Full Text of SB0086 103rd General Assembly
SB0086enr 103RD GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning education.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 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 | 17 | | preexisting
student loans. The term includes any individual | 18 | | whose signature is
requested, as a condition, to grant credit | 19 | | or to forbear on
collection. The term does not include a spouse | 20 | | of an individual if the
spouse's signature is needed solely to | 21 | | perfect the security
interest in a loan. | 22 | | "Educational expense" means any expense, in whole or in | 23 | | part,
expressly used to finance postsecondary education, |
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| 1 | | regardless of
whether the debt incurred by a student to pay | 2 | | that expense is
owed to the provider of postsecondary | 3 | | education whose school,
program, or facility the student | 4 | | attends. | 5 | | "Income share agreement" means an agreement under which a | 6 | | borrower commits to pay a percentage of his or her future | 7 | | income in exchange for money, payments, or credits applied to | 8 | | or on behalf of a borrower. An income share agreement | 9 | | constitutes a loan and debt within the meaning of this Act. | 10 | | "Income share agreement provider" means: | 11 | | (1) a person that provides money, payments, or credits | 12 | | to or on behalf of a borrower pursuant to the terms of an | 13 | | income share agreement; or | 14 | | (2) any other person engaged in the business of | 15 | | soliciting, making, funding, or extending
income share | 16 | | agreements. | 17 | | "Institution of higher education" includes, but is not | 18 | | limited to, institutions falling under the Private Business | 19 | | and Vocational Schools Act of 2012, the Private College Act, | 20 | | and public institutions of higher education as defined in | 21 | | Section 1 of the Board of Higher Education Act. "Institution | 22 | | of higher education" also includes a person engaged in the | 23 | | business of providing postsecondary education, via | 24 | | correspondence, online, or in this State, to a person located | 25 | | in this State, regardless of whether the person has obtained | 26 | | authorization from the Illinois Board of Higher Education to |
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| 1 | | operate in this State or is accredited. | 2 | | "Private educational lender" and "private education loan" | 3 | | have the meanings ascribed to the terms in Section 140 of the | 4 | | Truth in Lending Act (15 U.S.C. 1650). In addition, "private | 5 | | educational lender" includes an income share agreement | 6 | | provider and a student financing company and "private | 7 | | education loan" includes an income share agreement and student | 8 | | financing. | 9 | | "Student financing company" means a person engaged in the | 10 | | business of securing, making, or extending student financing. | 11 | | "Student financing company" does not include the following | 12 | | persons, only to the extent that State regulation is preempted | 13 | | by federal law: | 14 | | (1) a federally chartered bank, savings bank, savings | 15 | | and loan association, or credit union; | 16 | | (2) a wholly owned subsidiary of a federally chartered | 17 | | bank or credit union; and | 18 | | (3) an operating subsidiary where each owner of the | 19 | | operating subsidiary is wholly owned by the same federally | 20 | | chartered bank or credit union. | 21 | | "Student financing" means an extension of credit that: | 22 | | (1) is not made, insured, or guaranteed under Title IV | 23 | | of the Higher Education Act of 1965 (20 U.S.C. 1070 et | 24 | | seq.); | 25 | | (2) is extended to a consumer expressly, in whole or | 26 | | in part, for postsecondary educational expenses, |
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| 1 | | regardless of whether the extension of credit is provided | 2 | | by the institution of higher education that the student | 3 | | attends; | 4 | | (3) does not include a private education loan; | 5 | | (4) does not include an income share agreement; and | 6 | | (5) does not include a loan that is secured by real | 7 | | property or a dwelling.
