Full Text of HB2746 102nd General Assembly
HB2746eng 102ND 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 1. Short title. This Act may be cited as the Know | 5 | | Before You Owe Private Education Loan Act. | 6 | | Section 5. Definitions. As used in this Act: | 7 | | "Income share agreement" means an agreement under which a | 8 | | borrower commits to pay a percentage of his or her future | 9 | | income in exchange for money, payments, or credits applied to | 10 | | or on behalf of a borrower. An income share agreement | 11 | | constitutes a loan and debt within the meaning of this Act. | 12 | | "Income share agreement provider" means: | 13 | | (1) a person that directly or indirectly provides | 14 | | money, payments, or credits to or on behalf of a borrower | 15 | | pursuant to the terms of an income share agreement; | 16 | | (2) a person that participates in the creation or | 17 | | administration of an income share agreement, including by: | 18 | | (A) providing, originating, or underwriting | 19 | | services or assistance; | 20 | | (B) calculating, collecting, or processing | 21 | | payments; | 22 | | (C) collecting income from any source; | 23 | | (D) arranging one or more income-based financing |
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| 1 | | transactions; or | 2 | | (E) performing any other administrative service | 3 | | pursuant to the terms of an income share agreement; or | 4 | | (3) an assignee or recipient of the proceeds of an | 5 | | income share agreement. | 6 | | "Institution of higher education" includes, but is not | 7 | | limited to, institutions falling under the Private Business | 8 | | and Vocational Schools Act of 2012, the Private College Act, | 9 | | and public institutions of higher education as defined in | 10 | | Section 1 of the Board of Higher Education Act. "Institution | 11 | | of higher education" also includes a person engaged in the | 12 | | business of providing postsecondary education, via | 13 | | correspondence, online, or in this State, to a person located | 14 | | in this State, regardless of whether the person has obtained | 15 | | authorization from the Illinois Board of Higher Education to | 16 | | operate in this State or is accredited. | 17 | | "Private educational lender" and "private education loan" | 18 | | have the meanings ascribed to the terms in Section 140 of the | 19 | | Truth in Lending Act (15 U.S.C. 1650). In addition, "private | 20 | | educational lender" includes an income share agreement | 21 | | provider and a student financing company and "private | 22 | | education loan" includes an income share agreement and student | 23 | | financing. | 24 | | "Student financing company" means a person engaged in the | 25 | | business of securing, making, or extending student financing. | 26 | | "Student financing company" does not include the following |
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| 1 | | persons, only to the extent that State regulation is preempted | 2 | | by federal law: | 3 | | (1) a federally chartered bank, savings bank, savings | 4 | | and loan association, or credit union; | 5 | | (2) a wholly owned subsidiary of a federally chartered | 6 | | bank or credit union; and | 7 | | (3) an operating subsidiary where each owner of the | 8 | | operating subsidiary is wholly owned by the same federally | 9 | | chartered bank or credit union. | 10 | | "Student financing" means an extension of credit that: | 11 | | (1) is not made, insured, or guaranteed under Title IV | 12 | | of the Higher Education Act of 1965 (20 U.S.C. 1070 et | 13 | | seq.); | 14 | | (2) is extended to a consumer expressly, in whole or | 15 | | in part, for postsecondary educational expenses, | 16 | | regardless of whether the extension of credit is provided | 17 | | by the institution of higher education that the student | 18 | | attends; | 19 | | (3) does not include a private education loan; | 20 | | (4) does not include an income share agreement; and | 21 | | (5) does not include a loan that is secured by real | 22 | | property or a dwelling. | 23 | | Section 10. Institutional certification required. | 24 | | (a) In general. Except as provided in subsection (b) of | 25 | | this Section, before a private educational lender may disburse |
