Illinois prepaid college tuition program loses big on ShoreBank investment

Crain's Chicago Business reports:

The state's prepaid college tuition program is caught in the downward spiral of ShoreBank.

The Illinois Student Assistance Commission, which manages $1 billion invested for the college educations of Illinois students, has written off all but $2 million of a $12.7-million investment it made in ShoreBank two years ago, just before the South Side community lender hit the skids. That stake, which made the prepaid tuition program ShoreBank's largest shareholder, was the agency's first and only direct investment in a privately held company.

The $10.7-million loss, though modest in the context of a $1-billion fund, could turn up the already considerable political heat on the monthslong effort to save ShoreBank from failure. Congressional Republicans have questioned whether the Obama administration pressured big Wall Street banks into rescuing the lender.

No word yet from Robert Creamer on this one.