More than $5 million the Illinois State Scholarship Commission collected from defaulted student loans cannot be used to help students pay the $150 tuition increase.

Through a joint effort between the ISSC and the U.S. Department of Education (ED), the tax offset program is designed for defaulters to repay their Illinois student loans, said Renee Books, ISSC coordinator for agency information.

She said the money is not circulatory. Rather, the incoming funds from defaulted student loans payments are used to pay off old loans.

Under pending legislation, the offset program would withhold Illinois student loan defaulter’s 1987 federal tax returns, Books said.

“For those borrowers who continuously have ignored the efforts of the collection staff at the ISSC, the offset program is an effective method to gain their attention and to recover on defaulted student loans,” said Art Bilski, ISSC director for claims and collections.

The program consists of the ISSC having submitted to ED more than 54,000 names of defaulters whose loans totaled more than $186 million, Books said.

Books could not estimate the number of students who still are defaulting on their student loans or the amount which has not been repaid.

Books said under the agreement with ED, the ISSC sends the names of those who have not paid on a loan for 120 days after Dec. 1, which means six months has elapsed without a payment.

After ED receives the names of defaulters, a letter is sent explaining the terms of loan repayment and the consequences of not repaying the loan, Books said.

Borrowers then have 60 days after receiving the letter to contact the ISSC and arrange a payment schedule, Books said.

She said defaulters refusing to respond to the letter will have their names sent to the Internal Revenue Service.