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| 1 | | any funds with respect to a private education loan described | 2 | | in this Act, the private educational lender shall obtain from | 3 | | the relevant institution of higher education where such loan | 4 | | is to be used on the behalf of the borrower, such institution's | 5 | | certification of: | 6 | | (1) the enrollment status of the borrower; | 7 | | (2) the borrower's cost of attendance at the | 8 | | institution as determined by the institution under Title | 9 | | IV, Part F, of the Higher Education Act of 1965 as amended; | 10 | | and | 11 | | (3) the difference between: | 12 | | (A) such cost of attendance; and | 13 | | (B) the borrower's estimated financial assistance, | 14 | | including such assistance received under Title IV of | 15 | | the Higher Education Act of 1965 (20 U.S.C. 1070 et | 16 | | seq.) and other financial assistance known to the | 17 | | institution, as applicable. | 18 | | (b) Notwithstanding subsection (a), a private educational | 19 | | lender may disburse funds with respect to a private education | 20 | | loan described in this subsection without obtaining the | 21 | | institution's certification if the institution fails to | 22 | | provide the certification within 15 business days of the | 23 | | private educational lender's request for the certification if | 24 | | the private educational lender has received: | 25 | | (1) notification of the institution's refusal to | 26 | | certify the request; or |
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| 1 | | (2) notification that the institution has received the | 2 | | request for certification and will need additional time to | 3 | | comply with the certification request. | 4 | | (c) Loans disbursed without certification. If a private | 5 | | educational lender disburses funds without obtaining the | 6 | | certification as described in subsection (b), the private | 7 | | educational lender shall report the disbursement of the funds | 8 | | in a manner determined by the Student Loan Ombudsman. | 9 | | (d) Notification of loans disbursed without certification. | 10 | | On or before the date a private educational lender issues any | 11 | | funds with respect to a private education loan described in | 12 | | this Section, the private educational lender shall notify the | 13 | | relevant institution of higher education, in writing, of the | 14 | | amount of the extension of credit and the borrower on whose | 15 | | behalf credit is extended. | 16 | | (e) Annual report. A private educational lender that | 17 | | disburses funds with respect to a private education loan | 18 | | described in this Section shall prepare and submit an annual | 19 | | report to the Department of Financial and Professional | 20 | | Regulation and the Student Loan Ombudsman containing the | 21 | | required information about private student loans to be | 22 | | determined by the Student Loan Ombudsman. Such a report shall | 23 | | include, at a minimum, the following information about private | 24 | | education loans described in this Section, including any | 25 | | private education loans disbursed without certification: | 26 | | (A) a list of all institutions of higher education at |
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| 1 | | which a private education lender disburses funds with | 2 | | respect to a private education loan described in this | 3 | | Section; | 4 | | (B) the volume of private education loans described in | 5 | | this Section made annually by a private education lender; | 6 | | (C) the volume of private education loans described in | 7 | | this Section made annually at each school identified under | 8 | | paragraph (A); | 9 | | (D) the historical lifetime default rate for borrowers | 10 | | obtaining a private education loan described in this | 11 | | Section from the private education lender; and | 12 | | (E) a copy of each model or template promissory note, | 13 | | agreement, contract or other instrument used by a private | 14 | | education lender during the previous year to substantiate | 15 | | that a private education loan described in this Section | 16 | | has been extended to the borrower or that a borrower owes a | 17 | | debt to the private education lender. | 18 | | Section 15. Provision of information. | 19 | | (a) Provision of loan statement to borrowers. | 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 of those funds not less than once every 3 | 24 | | months during the time that the borrower is enrolled at an | 25 | | institution of higher education. |