| 8 | | (Source: P.A. 102-583, eff. 8-26-21.) | 9 | | (110 ILCS 983/15)
| 10 | | Sec. 15. Provision of information. | 11 | | (a) Provision of loan statement to borrowers and | 12 | | cosigners . | 13 | | (1) Loan statement. A private educational lender that | 14 | | disburses any funds with respect to a private education | 15 | | loan described in this Section shall send loan statements | 16 | | to the borrowers and cosigners of those funds not less | 17 | | than once every 3 months during the time that the borrower | 18 | | is enrolled at an institution of higher education. | 19 | | (2) Contents of statements for income share | 20 | | agreements. Each statement described in
subparagraph (1) | 21 | | with respect to income share agreements, shall: | 22 | | (A) report the consumer's total amounts financed | 23 | | under each income share
agreement; | 24 | | (B) report the percentage of income payable under | 25 | | each income share agreement; |
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| 1 | | (C) report the maximum number of monthly payments | 2 | | required to be paid under
each income share agreement; | 3 | | (D) report the maximum amount payable under each | 4 | | income share agreement; | 5 | | (E) report the maximum duration of each income | 6 | | share agreement; | 7 | | (F) report the minimum annual income above which | 8 | | payments are required under
each income share | 9 | | agreement; and | 10 | | (G) report the annual percentage rate for each | 11 | | income share agreement at the
minimum annual income | 12 | | above which payments are required and at $10,000 | 13 | | income
increments thereafter up to the annual income | 14 | | where the maximum number of monthly
payments results | 15 | | in the maximum amount payable. | 16 | | (3) Contents of all other loan statements. Each | 17 | | statement described in subparagraph (1) that does not fall | 18 | | under subparagraph (2) shall: | 19 | | (A) report the borrower's total remaining debt to | 20 | | the private educational lender, including accrued but | 21 | | unpaid interest and capitalized interest; | 22 | | (B) report any debt increases since the last | 23 | | statement; and | 24 | | (C) list the current annual percentage rate for | 25 | | each loan. | 26 | | (b) Certification of exhaustion of federal student loan |
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| 1 | | funds to private educational lender. Upon the request of a | 2 | | private educational lender, acting in connection with an | 3 | | application initiated by a borrower for a private education | 4 | | loan in accordance with Section 5, the institution of higher | 5 | | education shall within 15 days of receipt of the request | 6 | | provide certification to such private educational lender: | 7 | | (1) that the borrower who initiated the application | 8 | | for the private education loan, or on whose behalf the | 9 | | application was initiated, is enrolled or is scheduled to | 10 | | enroll at the institution of higher education; | 11 | | (2) of the borrower's cost of attendance at the | 12 | | institution of higher education as determined under | 13 | | paragraph (2) of subsection (a) of this Section; | 14 | | (3) of the difference between: | 15 | | (A) the cost of attendance at the institution of | 16 | | higher education; and | 17 | | (B) the borrower's estimated financial assistance | 18 | | received under the federal Higher Education Act of | 19 | | 1965 and other assistance known to the institution of | 20 | | higher education, as applicable; | 21 | | (4) that the institution of higher education has | 22 | | received the request for certification and will need | 23 | | additional time to comply with the certification request; | 24 | | and | 25 | | (5) if applicable, that the institution of higher | 26 | | education is refusing to certify the private education |
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| 1 | | loan. | 2 | | (c) Certification of exhaustion of federal student loan | 3 | | funds to borrower. With respect to a certification request | 4 | | described under subsection (b), and prior to providing such | 5 | | certification in paragraph (1) of subsection (b) or providing | 6 | | notice of the refusal to provide certification under paragraph | 7 | | (5) of subsection (b), the institution of higher education | 8 | | shall: | 9 | | (1) determine whether the borrower who initiated the | 10 | | application for the private education loan, or on whose | 11 | | behalf the application was initiated, has applied for and | 12 | | exhausted the federal financial assistance available to | 13 | | such borrower under the federal Higher Education Act of | 14 | | 1965 and inform the borrower and any cosigners | 15 | | accordingly; | 16 | | (2) provide the borrower and any cosigners whose loan | 17 | | application has prompted the certification request by a | 18 | | private educational lender, as described in paragraph (1) | 19 | | of subsection (b), with the following information and | 20 | | disclosures: | 21 | | (A) the amount of additional federal student | 22 | | assistance for which the borrower is eligible and the | 23 | | advantages of federal loans under the federal Higher | 24 | | Education Act of 1965, including disclosure of income | 25 | | driven repayment options, fixed interest rates, | 26 | | deferments, flexible repayment options, loan |
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| 1 | | forgiveness programs, additional protections, and the | 2 | | higher student loan limits for dependent borrowers | 3 | | whose parents are not eligible for a Federal Direct | 4 | | PLUS Loan; | 5 | | (B) the borrower's ability to select a private | 6 | | educational lender of the borrower's choice; | 7 | | (C) the impact of a proposed private education | 8 | | loan on the borrower's potential eligibility for other | 9 | | financial assistance, including federal financial | 10 | | assistance under the federal Higher Education Act; and | 11 | | (D) the borrower's right to accept or reject a | 12 | | private education loan within the 30-day period | 13 | | following a private educational lender's approval of a | 14 | | borrower's application and the borrower's 3-day right | 15 | | to cancel period; and | 16 | | (3) Any institution of higher education that is also | 17 | | acting as a private educational lender shall provide the | 18 | | certification of exhaustion of federal student loan funds | 19 | | described in paragraphs (1) and (2) of this subsection (c) | 20 | | to the borrower and any cosigners prior to disbursing | 21 | | funds to the borrower. Any institution of higher education | 22 | | that is not eligible for funding under Title IV of the | 23 | | federal Higher
Education Act of 1965 is not required to | 24 | | provide this certification to the borrower or any | 25 | | cosigners .
