Bill Amendment: IL SB0086 | 2023-2024 | 103rd General Assembly
NOTE: For additional amemendments please see the Bill Drafting List
Bill Title: HIGHER ED-COSIGNER LOANS
Status: 2024-08-02 - Public Act . . . . . . . . . 103-0748 [SB0086 Detail]
Download: Illinois-2023-SB0086-Senate_Amendment_001.html
Bill Title: HIGHER ED-COSIGNER LOANS
Status: 2024-08-02 - Public Act . . . . . . . . . 103-0748 [SB0086 Detail]
Download: Illinois-2023-SB0086-Senate_Amendment_001.html
| |||||||
| |||||||
| |||||||
1 | AMENDMENT TO SENATE BILL 86
| ||||||
2 | AMENDMENT NO. ______. Amend Senate Bill 86 by replacing | ||||||
3 | everything after the enacting clause with the following:
| ||||||
4 | "Section 5. The Know Before You Owe Private Education Loan | ||||||
5 | Act is amended by changing Sections 5 and 15 and by adding | ||||||
6 | Sections 25 and 30 as follows:
| ||||||
7 | (110 ILCS 983/5)
| ||||||
8 | Sec. 5. Definitions. As used in this Act: | ||||||
9 | "Annual percentage rate" means the percentage rate | ||||||
10 | calculated according to the Federal
Reserve Board's | ||||||
11 | methodology as set forth under Regulation Z, 12 CFR Part 1026. | ||||||
12 | "Cosigner" means any individual who is liable for the
| ||||||
13 | obligation of another without compensation, regardless of how | ||||||
14 | the
individual is designated in the contract or instrument | ||||||
15 | with respect
to that obligation, including an obligation under | ||||||
16 | a private
education loan extended to consolidate a borrower's |
| |||||||
| |||||||
1 | preexisting
student loans. The term includes any individual | ||||||
2 | whose signature is
requested, as a condition, to grant credit | ||||||
3 | or to forbear on
collection. The term does not include a spouse | ||||||
4 | of an individual if the
spouse's signature is needed solely to | ||||||
5 | perfect the security
interest in a loan. | ||||||
6 | "Educational expense" means any expense, in whole or in | ||||||
7 | part,
expressly used to finance postsecondary education, | ||||||
8 | regardless of
whether the debt incurred by a student to pay | ||||||
9 | that expense is
owed to the provider of postsecondary | ||||||
10 | education whose school,
program, or facility the student | ||||||
11 | attends. | ||||||
12 | "Income share agreement" means an agreement under which a | ||||||
13 | borrower commits to pay a percentage of his or her future | ||||||
14 | income in exchange for money, payments, or credits applied to | ||||||
15 | or on behalf of a borrower. An income share agreement | ||||||
16 | constitutes a loan and debt within the meaning of this Act. | ||||||
17 | "Income share agreement provider" means: | ||||||
18 | (1) a person that provides money, payments, or credits | ||||||
19 | to or on behalf of a borrower pursuant to the terms of an | ||||||
20 | income share agreement; or | ||||||
21 | (2) any other person engaged in the business of | ||||||
22 | soliciting, making, funding, or extending
income share | ||||||
23 | agreements. | ||||||
24 | "Institution of higher education" includes, but is not | ||||||
25 | limited to, institutions falling under the Private Business | ||||||
26 | and Vocational Schools Act of 2012, the Private College Act, |
| |||||||
| |||||||
1 | and public institutions of higher education as defined in | ||||||
2 | Section 1 of the Board of Higher Education Act. "Institution | ||||||
3 | of higher education" also includes a person engaged in the | ||||||
4 | business of providing postsecondary education, via | ||||||
5 | correspondence, online, or in this State, to a person located | ||||||
6 | in this State, regardless of whether the person has obtained | ||||||
7 | authorization from the Illinois Board of Higher Education to | ||||||
8 | operate in this State or is accredited. | ||||||
9 | "Private educational lender" and "private education loan" | ||||||
10 | have the meanings ascribed to the terms in Section 140 of the | ||||||
11 | Truth in Lending Act (15 U.S.C. 1650). In addition, "private | ||||||
12 | educational lender" includes an income share agreement | ||||||
13 | provider and a student financing company and "private | ||||||
14 | education loan" includes an income share agreement and student | ||||||
15 | financing. | ||||||
16 | "Student financing company" means a person engaged in the | ||||||
17 | business of securing, making, or extending student financing. | ||||||
18 | "Student financing company" does not include the following | ||||||
19 | persons, only to the extent that State regulation is preempted | ||||||
20 | by federal law: | ||||||
21 | (1) a federally chartered bank, savings bank, savings | ||||||
22 | and loan association, or credit union; | ||||||
23 | (2) a wholly owned subsidiary of a federally chartered | ||||||
24 | bank or credit union; and | ||||||
25 | (3) an operating subsidiary where each owner of the | ||||||
26 | operating subsidiary is wholly owned by the same federally |
| |||||||
| |||||||
1 | chartered bank or credit union. | ||||||
2 | "Student financing" means an extension of credit that: | ||||||
3 | (1) is not made, insured, or guaranteed under Title IV | ||||||
4 | of the Higher Education Act of 1965 (20 U.S.C. 1070 et | ||||||
5 | seq.); | ||||||
6 | (2) is extended to a consumer expressly, in whole or | ||||||
7 | in part, for postsecondary educational expenses, | ||||||
8 | regardless of whether the extension of credit is provided | ||||||
9 | by the institution of higher education that the student | ||||||
10 | attends; | ||||||
11 | (3) does not include a private education loan; | ||||||
12 | (4) does not include an income share agreement; and | ||||||
13 | (5) does not include a loan that is secured by real | ||||||
14 | property or a dwelling.
