From the Office of State Treasurer Alexi Giannoulias
Illinois State Treasurer Alexi Giannoulias today announced the expansion of a state-run loan program so military personnel who experience financial difficulties have access to low-interest loans after their deployment ends.
Giannoulias’ office will now partner with local lenders to offer low-interest “Welcome Home Loans” to members of the Illinois National Guard and U.S. Military Reserve within six months of their honorable discharge from duty.
The Welcome Home Loans are available for up to $10,000 and their interest rate is capped at 3 percent. Previously, Guard and Reserve members were only eligible for the Citizen Soldier Program while on active duty.
“The debt we owe our citizen soldiers who have left behind their families and jobs to risk their lives for our freedom is immeasurable,” said Giannoulias, who unveiled the expanded Citizen Soldier program with local veterans during stops in Chicago, the Quad Cities area and Springfield. “We must do more to assist our military service members and their families when they encounter economic hardship upon returning home.”
There are more than 25,000 Reservists and National Guard members in Illinois, including 3,200 who returned home from Iraq last month and would be eligible for a Welcome Home Loan.
Giannoulias noted that the loans would serve as an alternative to predatory lenders and payday loan operators who prey on military families, especially during these difficult times. Although Congress has taken action to curb predatory practices targeting military personnel, the Center for Responsible Lending has singled out Illinois as a case where loopholes in federal law exist.
“Citizen soldiers should not have to take out a high-interest loan from a payday lender to cover their living expenses and wind up in an endless cycle of debt,” Giannoulias added. “These shady storefront operators are preying on those who are often at risk and deserve much better.”
Federal law enacted in 2007 caps the annual percentage rate on payday loans at 36 percent for service members and their families. But the law only applies to service members on active duty, while recently discharged military personnel remain vulnerable to these predatory practices.
Illinois law also places restrictions on payday loan operators, but the measure only applies to loans spanning 120 days. As a result, payday lenders have found ways around the law by offering loans of 121 days or longer, which enables them to charge whatever they want, in some cases up to 700 percent.
“The Illinois Department of Veterans’ Affairs supports the Citizen Soldiers program,” said Illinois Department of Veterans’ Affairs Director Dan Grant. “This is an outstanding and innovative way to protect Illinois service members, who are already sacrificing so much, from predatory lending and other dubious financial practices that would take advantage of them.”
In addition to expanding the eligibility requirements, Giannoulias intends to increase marketing of the program and offer financial education outreach to service members and their families.
The Welcome Home Loans are part of the Citizen Soldiers Program, which is offered through the State Treasurer’s Office. Under the program, the Treasurer’s Office deposits money in financial institutions throughout Illinois to “buy down” the interest rate on loans to qualified borrowers. The 1 percent return the state gets from the deposit actually provides a boost to its investment portfolio as the rate gained through other investments have a lower return as the financial markets struggle to recover.
To date, the Treasurer’s Office has funded a total of 398 Citizen Soldier loans for active-duty military personnel totaling $3.5 million.
Anyone interested in learning more can: visit www.treasurer.il.gov; email firstname.lastname@example.org; or call (312) 814-1244.