation and who have salaries of less than $50,000.

It's unclear, at this point, how successful the programs will be in helping students to avoid default. With college costs continuing to skyrocket, an increasing number of graduates are finding themselves in financial trouble. In fact, staggering student loan debt may be one of the reasons why college graduates choose to move back home to live with their parents.

Julie Ann Amos
July 17th 2007

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• Repayment Options Abound for Those Consolidating Student Loans This Year
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