| 26 | | (Source: P.A. 102-583, eff. 8-26-21; 102-813, eff. 5-13-22.) |
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| 1 | | (110 ILCS 983/25 new) | 2 | | Sec. 25. Cosigner disclosure; notice. Before extending a | 3 | | private education loan that requires a
cosigner, a private | 4 | | educational lender shall disclose to the
cosigner: | 5 | | (1) how the private education loan obligation will | 6 | | appear
on the cosigner's credit report; | 7 | | (2) how the cosigner will be notified if the private
| 8 | | education loan becomes delinquent, including how the
| 9 | | cosigner can cure the delinquency in order to avoid
| 10 | | negative credit furnishing and the loss of cosigner
| 11 | | release eligibility; and | 12 | | (3) eligibility for release of the cosigner's | 13 | | obligation
on the private education loan, including the | 14 | | number of
on-time payments and any other criteria required | 15 | | to
approve the release of the cosigner from the loan
| 16 | | obligation. | 17 | | (110 ILCS 983/30 new) | 18 | | Sec. 30. Refinancing. Before offering a person a private | 19 | | education loan that is
being used to refinance an existing | 20 | | education loan, a private
educational lender shall provide the | 21 | | person with a disclosure
explaining that the benefits and | 22 | | protections applicable to the
existing loan may be lost due to | 23 | | the refinancing. The
disclosure must be provided on a one-page | 24 | | information sheet
in at least 12-point type and must be |
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| 1 | | written in simple,
clear, understandable, and easily readable | 2 | | language. | 3 | | Section 10. The Student Loan Servicing Rights Act is | 4 | | amended by changing Sections 1-5, 5-30, and 5-50 and by adding | 5 | | Sections 5-70, 5-75, 5-80, and 5-85 as follows: | 6 | | (110 ILCS 992/1-5)
| 7 | | Sec. 1-5. Definitions. As used in this Act: | 8 | | "Applicant" means a person applying for a license pursuant | 9 | | to this Act. | 10 | | "Borrower" or "student loan borrower" means a person who | 11 | | has received or agreed to pay a student loan for his or her own | 12 | | educational expenses. | 13 | | "Cosigner" means any individual who is liable for the | 14 | | obligation of another without compensation, regardless of how | 15 | | the individual is designated in the contract or instrument | 16 | | with respect to that obligation, including an obligation under | 17 | | a private education loan extended to consolidate a borrower's | 18 | | preexisting student loans. The term includes any individual | 19 | | whose signature is requested, as a condition, to grant credit | 20 | | or to forbear on collection. The term does not include a spouse | 21 | | of an individual if the spouse's signature is needed solely to | 22 | | perfect the security interest in a loan a person who has agreed | 23 | | to share responsibility for repaying a student loan with a | 24 | | borrower . |
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| 1 | | "Department" means the Department of Financial and | 2 | | Professional Regulation. | 3 | | "Division of Banking" means the Division of Banking of the | 4 | | Department of Financial and Professional Regulation. | 5 | | "Federal loan borrower eligible for referral to a | 6 | | repayment specialist" means a borrower who possesses any of | 7 | | the following characteristics: | 8 | | (1) requests information related to options to reduce | 9 | | or suspend his or her monthly payment; | 10 | | (2) indicates that he or she is experiencing or | 11 | | anticipates experiencing financial hardship, distress, or | 12 | | difficulty making his or her payments; | 13 | | (3) has missed 2 consecutive monthly payments; | 14 | | (4) is at least 75 days delinquent; | 15 | | (5) is enrolled in a discretionary forbearance for | 16 | | more than 9 of the previous 12 months; | 17 | | (6) has rehabilitated or consolidated one or more | 18 | | loans out of default within the past 12 months; or | 19 | | (7) has not completed a course of study, as reflected | 20 | | in the servicer's records, or the borrower identifies | 21 | | himself or herself as not having completed a program of | 22 | | study. | 23 | | "Federal education loan" means any loan made, guaranteed, | 24 | | or insured under Title IV of the federal Higher Education Act | 25 | | of 1965. | 26 | | "Income-driven payment plan certification" means the |
