With both houses of the Illinois General Assembly overriding the veto of Governor Bruce Rauner, the Illinois Student Loan Servicing Rights Act will become law. Surpassing the three-fifths supermajorities needed for an override, the Senate voted by a margin of 37-19 and the House of Representatives by 98-16. The Act takes effect on December 31, 2018.
Principally, the Act provides a Student Loan Bill of Rights, creates a position of Student Loan Ombudsman in the Illinois Attorney General’s Office, and requires the licensure of student-loan servicers operating in Illinois. Much of the Act’s substance is found in the Student Loan Bill of Rights, which was drafted by the Office of Illinois Attorney General Lisa Madigan.
The Student Loan Bill of Rights regulates student-loan servicers on various subjects including payment processing, fees, billing statements, specialized assistance for borrowers, disclosures related to discharge and cancellation, income-driven repayment plan certifications, information to be provided to private education loan borrowers, cosigner releases, payoff statements, transfers of servicing, and requests for assistance. Notably, the Illinois AG may enforce a violation of the Student Loan Bill of Rights as an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act.
Upon the legislative override, AG Madigan stated, “The Student Loan Bill of Rights will ensure that borrowers receive the necessary information to handle repayment of their student loans in a financially responsible manner.”
As the legislative override has demonstrated, student-loan servicing is a high priority in the Illinois AG’s Office. With the Student Loan Bill of Rights becoming law, enforceable by the AG, student-loan servicers operating in the State will have to adjust to the new mandates and plan to ensure compliance.