For the first time in three years, the state will offer to sell at least $150 million of Illinois College Savings Bonds through banks and brokerage houses next month, Gov. Jim Edgar announced Thursday.
Expansion of the previously successful college-bond program had been caught in the crossfire of Republican and Democratic sniping in recent years, which prevented lawmakers from approving new debt to allow sales of the bonds.
But in the spring legislative session, lawmakers finally approved a comprehensive state bonding bill that allowed the resumption of college bond sales.
Officials in the Edgar administration said an initial $150 million in bonds will be sold from Oct. 20 through Oct. 23, although the offering may be increased if demand is high.
Traditionally, that has been the case. The bonds have been popular not only for parents planning to deal with escalating college expenses for their children but also among investors attracted by the tax-exempt status of the zero-coupon bonds.
The bonds to be offered next month will pay $5,000 at maturity with costs ranging from about $1,600 for a bond that matures in 22 years to $4,300 for a bond maturing in four years. The actual price of the bonds will depend on market conditions at the time of the sale.
The bonds are exempt from both federal and state income taxes and the purchase of up to $25,000 in bonds will not reduce a student’s eligibility for some state loan and education assistance programs.
Parents who use the bonds to help defray college costs at Illinois schools also are eligible for bonuses from the state Student Assistance Commission. Such bonuses have previously ranged from about $80 to $440 per bond.
The state began the college bond sales program in 1988. When they were last offered in October 1994, $209.8 million in bonds were rapidly sold.
Lawmakers next month also are expected to approve Edgar’s technical changes to a bill giving parents another college funding option. That measure would allow them to take part in a state-sponsored tuition prepayment program aimed at locking in current rates for future tuition costs.
