In the United States, the outstanding student loan debt sits at $1.61 trillion, making it the second-largest form of consumer debt, trailing only mortgages. As college gets more expensive every year, many students are forced to take on larger student loans, which only worsens the issue.
According to LendEDU’s Student Loan Debt by School by State Report, Illinois’ average student debt per borrower figure is $29,692, which is the 21st highest in the country.
Further, the debt per borrower figure in Illinois has seen a year-over-year increase of 4.46%, outpacing inflation significantly. Some of the schools in the state with the highest debt figures include Judson University ($39,724), VanderCook College of Music ($35,559), and Loyola University Chicago ($35,509).
On the other end, some Illinois colleges such as Northeastern Illinois University ($16,220), Eureka College ($16,657), and Northwestern University ($19,718), posted low student loan debt figures and helped keep Illinois’ statewide figure from joining the worst states.
Illinois has taken some steps to address the issue of rising student loan debt, most notably by passing a student loan bill of rights that aims to prevent student loan servicers from misleading borrowers, while also keeping borrowers informed about their debt and repayment options.
Since 2017, not much other concrete action has been enacted in the state; however, there are a few Illinois-based policy proposals that have the potential to greatly reduce the burden that student loan debt places on so many young Americans.
Illinois’ own Sen. Dick Durbin recently proposed legislation in Washington, D.C., that would make student loan debt just as easily dischargeable in bankruptcy as other forms of debt.
In addition, Illinois State Treasurer Michael Frerichs’ has proposed the Illinois Student Loan Investment Act which would enable the state treasurer’s office to refinance the student loans of an Illinois resident at a lower interest rate to make repayment easier, and hopefully, cheaper. If passed, Frerichs’ office would be able to loan up to 5% of the $31 billion it currently manages, or $620 million.
Initially, the program would cost up to $150,000 for Illinois, but that cost would ideally be covered overtime from interest on payments made by Illinois borrowers. Currently, the proposed legislation has passed through the House and now awaits a ruling from the Senate, which has re-referred the bill to assignments.
While the policy proposal would cost a bit upfront, the potential benefits to the statewide economy greatly outweigh the costs. If Illinois borrowers can refinance their student loans at a lower rate, they will be able to repay their loans faster and move closer to achieving other financial goals that benefit the whole economy.
Without student loan debt to worry about, young Illinois residents can get married and have children, buy homes, start businesses, and invest – all of which will bolster Illinois’ economy.
• Michael Brown is a research analyst with LendEDU.