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| 1 | | documentation related to a federal student loan borrower's | 2 | | income or financial status the borrower must submit to renew | 3 | | an income-driven repayment plan. | 4 | | "Income-driven repayment options" includes the | 5 | | Income-Contingent Repayment Plan, the Income-Based Repayment | 6 | | Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn | 7 | | Plan, the Revised Pay As You Earn Plan, and any other federal | 8 | | student loan repayment plan that is calculated based on a | 9 | | borrower's income. | 10 | | "Licensee" means a person licensed pursuant to this Act. | 11 | | "Other repayment plans" means the Standard Repayment Plan, | 12 | | the Graduated Repayment Plan, the Extended Repayment Plan, or | 13 | | any other federal student loan repayment plan not based on a | 14 | | borrower's income. | 15 | | "Private education loan" has the meaning ascribed to the | 16 | | term in Section 140 of the federal Truth in Lending Act (15 | 17 | | U.S.C. 1650). In addition, "private education loan" includes | 18 | | an income share agreement and student financing. | 19 | | "Private loan borrower eligible for referral to a | 20 | | repayment specialist" means a borrower who possesses any of | 21 | | the following characteristics: | 22 | | (1) requests information related to options to reduce | 23 | | or suspend his or her monthly payments; or | 24 | | (2) indicates that he or she is experiencing or | 25 | | anticipates experiencing financial hardship, distress, or | 26 | | difficulty making his or her payments. |
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| 1 | | "Requester" means any borrower or cosigner that submits a | 2 | | request for assistance. | 3 | | "Request for assistance" means all inquiries, complaints, | 4 | | account disputes, and requests for documentation a servicer | 5 | | receives from borrowers or cosigners. | 6 | | "Secretary" means the Secretary of Financial and | 7 | | Professional Regulation, or his or her designee, including the | 8 | | Director of the Division of Banking of the Department of | 9 | | Financial and Professional Regulation. | 10 | | "Servicing" means: (1) receiving any scheduled periodic | 11 | | payments from a student loan borrower or cosigner pursuant to | 12 | | the terms of a student loan; (2) applying the payments of | 13 | | principal and interest and such other payments with respect to | 14 | | the amounts received from a student loan borrower or cosigner, | 15 | | as may be required pursuant to the terms of a student loan; and | 16 | | (3) performing other administrative services with respect to a | 17 | | student loan. | 18 | | "Student loan" or "loan" means any federal education loan | 19 | | or other loan primarily for use to finance a postsecondary | 20 | | education and costs of attendance at a postsecondary | 21 | | institution, including, but not limited to, tuition, fees, | 22 | | books and supplies, room and board, transportation, and | 23 | | miscellaneous personal expenses. "Student loan" includes a | 24 | | loan made to refinance a student loan. | 25 | | "Student loan" shall not include an extension of credit | 26 | | under an open-end consumer credit plan, a reverse mortgage |
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| 1 | | transaction, a residential mortgage transaction, or any other | 2 | | loan that is secured by real property or a dwelling. | 3 | | "Student loan" shall not include an extension of credit | 4 | | made by a postsecondary educational institution to a borrower | 5 | | if one of the following apply: | 6 | | (1) The term of the extension of credit is no longer | 7 | | than the borrower's education program. | 8 | | (2) The remaining, unpaid principal balance of the | 9 | | extension of credit is less than $1,500 at the time of the | 10 | | borrower's graduation or completion of the program. | 11 | | (3) The borrower fails to graduate or successfully | 12 | | complete his or her education program and has a balance | 13 | | due at the time of his or her disenrollment from the | 14 | | postsecondary institution. | 15 | | "Student loan servicer" or "servicer" means any person | 16 | | engaged in the business of servicing student loans. "Student | 17 | | loan servicer" or "servicer" includes persons or entities | 18 | | acting on behalf of the State Treasurer. | 19 | | "Student loan servicer" shall not include: | 20 | | (1) a bank, savings bank, savings association, or | 21 | | credit union organized under the laws of the State or any | 22 | | other state or under the laws of the United States; | 23 | | (2) a wholly owned subsidiary of any bank, savings | 24 | | bank, savings association, or credit union organized under | 25 | | the laws of the State or any other state or under the laws | 26 | | of the United States; |