| ||||||
15 | (Source: P.A. 102-583, eff. 8-26-21.)
| ||||||
16 | (110 ILCS 983/15)
| ||||||
17 | Sec. 15. Provision of information. | ||||||
18 | (a) Provision of loan statement to borrowers and | ||||||
19 | cosigners . | ||||||
20 | (1) Loan statement. A private educational lender that | ||||||
21 | disburses any funds with respect to a private education | ||||||
22 | loan described in this Section shall send loan statements | ||||||
23 | to the borrowers and cosigners of those funds not less | ||||||
24 | than once every 3 months during the time that the borrower | ||||||
25 | is enrolled at an institution of higher education. |
| |||||||
| |||||||
1 | (2) Contents of statements for income share | ||||||
2 | agreements. Each statement described in
subparagraph (1) | ||||||
3 | with respect to income share agreements, shall: | ||||||
4 | (A) report the consumer's total amounts financed | ||||||
5 | under each income share
agreement; | ||||||
6 | (B) report the percentage of income payable under | ||||||
7 | each income share agreement; | ||||||
8 | (C) report the maximum number of monthly payments | ||||||
9 | required to be paid under
each income share agreement; | ||||||
10 | (D) report the maximum amount payable under each | ||||||
11 | income share agreement; | ||||||
12 | (E) report the maximum duration of each income | ||||||
13 | share agreement; | ||||||
14 | (F) report the minimum annual income above which | ||||||
15 | payments are required under
each income share | ||||||
16 | agreement; and | ||||||
17 | (G) report the annual percentage rate for each | ||||||
18 | income share agreement at the
minimum annual income | ||||||
19 | above which payments are required and at $10,000 | ||||||
20 | income
increments thereafter up to the annual income | ||||||
21 | where the maximum number of monthly
payments results | ||||||
22 | in the maximum amount payable. | ||||||
23 | (3) Contents of all other loan statements. Each | ||||||
24 | statement described in subparagraph (1) that does not fall | ||||||
25 | under subparagraph (2) shall: | ||||||
26 | (A) report the borrower's total remaining debt to |
| |||||||
| |||||||
1 | the private educational lender, including accrued but | ||||||
2 | unpaid interest and capitalized interest; | ||||||
3 | (B) report any debt increases since the last | ||||||
4 | statement; and | ||||||
5 | (C) list the current annual percentage rate for | ||||||
6 | each loan. | ||||||
7 | (b) Certification of exhaustion of federal student loan | ||||||
8 | funds to private educational lender. Upon the request of a | ||||||
9 | private educational lender, acting in connection with an | ||||||
10 | application initiated by a borrower for a private education | ||||||
11 | loan in accordance with Section 5, the institution of higher | ||||||
12 | education shall within 15 days of receipt of the request | ||||||
13 | provide certification to such private educational lender: | ||||||
14 | (1) that the borrower who initiated the application | ||||||
15 | for the private education loan, or on whose behalf the | ||||||
16 | application was initiated, is enrolled or is scheduled to | ||||||
17 | enroll at the institution of higher education; | ||||||
18 | (2) of the borrower's cost of attendance at the | ||||||
19 | institution of higher education as determined under | ||||||
20 | paragraph (2) of subsection (a) of this Section; | ||||||
21 | (3) of the difference between: | ||||||
22 | (A) the cost of attendance at the institution of | ||||||
23 | higher education; and | ||||||
24 | (B) the borrower's estimated financial assistance | ||||||
25 | received under the federal Higher Education Act of | ||||||
26 | 1965 and other assistance known to the institution of |
| |||||||
| |||||||
1 | higher education, as applicable; | ||||||
2 | (4) that the institution of higher education has | ||||||
3 | received the request for certification and will need | ||||||
4 | additional time to comply with the certification request; | ||||||
5 | and | ||||||
6 | (5) if applicable, that the institution of higher | ||||||
7 | education is refusing to certify the private education | ||||||
8 | loan. | ||||||
9 | (c) Certification of exhaustion of federal student loan | ||||||
10 | funds to borrower. With respect to a certification request | ||||||
11 | described under subsection (b), and prior to providing such | ||||||
12 | certification in paragraph (1) of subsection (b) or providing | ||||||
