A little-known nonprofit created by Indiana lawmakers more than four decades ago could become a major lender for student loan borrowers.
The Indiana Secondary Market for Education Loans — which operates under the name INvestEd — issues private student loans at interest rates starting at 4.26% to 8.51% — far below the maximum 17.99% interest rate charged by some of its for-profit competitors.
The nonprofit’s motto is simple: The best student loan is no loan at all.
But leaders at INvestEd anticipate a surge in demand for private loans once tighter federal student loan restrictions and borrowing limits take effect July 1.
What is INvestEd?
Lawmakers created the agency by statute in 1981 to make college affordable and accessible for Hoosiers.
The private nonprofit lender takes no money from the state, despite its existence by statute.
In its early years, INvestEd purchased outstanding student loans from banks and other private lenders — issuing bond deals, securitizing loans and paying origination fees for students who took out federal loans — without directly lending money, according to William Wozniak, vice president and chief marketing officer of INvestEd.
Financial aid experts from the nonprofit started visiting high schools in the early 2000s to teach students and parents about their financial aid options — an initiative now present in 300 Indiana high schools.
INvestEd then launched its own tool for borrowers to compare interest rates and the true cost of competing loan products.
But it wasn’t until 2015 that INvestEd started issuing its own loans for Hoosier students and parents, a decision Wozniak attributes to the organization’s loan comparison tool.
The nonprofit is able to keep interest rates low because “we don’t have shareholders that need a 13% return,” he said.
Interest rates start at 4.5% with a maximum rate of 8.5% depending on the borrower’s credit score — beating many private lenders and the federal government, which will boost the interest rate for parent loans to 9% in July.
“We’re not chasing them to 2.84% because that’s bait and switch,” Wozniak said.
Lawmaker questions accessibility
Rep. Greg Porter, D-Indianapolis, looks at the INvestEd’s tax filings — the $240 million in assets and liabilities reported to the IRS in 2024 dwarf the $6.75 million lent to borrowers that year, and executive salaries that “would make Wall Street blush” — and wonders if INvestEd could do more to assist low-income Hoosiers.
“They’re sitting on a lot of money,” said Porter, who is the top Democrat on the budget-writing House Ways and Means Committee.
A minimum credit score of 670 on the scale of 850 is required for INvestEd’s standard loan, though borrowers can apply with a co-signer to improve their odds of qualifying.
Porter wonders whether that threshold is locking out low-income students at a time when borrowing limits on federal student loans and state financial aid cuts are expected to send more Hoosiers to private lenders.
“We need to make sure that those low-income students, or people that are struggling and trying to better themselves, have all the tools in the toolshed, and the threshold from my perspective is too high to meet those needs,” Porter said.
Wozniak said INvestEd’s money isn’t sitting idle, as only $15 million is “truly liquid capital.”
The nonprofit has $120 million in active loans and $130 million committed to banking partners.
“That’s not optional, those funds are what allow us to borrow at rates low enough to pass savings on to Indiana students and families with our current lending activity,” he said.
Remaining assets are used behind the scenes to keep interest rates affordable and to inform Hoosiers of their financial aid options, Wozniak said.
Alternative student loans
Without credit score limits, Wozniak said INvestEd wouldn’t be able to keep interest rates so low.
“There’d be boards across the doors,” he said. “… People would just take (the loan) and then they wouldn’t repay and then it would be over, and that would be the end.”
College sophomores, juniors and seniors who don’t meet those requirements may submit their transcripts to be considered for an academic merit loan using an alternative credit score, though default rates are higher for these borrowers — a risky investment for INvestEd.
The nonprofit also offers parent loans and refinancing for borrowers paying off high-interest loans from other lenders.
It does not publicly disclose loan approval rates.
Financial aid first
The bulk of INvestEd’s work still revolves around financial literacy.
Counselors visit Lawrence Central High School on the northeast side of Indianapolis several times each year, assisting seniors and their families as they navigate the federal financial aid application and scholarship deadlines.
Lawrence is one of 300 Hoosier high schools that partner with INvestEd for financial aid advising.
The nonprofit’s website makes it easy for families to compare college costs, find scholarships or choose a career and school.
Counselors even meet with families to map out a plan to pay for college.
Their advice: maximize grants and scholarships first, then apply for a loan at the lowest interest rate possible from a trusted lender.
“(Families) have that reassurance that they are submitting information correctly,” said KaNeasha Koebcke, director of counseling at Lawrence Central High School.
Many Lawrence Central students qualify for financial aid like Indiana’s 21st Century Scholars grants, Koebcke said, so having INvestEd counselors available for aid application workshops and phone calls from families is a life-saver for her team.
“We stress that our kids need to do what they need to do academically to be eligible for those scholarships and grants, so they’re not in a situation where they have to take out loans,” she said.
Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.
