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The Office of Illinois State Treasurer Michael W. Frerichs is invested in Illinois students. Even as college costs continue to rise, pursuing higher education remains the most sustainable path to career success. In 2019, Illinois Treasurer Frerichs spearheaded and received the authority to create new financial pathways for Illinois students to complete their studies and/or refinance their student loans post-graduation through the Student Investment Account Act (PA 101-586). The tools created under the Act will complement federal loan programs and Illinois’ existing grant and scholarship programs, helping students find affordable ways to pay for higher education. It permits the State Treasurer to invest up to five percent of the State Investments portfolio (approximately $800 million), on a recurring basis, in affordable and responsible education loans products such as low-interest loans and other innovative financing products for Illinois residents with higher education expenses and loans. Together, we’re working hard to make college more accessible and helping to eliminate expensive student debt for Illinois residents.


The Student Investment Account Act is an Impact Investment

Financial: It will provide an estimated net annual return to the State Investments portfolio similar to a 10-year Treasury; excess net proceeds may be utilized to provide loan forgiveness, loan forbearance, loan deferments, hardship assistance, scholarships and/or educational grants.

Economic: It will provide Illinois families with additional financial capacity to purchase homes, start families, save for education and retirement, start businesses, and invest in their potential.

Social: It will improve access to affordable education by improving financing options for Illinois middle- and lower- income families, people of color, and other communities who are not currently served by the private lending market.


Implementation Timeline

Implementation Timeline Chart for Student Loan Initiatives

New Models for Funding Post-Secondary Education in Illinois

The Milken Institute, in collaboration with the Treasurer’s Office, has published their findings and recommendations for improving education financing in a report titled: New Models for Funding Post-Secondary Education in Illinois. The report highlights the insights gained though several months of research, interviews, and Financial Innovations Labs to provide key considerations for the Student Investment Account.


The study begins by detailing the market landscape for student financing on a national and state level. Following, the report explores several barriers to higher education financing and completion for students, including complicated borrowing processes and the disparate access to financing products in minority and low-income communities.


Acknowledging current market needs and leveraging the insights gathered though Milken’s research and their Financial Innovations Labs, the report also provides potential solutions and recommendations, including product offerings, alternative underwriting criteria, and partnership options.


Click here to read the report.


Why Invest in Student Loans?

For the 2017–18 academic year, annual current dollar prices for undergraduate tuition, fees, roomand board were estimated to be $17,797 at public institutions and $46,014 at private nonprofit institutions, far above annual federal loan limits.1, 2 Increasingly, private student loans are filling in the gaps that federal, grant, and scholarship aid fails to cover.

Student loan debt has been found to delay home purchases, business start-ups, and other major economic investments.  Alleviating debt for Illinois borrowers will generate increased personal investment and fuel our state’s economic growth. Seventeen percent of Illinois residents – more than 2 million people – carry student loan debt, the average value of which is $29,855.Twelve percent of those borrowers have student loan debt in collections. Furthermore, traditionally underrepresented college students, such as low-income, first-generation, and African-American students, are more likely to have higher than average balances, often under predatory or unfavorable private loan terms. As private student loans increasingly fill the gap, it is important that students have access to competitively-priced, consumer-friendly products.


By investing with patient, long-term capital, the State Treasurer can deliver education finance products at competitive rates that are advantageous to Illinois students. The capital may be used to refinance existing loans at below-market rates, provide capital to underrepresented groups, and deliver promising, innovative financing products – such as income share agreements – to finance higher education on borrower-friendly terms. Alleviating inequality in student lending in our communities is a critical step towards economic equity and enhanced consumer protections.


The Student Investment Account Act will alleviate student debt burdens in Illinois and make it possible for more students to pursue higher education. It is an investment in Illinois’ future and part of a comprehensive approach — which includes award-winning college savings accounts — to improve access to higher education.