13 | notice of the refusal to provide certification under paragraph | ||||||
14 | (5) of subsection (b), the institution of higher education | ||||||
15 | shall: | ||||||
16 | (1) determine whether the borrower who initiated the | ||||||
17 | application for the private education loan, or on whose | ||||||
18 | behalf the application was initiated, has applied for and | ||||||
19 | exhausted the federal financial assistance available to | ||||||
20 | such borrower under the federal Higher Education Act of | ||||||
21 | 1965 and inform the borrower and any cosigners | ||||||
22 | accordingly; | ||||||
23 | (2) provide the borrower and any cosigners whose loan | ||||||
24 | application has prompted the certification request by a | ||||||
25 | private educational lender, as described in paragraph (1) | ||||||
26 | of subsection (b), with the following information and |
| |||||||
| |||||||
1 | disclosures: | ||||||
2 | (A) the amount of additional federal student | ||||||
3 | assistance for which the borrower is eligible and the | ||||||
4 | advantages of federal loans under the federal Higher | ||||||
5 | Education Act of 1965, including disclosure of income | ||||||
6 | driven repayment options, fixed interest rates, | ||||||
7 | deferments, flexible repayment options, loan | ||||||
8 | forgiveness programs, additional protections, and the | ||||||
9 | higher student loan limits for dependent borrowers | ||||||
10 | whose parents are not eligible for a Federal Direct | ||||||
11 | PLUS Loan; | ||||||
12 | (B) the borrower's ability to select a private | ||||||
13 | educational lender of the borrower's choice; | ||||||
14 | (C) the impact of a proposed private education | ||||||
15 | loan on the borrower's potential eligibility for other | ||||||
16 | financial assistance, including federal financial | ||||||
17 | assistance under the federal Higher Education Act; and | ||||||
18 | (D) the borrower's right to accept or reject a | ||||||
19 | private education loan within the 30-day period | ||||||
20 | following a private educational lender's approval of a | ||||||
21 | borrower's application and the borrower's 3-day right | ||||||
22 | to cancel period; and | ||||||
23 | (3) Any institution of higher education that is also | ||||||
24 | acting as a private educational lender shall provide the | ||||||
25 | certification of exhaustion of federal student loan funds | ||||||
26 | described in paragraphs (1) and (2) of this subsection (c) |
| |||||||
| |||||||
1 | to the borrower and any cosigners prior to disbursing | ||||||
2 | funds to the borrower. Any institution of higher education | ||||||
3 | that is not eligible for funding under Title IV of the | ||||||
4 | federal Higher
Education Act of 1965 is not required to | ||||||
5 | provide this certification to the borrower or any | ||||||
6 | cosigners .
| ||||||
7 | (Source: P.A. 102-583, eff. 8-26-21; 102-813, eff. 5-13-22.)
| ||||||
8 | (110 ILCS 983/25 new) | ||||||
9 | Sec. 25. Cosigner disclosure; notice. Before extending a | ||||||
10 | private education loan that requires a
cosigner, a private | ||||||
11 | educational lender shall disclose to the
cosigner: | ||||||
12 | (1) how the private education loan obligation will | ||||||
13 | appear
on the cosigner's credit report; | ||||||
14 | (2) how the cosigner will be notified if the private
| ||||||
15 | education loan becomes delinquent, including how the
| ||||||
16 | cosigner can cure the delinquency in order to avoid
| ||||||
17 | negative credit furnishing and the loss of cosigner
| ||||||
18 | release eligibility; and | ||||||
19 | (3) eligibility for release of the cosigner's | ||||||
20 | obligation
on the private education loan, including the | ||||||
21 | number of
on-time payments and any other criteria required | ||||||
22 | to
approve the release of the cosigner from the loan
| ||||||
23 | obligation.
| ||||||
24 | (110 ILCS 983/30 new) |
| |||||||
| |||||||
1 | Sec. 30. Refinancing. Before offering a person a private | ||||||
2 | education loan that is
being used to refinance an existing | ||||||
3 | education loan, a private
educational lender shall provide the | ||||||
4 | person with a disclosure
explaining that the benefits and | ||||||
5 | protections applicable to the
existing loan may be lost due to | ||||||
6 | the refinancing. The
disclosure must be provided on a one-page | ||||||
7 | information sheet
in at least 12-point type and must be | ||||||
8 | written in simple,
clear, understandable, and easily readable | ||||||
9 | language.
