Public Act 103-0748
 
SB0086 EnrolledLRB103 25185 RJT 51524 b

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

Effective Date: 8/2/2024