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| 1 | | (3) an operating subsidiary where each owner of the | 2 | | operating subsidiary is wholly owned by the same bank, | 3 | | savings bank, savings association, or credit union | 4 | | organized under the laws of the State or any other state or | 5 | | under the laws of the United States; | 6 | | (4) the Illinois Student Assistance Commission and its | 7 | | agents when the agents are acting on the Illinois Student | 8 | | Assistance Commission's behalf; | 9 | | (5) a public postsecondary educational institution or
| 10 | | a private nonprofit postsecondary educational institution
| 11 | | servicing a student loan it extended to the borrower; | 12 | | (6) a licensed debt management service under the Debt
| 13 | | Management Service Act, except to the extent that the
| 14 | | organization acts as a subcontractor, affiliate, or
| 15 | | service provider for an entity that is otherwise subject | 16 | | to licensure under this Act; | 17 | | (7) any collection agency licensed under the
| 18 | | Collection Agency Act that is collecting post-default
| 19 | | debt; | 20 | | (8) in connection with its responsibilities as a | 21 | | guaranty agency engaged in default aversion, a State or | 22 | | nonprofit private institution or organization having an | 23 | | agreement with the U.S. Secretary of Education under | 24 | | Section 428(b) of the Higher Education Act (20 U.S.C. | 25 | | 1078(B));
| 26 | | (9) a State institution or a nonprofit private |
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| 1 | | organization designated by a governmental entity to make | 2 | | or service student loans, provided in each case that the | 3 | | institution or organization services fewer than 20,000 | 4 | | student loan accounts of borrowers who reside in Illinois;
| 5 | | (10) a law firm or licensed attorney that is | 6 | | collecting post-default debt; or | 7 | | (11) the State Treasurer. | 8 | | "Total and permanent disability" means a physical or | 9 | | mental impairment, disease, or loss of a permanent nature that | 10 | | prevents employment with or without reasonable accommodation, | 11 | | with proof of disability being in the form of a declaration | 12 | | from the United States Social Security Administration, the | 13 | | Illinois Workers' Compensation Commission, the United States | 14 | | Department of Defense, or an insurer authorized to transact | 15 | | business in this State who is providing disability insurance | 16 | | coverage to a contractor. The term does not include a | 17 | | condition that has not progressed or been exacerbated or that | 18 | | the individual did not acquire until after the closing of the | 19 | | loan agreement. In addition, documentation sufficient to | 20 | | establish a total and permanent disability for a federal | 21 | | student loan made pursuant to Title IV of the federal Higher | 22 | | Education Act of 1965 is sufficient to establish a total and | 23 | | permanent disability under this Act. | 24 | | (Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18; | 25 | | 101-586, eff. 8-26-19.) |
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| 1 | | (110 ILCS 992/5-30)