| ||||||
10 | Section 10. The Student Loan Servicing Rights Act is | ||||||
11 | amended by changing Sections 1-5, 5-30, and 5-50 and by adding | ||||||
12 | Sections 5-70, 5-75, 5-80, and 5-85 as follows:
| ||||||
13 | (110 ILCS 992/1-5)
| ||||||
14 | Sec. 1-5. Definitions. As used in this Act: | ||||||
15 | "Applicant" means a person applying for a license pursuant | ||||||
16 | to this Act. | ||||||
17 | "Borrower" or "student loan borrower" means a person who | ||||||
18 | has received or agreed to pay a student loan for his or her own | ||||||
19 | educational expenses. | ||||||
20 | "Cosigner" means any individual who is liable for the | ||||||
21 | obligation of another without compensation, regardless of how | ||||||
22 | the individual is designated in the contract or instrument | ||||||
23 | with respect to that obligation, including an obligation under | ||||||
24 | a private education loan extended to consolidate a borrower's |
| |||||||
| |||||||
1 | preexisting student loans. The term includes any individual | ||||||
2 | whose signature is requested, as a condition, to grant credit | ||||||
3 | or to forbear on collection. The term does not include a spouse | ||||||
4 | of an individual if the spouse's signature is needed solely to | ||||||
5 | perfect the security interest in a loan a person who has agreed | ||||||
6 | to share responsibility for repaying a student loan with a | ||||||
7 | borrower . | ||||||
8 | "Department" means the Department of Financial and | ||||||
9 | Professional Regulation. | ||||||
10 | "Division of Banking" means the Division of Banking of the | ||||||
11 | Department of Financial and Professional Regulation. | ||||||
12 | "Federal loan borrower eligible for referral to a | ||||||
13 | repayment specialist" means a borrower who possesses any of | ||||||
14 | the following characteristics: | ||||||
15 | (1) requests information related to options to reduce | ||||||
16 | or suspend his or her monthly payment; | ||||||
17 | (2) indicates that he or she is experiencing or | ||||||
18 | anticipates experiencing financial hardship, distress, or | ||||||
19 | difficulty making his or her payments; | ||||||
20 | (3) has missed 2 consecutive monthly payments; | ||||||
21 | (4) is at least 75 days delinquent; | ||||||
22 | (5) is enrolled in a discretionary forbearance for | ||||||
23 | more than 9 of the previous 12 months; | ||||||
24 | (6) has rehabilitated or consolidated one or more | ||||||
25 | loans out of default within the past 12 months; or | ||||||
26 | (7) has not completed a course of study, as reflected |
| |||||||
| |||||||
1 | in the servicer's records, or the borrower identifies | ||||||
2 | himself or herself as not having completed a program of | ||||||
3 | study. | ||||||
4 | "Federal education loan" means any loan made, guaranteed, | ||||||
5 | or insured under Title IV of the federal Higher Education Act | ||||||
6 | of 1965. | ||||||
7 | "Income-driven payment plan certification" means the | ||||||
8 | documentation related to a federal student loan borrower's | ||||||
9 | income or financial status the borrower must submit to renew | ||||||
10 | an income-driven repayment plan. | ||||||
11 | "Income-driven repayment options" includes the | ||||||
12 | Income-Contingent Repayment Plan, the Income-Based Repayment | ||||||
13 | Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn | ||||||
14 | Plan, the Revised Pay As You Earn Plan, and any other federal | ||||||
15 | student loan repayment plan that is calculated based on a | ||||||
16 | borrower's income. | ||||||
17 | "Licensee" means a person licensed pursuant to this Act. | ||||||
18 | "Other repayment plans" means the Standard Repayment Plan, | ||||||
19 | the Graduated Repayment Plan, the Extended Repayment Plan, or | ||||||
20 | any other federal student loan repayment plan not based on a | ||||||
21 | borrower's income. | ||||||
22 | "Private education loan" has the meaning ascribed to the | ||||||
23 | term in Section 140 of the federal Truth in Lending Act (15 | ||||||
24 | U.S.C. 1650). In addition, "private education loan" includes | ||||||
25 | an income share agreement and student financing. | ||||||
26 | "Private loan borrower eligible for referral to a |
| |||||||
| |||||||
1 | repayment specialist" means a borrower who possesses any of | ||||||
2 | the following characteristics: | ||||||
3 | (1) requests information related to options to reduce | ||||||
4 | or suspend his or her monthly payments; or | ||||||
5 | (2) indicates that he or she is experiencing or | ||||||
6 | anticipates experiencing financial hardship, distress, or | ||||||
7 | difficulty making his or her payments. | ||||||
8 | "Requester" means any borrower or cosigner that submits a | ||||||
9 | request for assistance. | ||||||
10 | "Request for assistance" means all inquiries, complaints, | ||||||
11 | account disputes, and requests for documentation a servicer | ||||||
12 | receives from borrowers or cosigners. | ||||||
13 | "Secretary" means the Secretary of Financial and | ||||||
14 | Professional Regulation, or his or her designee, including the | ||||||
15 | Director of the Division of Banking of the Department of | ||||||
16 | Financial and Professional Regulation. | ||||||
17 | "Servicing" means: (1) receiving any scheduled periodic | ||||||
18 | payments from a student loan borrower or cosigner pursuant to | ||||||
19 | the terms of a student loan; (2) applying the payments of | ||||||
20 | principal and interest and such other payments with respect to | ||||||
21 | the amounts received from a student loan borrower or cosigner, | ||||||
22 | as may be required pursuant to the terms of a student loan; and | ||||||
