Vetoed by Governor Bruce Rauner

Vote Smart's Synopsis:

Vote to pass a bill that establishes various laws governing student loan servicers, effective December 31, 2018.

Highlights:

• Prohibits the omission or misrepresentation of any information regarding a loan to a borrower or cosigner, or any other unfair or deceptive practices, by a student loan servicer (Sec. 5-5).

• Prohibits a student loan servicer from misrepresenting a delinquent amount in any communication with a borrower or cosigner (Sec. 5-10).

• Requires a student loan servicer to allow a borrower or cosigner to specify the manner in which overpayment is applied to the balance of a loan (Sec. 5-10).

• Prohibits a student loan servicer from charging late fees beyond those reasonable and proportional to the cost incurred by a late payment (Sec. 5-15).

• Requires a student loan servicer to designate personnel as repayment specialists and to route all communications from borrowers who are eligible for referral to repayment specialists to a repayment specialist (Sec. 5-30).

• Requires a repayment specialist, in each communication with a federal loan borrower, to inform the borrower of the various options available for federal student debt relief (Sec. 5-30).

• Prohibits a student loan servicer from presenting forbearance as the first or sole option for repayment to a borrower struggling with their current repayment plan (Sec. 5-30).

• Requires a student loan servicer who is aware that a borrower is eligible for a defense to repayment claim or permanent disability discharge to disclose such information to the borrower along with information regarding the Department of Education’s procedures for asserting such a claim (Sec. 5-35).

• Requires a student loan servicer to disclose to a borrower the date on which such borrower’s income-driven payment plan will expire, the consequences for failing to recertify, and the new repayment amount should such borrower fail to recertify (Sec. 5-40).

• Establishes guidelines for the presentation and disclosure of private repayment plans available to borrowers, given that a student loan servicer offers such plans (Sec. 5-45).

• Establishes various guidelines and requirements for the transfer of loan servicing from one servicer to another, including how and when information must be provided to borrowers and cosigners (Sec. 5-60).

• Requires a student loan servicer to implement rules and procedures for receiving and processing requests for assistance with repayment in a timely manner (Sec. 5-65).

• Establishes certain requirements for how a student loan servicer must handle account disputes with borrowers (Sec. 5-65).

• Establishes the office of the Student Loan Ombudsman, and the responsibilities and duties therein (Article 10).

• Requires that student loan servicers operating in the state of Illinois be licensed with the Department of Financial and Professional Regulation and establishes various rules and procedures for how a servicer may be licensed and how a license may be suspended or revoked (Article 15).

• Specifies the various duties and powers of the Secretary of Financial and Professional Regulation in regards to supervising licensed student loan servicers in the state (Article 20).

• Specifies that violations of this act are enforceable under the Consumer Fraud and Deceptive Business Practices Act (Article 25).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that establishes various laws governing student loan servicers, effective December 31, 2018.

Highlights:

• Prohibits the omission or misrepresentation of any information regarding a loan to a borrower or cosigner, or any other unfair or deceptive practices, by a student loan servicer (Sec. 5-5).

• Prohibits a student loan servicer from misrepresenting a delinquent amount in any communication with a borrower or cosigner (Sec. 5-10).

• Requires a student loan servicer to allow a borrower or cosigner to specify the manner in which overpayment is applied to the balance of a loan (Sec. 5-10).

• Prohibits a student loan servicer from charging late fees beyond those reasonable and proportional to the cost incurred by a late payment (Sec. 5-15).

• Requires a student loan servicer to designate personnel as repayment specialists and to route all communications from borrowers who are eligible for referral to repayment specialists to a repayment specialist (Sec. 5-30).

• Requires a repayment specialist, in each communication with a federal loan borrower, to inform the borrower of the various options available for federal student debt relief (Sec. 5-30).

• Prohibits a student loan servicer from presenting forbearance as the first or sole option for repayment to a borrower struggling with their current repayment plan (Sec. 5-30).

• Requires a student loan servicer who is aware that a borrower is eligible for a defense to repayment claim or permanent disability discharge to disclose such information to the borrower along with information regarding the Department of Education’s procedures for asserting such a claim (Sec. 5-35).

• Requires a student loan servicer to disclose to a borrower the date on which such borrower’s income-driven payment plan will expire, the consequences for failing to recertify, and the new repayment amount should such borrower fail to recertify (Sec. 5-40).

• Establishes guidelines for the presentation and disclosure of private repayment plans available to borrowers, given that a student loan servicer offers such plans (Sec. 5-45).

• Establishes various guidelines and requirements for the transfer of loan servicing from one servicer to another, including how and when information must be provided to borrowers and cosigners (Sec. 5-60).

• Requires a student loan servicer to implement rules and procedures for receiving and processing requests for assistance with repayment in a timely manner (Sec. 5-65).

• Establishes certain requirements for how a student loan servicer must handle account disputes with borrowers (Sec. 5-65).

• Establishes the office of the Student Loan Ombudsman, and the responsibilities and duties therein (Article 10).

• Requires that student loan servicers operating in the state of Illinois be licensed with the Department of Financial and Professional Regulation and establishes various rules and procedures for how a servicer may be licensed and how a license may be suspended or revoked (Article 15).

• Specifies the various duties and powers of the Secretary of Financial and Professional Regulation in regards to supervising licensed student loan servicers in the state (Article 20).

• Specifies that violations of this act are enforceable under the Consumer Fraud and Deceptive Business Practices Act (Article 25).

Full Bill Text