| 2 | | Sec. 5-30. Specialized assistance for student loan | 3 | | borrowers. | 4 | | (a) A servicer shall specially designate servicing and | 5 | | collections personnel deemed repayment specialists who have | 6 | | received enhanced training related to repayment options. | 7 | | (b) A servicer shall refrain from presenting forbearance | 8 | | as the sole or first repayment option to a student loan | 9 | | borrower struggling with repayment unless the servicer has | 10 | | determined that, based on the borrower's financial status, a | 11 | | short term forbearance is appropriate. | 12 | | (c) All inbound and outbound calls from a federal loan | 13 | | borrower eligible for referral to a repayment specialist and a | 14 | | private loan borrower eligible for referral to a repayment | 15 | | specialist shall be routed to a repayment specialist. | 16 | | (d) During each inbound or outbound communication with an | 17 | | eligible federal loan borrower, a repayment specialist shall | 18 | | first inform a federal loan borrower eligible for referral to | 19 | | a repayment specialist that federal income-driven repayment | 20 | | plans that can reduce the borrower's monthly payment may be | 21 | | available, discuss such plans, and assist the borrower in | 22 | | determining whether a particular repayment plan may be | 23 | | appropriate for the borrower. | 24 | | (e) A repayment specialist shall assess the long-term and | 25 | | short-term financial situation and needs of a federal loan | 26 | | borrower eligible for referral to a repayment specialist and |
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| 1 | | consider any available specific information from the borrower | 2 | | as necessary to assist the borrower in determining whether a | 3 | | particular income-driven repayment option may be available to | 4 | | the borrower. | 5 | | (f) In each discussion with a federal loan borrower | 6 | | eligible for referral to a repayment specialist, a repayment | 7 | | specialist shall present and explain the following options, as | 8 | | appropriate: | 9 | | (1) total and permanent disability discharge, public | 10 | | service loan forgiveness, closed school discharge, and | 11 | | defenses to repayment; | 12 | | (2) other repayment plans; | 13 | | (3) deferment; and | 14 | | (4) forbearance. | 15 | | (g) A repayment specialist shall assess the long-term and | 16 | | short-term financial situation and needs of a private loan | 17 | | borrower eligible for referral to a repayment specialist in | 18 | | determining whether any private loan repayment options may be | 19 | | appropriate for the borrower. | 20 | | (h) A servicer shall present and explain all private loan | 21 | | repayment options, including alternative repayment | 22 | | arrangements applicable to private student loan borrowers. | 23 | | (i) A servicer shall be prohibited from implementing any | 24 | | compensation plan that has the intended or actual effect of | 25 | | incentivizing a repayment specialist to violate this Act or | 26 | | any other measure that encourages undue haste or lack of |
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| 1 | | quality. | 2 | | (j) The requirements of this Section shall not apply if a | 3 | | repayment specialist has already conversed with a borrower | 4 | | consistent with the requirements of this Section. | 5 | | (k) A servicer shall: | 6 | | (1) provide on its website a description of any | 7 | | modified or flexible repayment options offered by the | 8 | | lender for private education loans; | 9 | | (2) establish policies and procedures and implement | 10 | | modified or flexible repayment options consistently in | 11 | | order to facilitate the evaluation of such option | 12 | | requests, including providing accurate information | 13 | | regarding any options that may be available to the | 14 | | borrower through the promissory note or that may have been | 15 | | marketed to the borrower through marketing materials; and | 16 | | (3) consistently present and offer private education | 17 | | loan modification or flexible repayment options to all | 18 | | borrowers with similar financial circumstances if the | 19 | | servicer offers such modification or repayment options. | 20 | | (l) A servicer may not place a loan or account into default | 21 | | or accelerate a loan while a borrower is seeking a loan | 22 | | modification or enrollment in a modified or flexible repayment | 23 | | plan, except that a servicer may place a loan or account into | 24 | | default or accelerate a loan for payment default 90 days or | 25 | | more after the borrower's default.
| 26 | | (Source: P.A. 100-540, eff. 12-31-18 .) |
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| 1 | | (110 ILCS 992/5-50)
| 2 | | Sec. 5-50. Cosigner release. | 3 | | (a) For private student loans, a servicer shall provide | 4 | | information on its website concerning the availability and | 5 | | criteria for a cosigner release.