23 | (3) performing other administrative services with respect to a | ||||||
24 | student loan. | ||||||
25 | "Student loan" or "loan" means any federal education loan | ||||||
26 | or other loan primarily for use to finance a postsecondary |
| |||||||
| |||||||
1 | education and costs of attendance at a postsecondary | ||||||
2 | institution, including, but not limited to, tuition, fees, | ||||||
3 | books and supplies, room and board, transportation, and | ||||||
4 | miscellaneous personal expenses. "Student loan" includes a | ||||||
5 | loan made to refinance a student loan. | ||||||
6 | "Student loan" shall not include an extension of credit | ||||||
7 | under an open-end consumer credit plan, a reverse mortgage | ||||||
8 | transaction, a residential mortgage transaction, or any other | ||||||
9 | loan that is secured by real property or a dwelling. | ||||||
10 | "Student loan" shall not include an extension of credit | ||||||
11 | made by a postsecondary educational institution to a borrower | ||||||
12 | if one of the following apply: | ||||||
13 | (1) The term of the extension of credit is no longer | ||||||
14 | than the borrower's education program. | ||||||
15 | (2) The remaining, unpaid principal balance of the | ||||||
16 | extension of credit is less than $1,500 at the time of the | ||||||
17 | borrower's graduation or completion of the program. | ||||||
18 | (3) The borrower fails to graduate or successfully | ||||||
19 | complete his or her education program and has a balance | ||||||
20 | due at the time of his or her disenrollment from the | ||||||
21 | postsecondary institution. | ||||||
22 | "Student loan servicer" or "servicer" means any person | ||||||
23 | engaged in the business of servicing student loans. "Student | ||||||
24 | loan servicer" or "servicer" includes persons or entities | ||||||
25 | acting on behalf of the State Treasurer. | ||||||
26 | "Student loan servicer" shall not include: |
| |||||||
| |||||||
1 | (1) a bank, savings bank, savings association, or | ||||||
2 | credit union organized under the laws of the State or any | ||||||
3 | other state or under the laws of the United States; | ||||||
4 | (2) a wholly owned subsidiary of any bank, savings | ||||||
5 | bank, savings association, or credit union organized under | ||||||
6 | the laws of the State or any other state or under the laws | ||||||
7 | of the United States; | ||||||
8 | (3) an operating subsidiary where each owner of the | ||||||
9 | operating subsidiary is wholly owned by the same bank, | ||||||
10 | savings bank, savings association, or credit union | ||||||
11 | organized under the laws of the State or any other state or | ||||||
12 | under the laws of the United States; | ||||||
13 | (4) the Illinois Student Assistance Commission and its | ||||||
14 | agents when the agents are acting on the Illinois Student | ||||||
15 | Assistance Commission's behalf; | ||||||
16 | (5) a public postsecondary educational institution or
| ||||||
17 | a private nonprofit postsecondary educational institution
| ||||||
18 | servicing a student loan it extended to the borrower; | ||||||
19 | (6) a licensed debt management service under the Debt
| ||||||
20 | Management Service Act, except to the extent that the
| ||||||
21 | organization acts as a subcontractor, affiliate, or
| ||||||
22 | service provider for an entity that is otherwise subject | ||||||
23 | to licensure under this Act; | ||||||
24 | (7) any collection agency licensed under the
| ||||||
25 | Collection Agency Act that is collecting post-default
| ||||||
26 | debt; |
| |||||||
| |||||||
1 | (8) in connection with its responsibilities as a | ||||||
2 | guaranty agency engaged in default aversion, a State or | ||||||
3 | nonprofit private institution or organization having an | ||||||
4 | agreement with the U.S. Secretary of Education under | ||||||
5 | Section 428(b) of the Higher Education Act (20 U.S.C. | ||||||
6 | 1078(B));
| ||||||
7 | (9) a State institution or a nonprofit private | ||||||
8 | organization designated by a governmental entity to make | ||||||
9 | or service student loans, provided in each case that the | ||||||
10 | institution or organization services fewer than 20,000 | ||||||
11 | student loan accounts of borrowers who reside in Illinois;
| ||||||
12 | (10) a law firm or licensed attorney that is | ||||||
13 | collecting post-default debt; or | ||||||
14 | (11) the State Treasurer. | ||||||
15 | "Total and permanent disability" means a physical or | ||||||
16 | mental impairment, disease, or loss of a permanent nature that | ||||||
17 | prevents employment with or without reasonable accommodation, | ||||||
18 | with proof of disability being in the form of a declaration | ||||||
19 | from the United States Social Security Administration, the | ||||||
20 | Illinois Workers' Compensation Commission, the United States | ||||||
21 | Department of Defense, or an insurer authorized to transact | ||||||
22 | business in this State who is providing disability insurance | ||||||
23 | coverage to a contractor. The term does not include a | ||||||
24 | condition that has not progressed or been exacerbated or that | ||||||
25 | the individual did not acquire until after the closing of the | ||||||
26 | loan agreement. In addition, documentation sufficient to |
| |||||||
| |||||||
1 | establish a total and permanent disability for a federal | ||||||
2 | student loan made pursuant to Title IV of the federal Higher | ||||||
3 | Education Act of 1965 is sufficient to establish a total and | ||||||
4 | permanent disability under this Act. | ||||||
5 | (Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18; | ||||||
6 | 101-586, eff. 8-26-19.)