National Center for Education Statistics, 2020
Federal Student Aid 2020
College Insight, 2020



Projected Investment Breakdown

Through the Student Investment Account Act, the State Treasurer’s Office will establish a number of underlying objectives for the investment of capital – including maintaining a diversified investment portfolio. While subject to change based on feedback and market conditions, initial projections are as follows:


  • $550 million: Refinancing the student loans of Illinois graduates with consumer friendly, lower interest-rate products.
  • $200 million: Providing low-cost, responsible capital to students from underrepresented groups or households with low incomes or low credit scores.
  • $50 million: Supporting innovative financing products, such as income share agreements, which are equity-like investments based on the graduate’s salary and typically require borrowers to pay a percentage of their income post-graduation for a set period of time.


These $550 million, $200 million, and $50 million amounts are expected to be proportionately deployed over approximately seven years. Payments will fund new investments on a recurring basis in perpetuity.

Stakeholder Engagement

To prepare for the launch of the Student Investment Account, we have taken a comprehensive approach to ensure we understand the student loan landscape from every angle. Over the last several months, we have formalized partnerships with the Milken Institute and the Student Borrower Protection Center (SBPC), spoken to numerous stakeholders and Illinois constituents, hosted virtual information gathering panels, and issued procurement opportunities related to the Student Investment Account.

Community Input

Beginning in 2020, several community roundtable discussions were planned at sites across Illinois to solicit input, insights and perspectives on borrower needs. The State Treasurer’s Office engaged with constituents and stakeholders in Champaign-Urbana, Rockford, and DeKalb, though latter planned sessions in central and southern Illinois were cancelled due to COVID-19.


Stakeholder Meetings

Since 2019, the Treasurer’s Office has held meetings with stakeholders across the student loan industry to gain insights on the student lending landscape and perspectives into key considerations for the Student Investment Account.


Stakeholders included colleges and universities, investment banks, student loan providers, non-profits, ISA providers, individual students, state and higher education agencies, foundations, loan servicers, and loan originators.


Strategic Partnerships

By engaging in strategic partnerships with the Milken Institute and the Student Borrower Protection Center, the State Treasurer’s Office will be able to enter this new investment territory with insights into implementing capital market solutions centered around equity and consumer protections.


The Milken Institute

The Milken Institute is a nonprofit, nonpartisan think tank that publishes research and hosts programming and conferences that apply innovative, market-based solutions to social issues. Through our partnership, they spearheaded the development of a comprehensive market study of the student loan market, issues, and possible solutions. In addition, they hosted a virtual Financial Innovations Lab on New Models for Funding Post-Secondary Education in Illinois.  These series of roundtable discussions explored the present challenges and potential viable solutions in the higher education lending market.


Student Borrower Protection Center

The Student Borrower Protection Center (SBPC) is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. As a partner with the Illinois State Treasurer, the SBPC provides insights on borrower-friendly program design, consumer protections, and current events that impact the student lending market.


Financial Innovations Lab

In June 2020, the Treasurer’s Office, in collaboration with the Milken Institute, hosted a virtual, five-part Financial Innovations Lab. The discussions focused on consumer protections, alternative credit guidelines when evaluating potential borrowers, and income-share agreements with regulatory experts, state agencies, and market participants.


Request for Information

In May 2020, the State Treasurer’s Office published a request to solicit formal feedback from interested stakeholders on the structure and design of the platform. This also served as an additional opportunity for interested parties to submit feedback to us, if not otherwise engaged.


Request for Proposals

In June 2020, the State Treasurer’s Office solicited responses for a Strategic Investment Advisor that is qualified to provide both capital market advisory services and financial insights on the program development, design and implementation of the Student Investment Account.

How Can I Participate?

The Student Investment Account Act is not a direct lending program. Instead, the State Treasurer’s Office will make investments in existing firms and funds that will lead to the creation of low-interest loans and other financing products. As we facilitate investments beginning in 2021, the programs and products developed under the Student Investment Account Act will be featured at


How Can Financial Institutions Participate?

Financial institutions including, but not limited to, investment banks, student loan servicers, direct lenders, and income share agreement providers interested in collaborating with the State Treasurer’s Office to develop, finance or manage a student loan financing product should reach out to

RFPs, RFIs, and invitations to bid are posted on the Treasurer’s Procurement page. To receive automatic email notifications when new procurement opportunities are issued, sign up for the procurement notification system.