An Illinois student loan agency is proposing to sell $100 million of debt a year to supplement funding for a college grant program, a state official said on Monday.

Andrew Davis, executive director of the Illinois Student Assistance Commission, said the 10-year taxable revenue notes or bonds would be paid off with future state income tax payments made by recipients of the grants.

The Illinois Board of Higher Education announced last week a task force will be examining “the feasibility, sustainability and advisability” of the commission’s plan, which is aimed at supplementing state funding of the monetary award program (MAP).

The notes would carry no state guarantee, but are expected to have 1.85 times debt service coverage based on data that showed income growth for MAP recipients and that 90 percent of students who attended Illinois community colleges remained in the state for 10 years, according to Davis. Grant recipients would not be required to stay in Illinois.

“The revenue bonds would get a better reception (in the municipal market) than the general obligation bonds of the state of Illinois,” Davis said, pointing to the data and the advice of investment bankers from Loop Capital Markets and others working on the proposal.

Davis said while Illinois has appropriated about $405 million for MAP, more lower-income students have been applying for the grants. He said proceeds from the note sale could help as many as 60,000 students on top of the 140,000 already receiving MAP grants funded by the state.

The task force is due to make its recommendations to the higher education board on February 15. If the note plan is adopted, Davis said the Illinois General Assembly would need to vote to allow the student assistance commission to tap the students’ income tax revenue to pay off the debt.