| ||||||
7 | (110 ILCS 992/5-30)
| ||||||
8 | Sec. 5-30. Specialized assistance for student loan | ||||||
9 | borrowers. | ||||||
10 | (a) A servicer shall specially designate servicing and | ||||||
11 | collections personnel deemed repayment specialists who have | ||||||
12 | received enhanced training related to repayment options. | ||||||
13 | (b) A servicer shall refrain from presenting forbearance | ||||||
14 | as the sole or first repayment option to a student loan | ||||||
15 | borrower struggling with repayment unless the servicer has | ||||||
16 | determined that, based on the borrower's financial status, a | ||||||
17 | short term forbearance is appropriate. | ||||||
18 | (c) All inbound and outbound calls from a federal loan | ||||||
19 | borrower eligible for referral to a repayment specialist and a | ||||||
20 | private loan borrower eligible for referral to a repayment | ||||||
21 | specialist shall be routed to a repayment specialist. | ||||||
22 | (d) During each inbound or outbound communication with an | ||||||
23 | eligible federal loan borrower, a repayment specialist shall | ||||||
24 | first inform a federal loan borrower eligible for referral to | ||||||
25 | a repayment specialist that federal income-driven repayment |
| |||||||
| |||||||
1 | plans that can reduce the borrower's monthly payment may be | ||||||
2 | available, discuss such plans, and assist the borrower in | ||||||
3 | determining whether a particular repayment plan may be | ||||||
4 | appropriate for the borrower. | ||||||
5 | (e) A repayment specialist shall assess the long-term and | ||||||
6 | short-term financial situation and needs of a federal loan | ||||||
7 | borrower eligible for referral to a repayment specialist and | ||||||
8 | consider any available specific information from the borrower | ||||||
9 | as necessary to assist the borrower in determining whether a | ||||||
10 | particular income-driven repayment option may be available to | ||||||
11 | the borrower. | ||||||
12 | (f) In each discussion with a federal loan borrower | ||||||
13 | eligible for referral to a repayment specialist, a repayment | ||||||
14 | specialist shall present and explain the following options, as | ||||||
15 | appropriate: | ||||||
16 | (1) total and permanent disability discharge, public | ||||||
17 | service loan forgiveness, closed school discharge, and | ||||||
18 | defenses to repayment; | ||||||
19 | (2) other repayment plans; | ||||||
20 | (3) deferment; and | ||||||
21 | (4) forbearance. | ||||||
22 | (g) A repayment specialist shall assess the long-term and | ||||||
23 | short-term financial situation and needs of a private loan | ||||||
24 | borrower eligible for referral to a repayment specialist in | ||||||
25 | determining whether any private loan repayment options may be | ||||||
26 | appropriate for the borrower. |
| |||||||
| |||||||
1 | (h) A servicer shall present and explain all private loan | ||||||
2 | repayment options, including alternative repayment | ||||||
3 | arrangements applicable to private student loan borrowers. | ||||||
4 | (i) A servicer shall be prohibited from implementing any | ||||||
5 | compensation plan that has the intended or actual effect of | ||||||
6 | incentivizing a repayment specialist to violate this Act or | ||||||
7 | any other measure that encourages undue haste or lack of | ||||||
8 | quality. | ||||||
9 | (j) The requirements of this Section shall not apply if a | ||||||
10 | repayment specialist has already conversed with a borrower | ||||||
11 | consistent with the requirements of this Section. | ||||||
12 | (k) A servicer shall: | ||||||
13 | (1) provide on its website a description of any | ||||||
14 | modified or flexible repayment options offered by the | ||||||
15 | lender for private education loans; | ||||||
16 | (2) establish policies and procedures and implement | ||||||
17 | modified or flexible repayment options consistently in | ||||||
18 | order to facilitate the evaluation of such option | ||||||
19 | requests, including providing accurate information | ||||||
20 | regarding any options that may be available to the | ||||||
21 | borrower through the promissory note or that may have been | ||||||
22 | marketed to the borrower through marketing materials; and | ||||||
23 | (3) consistently present and offer private education | ||||||
24 | loan modification or flexible repayment options to all | ||||||
25 | borrowers with similar financial circumstances if the | ||||||
26 | servicer offers such modification or repayment options. |
| |||||||
| |||||||
1 | (l) A servicer may not place a loan or account into default | ||||||
2 | or accelerate a loan while a borrower is seeking a loan | ||||||
3 | modification or enrollment in a modified or flexible repayment | ||||||
4 | plan, except that a servicer may place a loan or account into | ||||||
5 | default or accelerate a loan for payment default 90 days or | ||||||
6 | more after the borrower's default.
| ||||||
7 | (Source: P.A. 100-540, eff. 12-31-18 .)
| ||||||
8 | (110 ILCS 992/5-50)
| ||||||
9 | Sec. 5-50. Cosigner release. | ||||||
10 | (a) For private student loans, a servicer shall provide | ||||||
11 | information on its website concerning the availability and | ||||||
12 | criteria for a cosigner release.