| 6 | | (b) For any private education loan that obligates a | 7 | | cosigner, a servicer shall provide the borrower and the | 8 | | cosigner an annual written notice containing information about | 9 | | cosigner release, including the administrative and objective | 10 | | criteria the servicer requires to approve the release of the | 11 | | cosigner from the loan obligation and the process for applying | 12 | | for cosigner release. If the borrower has met the applicable | 13 | | payment requirement to be eligible for cosigner release, the | 14 | | servicer shall send the borrower and the cosigner a written | 15 | | notification by mail, and by electronic mail if the borrower | 16 | | or cosigner has elected to receive electronic communications | 17 | | from the servicer, informing the borrower and cosigner that | 18 | | the payment requirement to be eligible for cosigner release | 19 | | has been met. The notification must also include information | 20 | | about any additional criteria to qualify for cosigner release | 21 | | and the procedure to apply for cosigner release. | 22 | | (c) A servicer shall provide written notice to a borrower | 23 | | who applies for cosigner release but whose application is | 24 | | incomplete. The written notice must include a description of | 25 | | the information needed to consider the application complete |
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| 1 | | and the date by which the applicant must furnish the missing | 2 | | information in order to complete the application. | 3 | | (d) Within 30 days after a borrower submits a completed | 4 | | application for cosigner release, the servicer shall send the | 5 | | borrower and cosigner a written notice that informs the | 6 | | borrower and cosigner whether the servicer has approved or | 7 | | denied the cosigner release application. If the servicer | 8 | | denies a request for cosigner release, the borrower may | 9 | | request copies of any documents or information used in the | 10 | | determination, including the credit score threshold used by | 11 | | the servicer, the borrower's credit report, the borrower's | 12 | | credit score, and any other documents or information specific | 13 | | to the borrower. The servicer shall also provide any adverse | 14 | | action notices required under applicable federal law if the | 15 | | denial is based in whole or in part on any information | 16 | | contained in a credit report. | 17 | | (e) In response to a written or oral request by the | 18 | | borrower for cosigner release, a servicer shall provide to the | 19 | | borrower the information described in subsection (b) of this | 20 | | Section. | 21 | | (Source: P.A. 100-540, eff. 12-31-18 .) | 22 | | (110 ILCS 992/5-70 new) | 23 | | Sec. 5-70. Cosigner release rights. | 24 | | (a) A servicer may not impose any restriction that | 25 | | permanently bars a borrower from qualifying for cosigner |
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| 1 | | release, including restricting the number of times a borrower | 2 | | may apply for cosigner release. | 3 | | (b) A servicer may not impose any negative consequences on | 4 | | a borrower or cosigner during the 60 days following the | 5 | | issuance of the notice required pursuant to subsection (c) of | 6 | | Section 5-50 of this Act or until the servicer makes a final | 7 | | determination about a borrower's cosigner release application, | 8 | | whichever occurs later. As used in this subsection (b), | 9 | | "negative consequences" includes the imposition of additional | 10 | | eligibility criteria, negative credit reporting, lost | 11 | | eligibility or cosigner release, late fees, interest | 12 | | capitalization, or other financial injury. | 13 | | (c) 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 may not require proof of more than 12 | 16 | | consecutive, on-time payments as part of the criteria for | 17 | | cosigner release. A borrower who has paid the equivalent of 12 | 18 | | months of principal and interest payments within any 12-month | 19 | | period is deemed to have satisfied the consecutive, on-time | 20 | | payment requirement even if the borrower has not made payments | 21 | | monthly during the 12-month period. If a borrower or cosigner | 22 | | requests a change in terms that restarts the count of | 23 | | consecutive, on-time payments required for cosigner release, | 24 | | the servicer shall notify the borrower and cosigner in writing | 25 | | of the impact of the change and provide the borrower and | 26 | | cosigner with the right to withdraw or reverse the request to |
