SB3032 102ND GENERAL ASSEMBLY

LRB102 22166 CMG 31295 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3032

Introduced 1/5/2022, by Sen. Laura Fine

SYNOPSIS AS INTRODUCED:

New Act

Creates the Student Debt Assistance Act. Prohibits an institution of higher learning or a public or private entity that provides academic transcripts from (i) withholding academic transcripts from a current or former student because the student owes a debt to the institution, (ii) conditioning the provision of an academic transcript on the payment of a debt, other than a fee charged to provide the transcript, (iii) charging a higher fee to obtain an academic transcript or providing less favorable treatment of a request for an academic transcript because a current or former student owes a debt, or (iv) using academic transcript issuance as a tool for debt collection. Beginning with the 2022-2023 academic year, requires an institution of higher learning to make a good faith effort to offer a debt repayment plan to any student who owes a debt of $250 or more to the institution. Sets forth provisions concerning the debt repayment plan and enrollment procedures. Effective immediately.

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT MAY APPLY

A BILL FOR

AN ACT concerning education.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Student Debt Assistance Act.

Section 5. Findings. The General Assembly makes all of the following findings:

(1) Student debt is a consistent and growing problem in this State as well as nationwide. Due to unpaid tuition and fees, colleges and universities in this State place thousands of students on academic hold and often send the uncollected student debt to collection agencies. Either of these methods used by a college or university to collect student debt leads to significant issues for students. Being placed on academic hold prevents a student from enrolling in additional courses of study or receiving the student's academic transcript, which may prevent the student from receiving a job promotion that may help the student pay the student's debt to the college or university.

(2) Student debt that is sent to a collection agency often results in a student owing hundreds of dollars in collection fees and negatively affects the student's credit score. Additionally, sending a student's debt to a collection agency is not an effective method to collect unpaid student debt. In Ohio, a state with aggressive debt collection practices, public universities were only able to recover less than 7 cents of every dollar owed.

(3) Unpaid student debt presents an equity problem. Unpaid student debt disproportionately impacts low-income students and significantly affects students who attend community colleges.

(4) This State and its institutions of higher learning must do whatever is possible to prevent student debt from being sent to collection agencies.

(5) This Act provides opportunities for students to pay off their unpaid debts and to ensure that our institutions of higher learning are doing their part to assist students in these efforts.

Section 10. Definitions. In this Act:

"Academic hold" means any restriction imposed by an institution of higher learning to prevent a student from enrolling in courses of study or gaining access to the institution's services.

"Applicable provider" means an institution of higher learning or a public or private entity that is responsible for providing academic transcripts to a current or former student of an institution of higher learning.

"Debt" means any money, obligation, claim, or sum due or owing or alleged to be due or owing from a student to an institution of higher learning. "Debt" does not include the fee, if any, that is charged to students by an applicable provider for the actual cost of providing an academic transcript to a student.

"Financial evidence" means a bank statement, pay stubs, student loan approval, or other documentation used by a student to provide proof to an institution of higher learning that the student will be able to pay the tuition and mandatory fees for the next academic term.

"Good faith effort" means that an institution of higher learning has taken all necessary steps to contact a student concerning the student's delinquent debt and, if a student is eligible, has offered the student a debt repayment plan. A "good faith effort" to contact a student made by an institution of higher learning before sending the student's delinquent account to debt collection must include:

(1) making numerous attempts to contact the student via phone or email;

(2) giving the student ample time to respond to the final email or phone call, especially if the student withdrew from the institution for a documented medical reason or to take care of a family member; and

(3) giving the student ample time to return the required paperwork if contact with the student is made regarding the student's delinquent debt and a debt repayment plan is offered to the student.

"Institution of higher learning" or "institution" has the meaning ascribed to that term in the Higher Education Student Assistance Act.

Section 15. Withholding of academic transcripts prohibited. After the effective date of this Act, an applicable provider may not do any of the following:

(1) Refuse to provide an academic transcript to a current or former student on the grounds that the student owes a debt.

(2) Condition the provision of an academic transcript on the payment of a debt, other than a fee charged to provide the transcript.

(3) Charge a higher fee for obtaining an academic transcript or provide less favorable treatment of a request for an academic transcript because a current or former student owes a debt.

(4) Use academic transcript issuance as a tool for debt collection.

Section 20. Higher education debt repayment plan.

(a) To provide students with an opportunity to pay off debt they owe to an institution of higher learning, beginning with the 2022-2023 academic year, an institution of higher learning must make a good faith effort to offer a debt repayment plan to any student who owes a debt of $250 or more to the institution. A debt repayment plan offered by an institution of higher learning must satisfy the following requirements:

(1) If the amount of the student's debt is less than or equal to $2,500, the student must be offered the option of at least a 3-month, 6-month, 9-month, 12-month, or 18-month debt repayment plan.

(2) If the amount of the student's debt is more than $2,500, the student must be offered the option of at least a 6-month, 9-month, 12-month, 24-month, or 36-month debt repayment plan.