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| 1 | | (2) Contents of loan statement. Each statement | 2 | | described in subparagraph (1) shall: | 3 | | (A) report the borrower's total remaining debt to | 4 | | the private educational lender, including accrued but | 5 | | unpaid interest and capitalized interest; | 6 | | (B) report any debt increases since the last | 7 | | statement; and | 8 | | (C) list the current interest rate for each loan. | 9 | | (b) Certification of exhaustion of federal student loan | 10 | | funds to private student lender. Upon the request of a private | 11 | | educational lender, acting in connection with an application | 12 | | initiated by a borrower for a private education loan in | 13 | | accordance with Section 5, the institution of higher education | 14 | | shall within 15 days of receipt of the request provide | 15 | | certification to such private educational lender: | 16 | | (1) that the borrower who initiated the application | 17 | | for the private education loan, or on whose behalf the | 18 | | application was initiated, is enrolled or is scheduled to | 19 | | enroll at the institution of higher education; | 20 | | (2) of the borrower's cost of attendance at the | 21 | | institution of higher education as determined under | 22 | | paragraph (2) of subsection (a) of this Section; | 23 | | (3) of the difference between: | 24 | | (A) the cost of attendance at the institution of | 25 | | higher education; and | 26 | | (B) the borrower's estimated financial assistance |
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| 1 | | received under the federal Higher Education Act of | 2 | | 1965 and other assistance known to the institution of | 3 | | higher education, as applicable; | 4 | | (4) that the institution of higher education has | 5 | | received the request for certification and will need | 6 | | additional time to comply with the certification request; | 7 | | and | 8 | | (5) if applicable, that the institution of higher | 9 | | education is refusing to certify the private education | 10 | | loan. | 11 | | (c) Certification of exhaustion of federal student loan | 12 | | funds to borrower. With respect to a certification request | 13 | | described under subsection (b), and prior to providing such | 14 | | certification in paragraph (1) of subsection (b) or providing | 15 | | notice of the refusal to provide certification under paragraph | 16 | | (5) of subsection (b), the institution of higher education | 17 | | shall: | 18 | | (1) determine whether the borrower who initiated the | 19 | | application for the private education loan, or on whose | 20 | | behalf the application was initiated, has applied for and | 21 | | exhausted the federal financial assistance available to | 22 | | such borrower under the federal Higher Education Act of | 23 | | 1965 and inform the borrower accordingly; and | 24 | | (2) provide the borrower whose loan application has | 25 | | prompted the certification request by a private | 26 | | educational lender, as described in paragraph (1) of |
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| 1 | | subsection (b), with the following information and | 2 | | disclosures: | 3 | | (A) the amount of additional federal student | 4 | | assistance for which the borrower is eligible and the | 5 | | advantages of federal loans under the federal Higher | 6 | | Education Act of 1965, including disclosure of income | 7 | | driven repayment options, fixed interest rates, | 8 | | deferments, flexible repayment options, loan | 9 | | forgiveness programs, additional protections, and the | 10 | | higher student loan limits for dependent borrowers | 11 | | whose parents are not eligible for a Federal Direct | 12 | | PLUS Loan; | 13 | | (B) the borrower's ability to select a private | 14 | | educational lender of the borrower's choice; | 15 | | (C) the impact of a proposed private education | 16 | | loan on the borrower's potential eligibility for other | 17 | | financial assistance, including federal financial | 18 | | assistance under the federal Higher Education Act; and | 19 | | (D) the borrower's right to accept or reject a | 20 | | private education loan within the 30-day period | 21 | | following a private educational lender's approval of a | 22 | | borrower's application and the borrower's 3-day right | 23 | | to cancel period. | 24 | | Section 20. Annual certification and maintenance of | 25 | | approval. |
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| 1 | | (a) Certification. An institution of higher education must | 2 | | certify annually to the Board of Higher Education, and the | 3 | | Illinois Community College Board where applicable, whether it | 4 | | has made all certifications required under subsections (b) and | 5 | | (c) of Section 15. | 6 | | (b) Maintenance of approval. In each instance where the | 7 | | Board of Higher Education or the Illinois Community College | 8 | | Board provides the institution of higher education with | 9 | | approval to operate, the certification provided pursuant to | 10 | | this Section shall be required for the maintenance of approval | 11 | | to operate.
| 12 | | Section 99. Effective date. This Act takes effect upon | 13 | | becoming law.
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