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| 1 | | avoid the impact. | 2 | | (d) A borrower may request an appeal of a servicer's | 3 | | determination to deny a request for cosigner release, and the | 4 | | servicer shall permit the borrower to submit additional | 5 | | documentation evidencing the borrower's ability, willingness, | 6 | | and stability to meet the payment obligations. The borrower | 7 | | may request that another employee of the servicer review the | 8 | | cosigner release determination. | 9 | | (e) A servicer shall establish and maintain a | 10 | | comprehensive record management system reasonably designed to | 11 | | ensure the accuracy, integrity, and completeness of | 12 | | information about cosigner release applications and to ensure | 13 | | compliance with applicable State and federal laws. The system | 14 | | must include the number of cosigner-release applications | 15 | | received, the approval and denial rate, and the primary | 16 | | reasons for any denial. | 17 | | (110 ILCS 992/5-75 new) | 18 | | Sec. 5-75. Cosigner and borrower rights. | 19 | | (a) A servicer shall provide a cosigner with access to all | 20 | | documents or records related to the cosigned private education | 21 | | loan that are available to the borrower. | 22 | | (b) If a servicer provides electronic access to documents | 23 | | and records for a borrower, it shall provide equivalent | 24 | | electronic access to the cosigner. | 25 | | (c) Upon a borrower's request, the servicer shall redact |
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| 1 | | the borrower's contact information from documents and records | 2 | | provided to a cosigner. | 3 | | (d) A servicer may not include in a private education loan | 4 | | executed on or after the effective date of this amendatory Act | 5 | | of the 103rd General Assembly a provision that permits the | 6 | | servicer to accelerate payments, in whole or in part, except | 7 | | upon a payment default. A servicer may not place any loan or | 8 | | account into default or accelerate a loan for any reason other | 9 | | than payment default. | 10 | | (e) A private education loan executed before the effective | 11 | | date of this amendatory Act of the 103rd General Assembly may | 12 | | permit the servicer to accelerate payments only if the | 13 | | promissory note or loan agreement explicitly authorizes an | 14 | | acceleration and only for the reasons stated in the note or | 15 | | agreement. | 16 | | (110 ILCS 992/5-80 new) | 17 | | Sec. 5-80. Bankruptcy or death of cosigner. | 18 | | (a) If a cosigner dies, the servicer may not attempt to | 19 | | collect against the cosigner's estate other than for payment | 20 | | default. | 21 | | (b) With regard to the death or bankruptcy of a cosigner, | 22 | | if a private education loan is not more than 60 days delinquent | 23 | | at the time the servicer is notified of the cosigner's death or | 24 | | bankruptcy, the servicer may not change any terms or benefits | 25 | | under the promissory note, the repayment schedule, the |
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| 1 | | repayment terms, or the monthly payment amount or any other | 2 | | provision associated with the loan. | 3 | | (110 ILCS 992/5-85 new) | 4 | | Sec. 5-85. Total and permanent disability of borrower or | 5 | | cosigner. | 6 | | (a) For any private education loan issued on or after the | 7 | | effective date of this amendatory Act of the 103rd General | 8 | | Assembly, a servicer, when notified of the total and permanent | 9 | | disability of a borrower or cosigner, shall release the | 10 | | cosigner from the obligations of a cosigner under the private | 11 | | education loan. The servicer may not attempt to collect a | 12 | | payment from a cosigner following a notification of total and | 13 | | permanent disability of the borrower or cosigner. | 14 | | (b) A servicer shall be notified of the total and | 15 | | permanent disability of a borrower and discharge the liability | 16 | | of the borrower and cosigner on the loan. | 17 | | (c) After receiving a notification described in subsection | 18 | | (b) of this Section, the servicer may not: | 19 | | (1) attempt to collect on the outstanding liability of | 20 | | the borrower or cosigner; or | 21 | | (2) monitor the disability status of the borrower at | 22 | | any point after the date of discharge. | 23 | | (d) A servicer shall, within 30 days after the release of | 24 | | either a cosigner or borrower from the obligation of a private | 25 | | education loan pursuant to subsection (a) or (b) of this |
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| 1 | | Section, notify both the borrower and cosigner of the release. | 2 | | (e) A servicer shall, within 30 days after receiving | 3 | | notice of the total and permanent disability of a borrower | 4 | | pursuant to subsection (a) of this Section, provide the | 5 | | borrower with an option to designate an individual to have the | 6 | | legal authority to act on behalf of the borrower. | 7 | | (f) If a cosigner is released from the obligations of a | 8 | | private education loan pursuant to subsection (a) of this | 9 | | Section, the servicer may not require the borrower to obtain | 10 | | another cosigner on the loan obligation. | 11 | | (g) A servicer may not declare a default or accelerate the | 12 | | debt against a borrower on the sole bases of the release of the | 13 | | cosigner from the loan obligation due to total and permanent | 14 | | disability pursuant to subsection (a) of this Section.
| 15 | | Section 99. Effective date. This Act takes effect upon | 16 | | becoming law.
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