(3) All late fees or past-due fees incurred by a student that remain unpaid on the date the student enters into the debt repayment plan with the institution of higher learning must be waived by the institution.

(4) An institution of higher learning may use a third-party entity to assist in setting up and administering debt repayment plans; however, neither the institution of higher learning nor the third-party entity may charge the student interest on the amount of debt owed under the debt repayment plan. Neither the institution nor the third-party entity may charge the student more than $50 in fees to set up and administer the debt repayment plan.

(5) An institution of higher learning or a third-party entity that administers an institution's debt repayment plans may not charge a student any fee or prepayment penalty for the early repayment of the debt under the debt repayment plan.

(6) If a student enters into a debt repayment plan, the institution of higher learning or third-party entity must offer the student an option to renegotiate the debt repayment plan for a longer time period if the student can provide financial evidence that the student is not able to make the required payments due to unforeseen medical, travel, or cost-of-living expenses. The student may renegotiate only for time periods offered by the applicable provider.

(7) A student may not have more than one active debt repayment plan at a time for a past-due debt with an institution of higher learning or a third-party entity that administers an institution's debt repayment plans.

(8) If a student makes a payment of less than the negotiated monthly payment amount and fails to submit the remainder of the negotiated monthly payment due before the end of the applicable month, then the payment made shall be considered to be a missed payment for that month and shall be designated as such. The student may request that the institution of higher learning or third-party entity remove the designation if the student can provide financial evidence that the student was unable to fully pay the negotiated monthly payment amount as a result of unforeseen medical, travel, or cost-of-living expenses.

(b) If a student who is eligible under subsection (a) enters into a debt repayment plan with an institution of higher learning but fails to make 3 consecutive monthly payments, the institution of higher learning may initiate the process to send the remaining debt owed by the student to a collection agency. Prior to sending the student's debt to a collection agency, the institution must make a good faith effort to inform the student that the institution will be sending the student's debt to a collection agency unless the student begins to make payments again. The institution shall allow the student to appeal the institution's decision to send the debt to a collection agency. The student may also provide financial evidence to the institution to explain why the student has stopped making the debt payments.

(c) Any applicable provider to which a student owes a debt of less than $250 must make a good faith effort to contact and inform the student of the debt.

Section 25. Enrollment procedures for a student who owes debt.

(a) Beginning with the 2022-2023 academic year, an institution of higher learning may not place a student on academic hold and must allow the student to continue to enroll in courses of study if:

(1) the student has entered into a debt repayment plan with the institution of higher learning;

(2) the debt owed by the student is less than $2,500; and

(3) the student provides financial evidence that the student will not be accruing additional debt.

Any financial evidence requested by an institution under this subsection (a) must be of a nature that is easily accessible to the student and must not be overly burdensome to acquire. A student under this subsection (a) must provide financial evidence to the institution's office of financial aid or bursar's office. A student's financial evidence may be re-evaluated by the institution every academic term for as long as the student continues to owe debt to the institution.

(b) An institution of higher learning may not consider applying for or receiving student loan assistance as adding additional debt under subsection (a).

(c) If an institution of higher learning deems a student's financial evidence under subsection (a) insufficient, the student may appeal the institution's decision. The appeal process shall include a meeting with the institution's office of financial aid or bursar's office or another relevant department to discuss potential solutions that will allow the student to be eligible to enroll in additional courses of study. If, after the appeal process, the student's financial evidence is still deemed insufficient, the student may request a new appeal or provide new financial evidence once each academic term.

(d) Once a student pays a debt owed to an institution of higher learning, the institution may no longer request financial evidence from the student unless the student continues to meet the requirements under subsection (a).

(e) A student under subsection (a) who is allowed to enroll in additional courses of study but fails to make 2 consecutive monthly payments under a debt repayment plan with the institution may be placed on academic hold by the institution until the student makes payments again. The institution shall allow the student to appeal the academic hold. In its discretion, the institution may remove the academic hold.

(f) If a student meets the eligibility requirements in subsection (a), enrolls in additional courses, and accrues additional debt in a subsequent semester or term, the institution of higher learning or third-party entity that administers an institution's debt repayment plan must give the student the ability to renegotiate the student's debt repayment plan to include the additional debt. If the additional debt added to the debt repayment plan causes the student to owe $2,500 or more in debt, the institution of higher learning may place the student on academic hold until the student meets the eligibility requirements in subsection (a) again.

(g) A student may not have more than one active debt repayment plan at a time for a past-due debt with an institution of higher learning or a third-party entity that administers an institution's debt repayment plans.

Section 30. Applicability. Nothing in this Act preempts an institution of higher learning's ability to offer or prevents an institution from offering any kind of financial aid to a student for the purpose of keeping the student out of debt. Nothing in this Act prevents an institution of higher learning from forgiving a student's debt.

Section 99. Effective date. This Act takes effect upon becoming law.