| ||||||
13 | (b) For any private education loan that obligates a | ||||||
14 | cosigner, a servicer shall provide the borrower and the | ||||||
15 | cosigner an annual written notice containing information about | ||||||
16 | cosigner release, including the administrative and objective | ||||||
17 | criteria the servicer requires to approve the release of the | ||||||
18 | cosigner from the loan obligation and the process for applying | ||||||
19 | for cosigner release. If the borrower has met the applicable | ||||||
20 | payment requirement to be eligible for cosigner release, the | ||||||
21 | servicer shall send the borrower and the cosigner a written | ||||||
22 | notification by mail, and by electronic mail if the borrower | ||||||
23 | or cosigner has elected to receive electronic communications | ||||||
24 | from the servicer, informing the borrower and cosigner that | ||||||
25 | the payment requirement to be eligible for cosigner release |
| |||||||
| |||||||
1 | has been met. The notification must also include information | ||||||
2 | about any additional criteria to qualify for cosigner release | ||||||
3 | and the procedure to apply for cosigner release. | ||||||
4 | (c) A servicer shall provide written notice to a borrower | ||||||
5 | who applies for cosigner release but whose application is | ||||||
6 | incomplete. The written notice must include a description of | ||||||
7 | the information needed to consider the application complete | ||||||
8 | and the date by which the applicant must furnish the missing | ||||||
9 | information in order to complete the application. | ||||||
10 | (d) Within 30 days after a borrower submits a completed | ||||||
11 | application for cosigner release, the servicer shall send the | ||||||
12 | borrower and cosigner a written notice that informs the | ||||||
13 | borrower and cosigner whether the servicer has approved or | ||||||
14 | denied the cosigner release application. If the servicer | ||||||
15 | denies a request for cosigner release, the borrower may | ||||||
16 | request copies of any documents or information used in the | ||||||
17 | determination, including the credit score threshold used by | ||||||
18 | the servicer, the borrower's credit report, the borrower's | ||||||
19 | credit score, and any other documents or information specific | ||||||
20 | to the borrower. The servicer shall also provide any adverse | ||||||
21 | action notices required under applicable federal law if the | ||||||
22 | denial is based in whole or in part on any information | ||||||
23 | contained in a credit report. | ||||||
24 | (e) In response to a written or oral request by the | ||||||
25 | borrower for cosigner release, a servicer shall provide to the | ||||||
26 | borrower the information described in subsection (b) of this |
| |||||||
| |||||||
1 | Section. | ||||||
2 | (Source: P.A. 100-540, eff. 12-31-18 .)
| ||||||
3 | (110 ILCS 992/5-70 new) | ||||||
4 | Sec. 5-70. Cosigner release rights. | ||||||
5 | (a) A servicer may not impose any restriction that | ||||||
6 | permanently bars a borrower from qualifying for cosigner | ||||||
7 | release, including restricting the number of times a borrower | ||||||
8 | may apply for cosigner release. | ||||||
9 | (b) A servicer may not impose any negative consequences on | ||||||
10 | a borrower or cosigner during the 60 days following the | ||||||
11 | issuance of the notice required pursuant to subsection (c) of | ||||||
12 | Section 5-50 of this Act or until the servicer makes a final | ||||||
13 | determination about a borrower's cosigner release application, | ||||||
14 | whichever occurs later. As used in this subsection (b), | ||||||
15 | "negative consequences" includes the imposition of additional | ||||||
16 | eligibility criteria, negative credit reporting, lost | ||||||
17 | eligibility or cosigner release, late fees, interest | ||||||
18 | capitalization, or other financial injury. | ||||||
19 | (c) For any private education loan issued on or after the | ||||||
20 | effective date of this amendatory Act of the 103rd General | ||||||
21 | Assembly, a servicer may not require proof of more than 12 | ||||||
22 | consecutive, on-time payments as part of the criteria for | ||||||
23 | cosigner release. A borrower who has paid the equivalent of 12 | ||||||
24 | months of principal and interest payments within any 12-month | ||||||
25 | period is deemed to have satisfied the consecutive, on-time |
| |||||||
| |||||||
1 | payment requirement even if the borrower has not made payments | ||||||
2 | monthly during the 12-month period. If a borrower or cosigner | ||||||
3 | requests a change in terms that restarts the count of | ||||||
4 | consecutive, on-time payments required for cosigner release, | ||||||
5 | the servicer shall notify the borrower and cosigner in writing | ||||||
6 | of the impact of the change and provide the borrower and | ||||||
7 | cosigner with the right to withdraw or reverse the request to | ||||||
8 | avoid the impact. | ||||||
9 | (d) A borrower may request an appeal of a servicer's | ||||||
10 | determination to deny a request for cosigner release, and the | ||||||
11 | servicer shall permit the borrower to submit additional | ||||||
12 | documentation evidencing the borrower's ability, willingness, | ||||||
13 | and stability to meet the payment obligations. The borrower | ||||||
14 | may request that another employee of the servicer review the | ||||||
15 | cosigner release determination. | ||||||
16 | (e) A servicer shall establish and maintain a | ||||||
17 | comprehensive record management system reasonably designed to | ||||||
18 | ensure the accuracy, integrity, and completeness of | ||||||
19 | information about cosigner release applications and to ensure | ||||||
20 | compliance with applicable State and federal laws. The system | ||||||
21 | must include the number of cosigner-release applications | ||||||
22 | received, the approval and denial rate, and the primary | ||||||
23 | reasons for any denial.
