A Report on the Feasibility of Textbook Rental - IBHE

FundingSR 692 directs the IBHE and ICCB to explore funding options for textbook rentalprograms. Based on information collected from the community colleges and public universities,the estimated start-up costs of implementing textbook rental programs at Illinois communitycolleges and public universities would be approximately $211.2 million, with approximately$202.0 million going toward textbook inventory. Several of the options could require statutorychanges to permit institutional borrowing to finance the purchase of textbook inventory.Estimated Start-Up CostCommunity Colleges $ 112,891,355Public Universities 98,273,087Total $ 211,164,442Source: Institutional Responses to IBHE Survey 2006State Appropriations. The State of Illinois could fund textbook rental programs severaldifferent ways. First, state appropriations could be made directly to the colleges and universitieswith no expectation of repayment. Second, the State could set up a grant program, administeredby the IBHE or the ICCB or both, for institutions interested in pursuing rental programs. Statefundedgrants to implement textbook rental programs were proposed in HB 3745 of the 94 thGeneral Assembly. Finally, state funds could be used as a source of capital for a revolving loanfund. With the revolving loan fund option, the state would act as the banker, providing a sourceof low-cost capital to fund the more expensive start-up phase, and ultimately recovering its fundswith interest. Depending on the number of institutions choosing to participate in rental programs,this funding option could have a significant financial impact on the State of Illinois.Illinois Designated Account Purchase Program. The Illinois Student AssistanceCommission has been working toward the sale or restructuring of the Illinois Designated AccountPurchase Program’s (IDAPP) loan assets for some time. A portion of the proceeds from theproposed IDAPP restructuring or sale is obligated to cover fiscal year 2007 appropriations fromthe Student Loan Operating Fund to the Monetary Award Program and MAP-Plus initiative. Withstatutory changes, remaining sale proceeds could be made available to cover the start-up costs ofimplementing textbook rental programs either directly or through the creation of a revolving loanfund. A revolving loan fund could eventually return the initial capital to the Illinois StudentAssistance Commission to finance additional affordability initiatives.Borrowing Under the Public Community College Act. Community colleges wouldhave the ability to cover some start-up costs, though not the cost of the textbooks themselves,through current borrowing authority. Under the Public Community College Act, communitycolleges could borrow money to build and equip storage facilities. A referendum would berequired to approve the bond sale. Bonding for textbook inventory would require statutorychange as community colleges currently may borrow money for the following purposes:-37-