Legislation Would Block Faculty Loans

Feb 24, 2014

Illinois lawmakers are considering whether to crack down on universities giving a certain type of interest-free loan to faculty. Except it doesn’t seem to be happening in Illinois.

State Rep. Jack Franks, a Democrat from Marnego, says the legislation is meant to prevent universities from abusing their tax-exempt status.

“What we found was that tax-exempt universities were giving interest-free … loans, and also forgiving loans, for second homes for professors, at a time when students are taking on excessive debt," Franks says.

The thing is, Franks says he’s been in touch with numerous colleges and universities in Illinois, and none of them are actually doing this.

That prompted several lawmakers to ask why this is necessary.

Rep. Chad Hays is a Republican from Catlin, near Danville: “Sometimes I feel like this is a solution desperately seeking a problem."

Franks, however, says if institutions ever want to give out this kind of perk, it might be time to reconsider their tax-exempt status.