| ||||||
24 | (110 ILCS 992/5-75 new) | ||||||
25 | Sec. 5-75. Cosigner and borrower rights. |
| |||||||
| |||||||
1 | (a) A servicer shall provide a cosigner with access to all | ||||||
2 | documents or records related to the cosigned private education | ||||||
3 | loan that are available to the borrower. | ||||||
4 | (b) If a servicer provides electronic access to documents | ||||||
5 | and records for a borrower, it shall provide equivalent | ||||||
6 | electronic access to the cosigner. | ||||||
7 | (c) Upon a borrower's request, the servicer shall redact | ||||||
8 | the borrower's contact information from documents and records | ||||||
9 | provided to a cosigner. | ||||||
10 | (d) A servicer may not include in a private education loan | ||||||
11 | executed on or after the effective date of this amendatory Act | ||||||
12 | of the 103rd General Assembly a provision that permits the | ||||||
13 | servicer to accelerate payments, in whole or in part, except | ||||||
14 | upon a payment default. A servicer may not place any loan or | ||||||
15 | account into default or accelerate a loan for any reason other | ||||||
16 | than payment default. | ||||||
17 | (e) A private education loan executed before the effective | ||||||
18 | date of this amendatory Act of the 103rd General Assembly may | ||||||
19 | permit the servicer to accelerate payments only if the | ||||||
20 | promissory note or loan agreement explicitly authorizes an | ||||||
21 | acceleration and only for the reasons stated in the note or | ||||||
22 | agreement.
| ||||||
23 | (110 ILCS 992/5-80 new) | ||||||
24 | Sec. 5-80. Bankruptcy or death of cosigner. | ||||||
25 | (a) If a cosigner dies, the servicer may not attempt to |
| |||||||
| |||||||
1 | collect against the cosigner's estate other than for payment | ||||||
2 | default. | ||||||
3 | (b) With regard to the death or bankruptcy of a cosigner, | ||||||
4 | if a private education loan is not more than 60 days delinquent | ||||||
5 | at the time the servicer is notified of the cosigner's death or | ||||||
6 | bankruptcy, the servicer may not change any terms or benefits | ||||||
7 | under the promissory note, the repayment schedule, the | ||||||
8 | repayment terms, or the monthly payment amount or any other | ||||||
9 | provision associated with the loan.
| ||||||
10 | (110 ILCS 992/5-85 new) | ||||||
11 | Sec. 5-85. Total and permanent disability of borrower or | ||||||
12 | cosigner. | ||||||
13 | (a) For any private education loan issued on or after the | ||||||
14 | effective date of this amendatory Act of the 103rd General | ||||||
15 | Assembly, a servicer, when notified of the total and permanent | ||||||
16 | disability of a borrower or cosigner, shall release the | ||||||
17 | cosigner from the obligations of a cosigner under the private | ||||||
18 | education loan. The servicer may not attempt to collect a | ||||||
19 | payment from a cosigner following a notification of total and | ||||||
20 | permanent disability of the borrower or cosigner. | ||||||
21 | (b) A servicer shall be notified of the total and | ||||||
22 | permanent disability of a borrower and discharge the liability | ||||||
23 | of the borrower and cosigner on the loan. | ||||||
24 | (c) After receiving a notification described in subsection | ||||||
25 | (b) of this Section, the servicer may not: |
| |||||||
| |||||||
1 | (1) attempt to collect on the outstanding liability of | ||||||
2 | the borrower or cosigner; or | ||||||
3 | (2) monitor the disability status of the borrower at | ||||||
4 | any point after the date of discharge. | ||||||
5 | (d) A servicer shall, within 30 days after the release of | ||||||
6 | either a cosigner or borrower from the obligation of a private | ||||||
7 | education loan pursuant to subsection (a) or (b) of this | ||||||
8 | Section, notify both the borrower and cosigner of the release. | ||||||
9 | (e) A servicer shall, within 30 days after receiving | ||||||
10 | notice of the total and permanent disability of a borrower | ||||||
11 | pursuant to subsection (a) of this Section, provide the | ||||||
12 | borrower with an option to designate an individual to have the | ||||||
13 | legal authority to act on behalf of the borrower. | ||||||
14 | (f) If a cosigner is released from the obligations of a | ||||||
15 | private education loan pursuant to subsection (a) of this | ||||||
16 | Section, the servicer may not require the borrower to obtain | ||||||
17 | another cosigner on the loan obligation. | ||||||
18 | (g) A servicer may not declare a default or accelerate the | ||||||
19 | debt against a borrower on the sole bases of the release of the | ||||||
20 | cosigner from the loan obligation due to total and permanent | ||||||
21 | disability pursuant to subsection (a) of this Section.
| ||||||
22 | Section 99. Effective date. This Act takes effect upon | ||||||
23 | becoming law.".
|