Biss05052017As the White House rolls back federal protections for student loan borrowers across the nation, the Illinois State Senate sent a clear message Wednesday that it won’t succumb to pressure from loan services and their lobbyists.

Legislation sponsored by Senator Daniel Biss (D-Evanston) that would establish a student loan bill of rights in Illinois and help to protect students from predatory college lenders passed in the Senate Wednesday.

“The fact that the student loan industry sent high-powered lobbyists to Springfield to fight against these practical, commonsense protections for middle- and low-income families tells me that we’re on the right track with this legislation,” Biss said.

“Students are drowning in debt the second they complete their education. It can take decades to dig out from that kind of financial burden, and quite often students quickly fall behind on their payments or end up in default. This is no way to start a life, a career or a family.”

Senate Bill 1351 establishes the Student Loan Bill of Rights in Illinois to provide as much protection as possible for student borrowers, a population that frequently is targeted by bad actors in the student loan industry.

The measure would help to ensure students and their families receive clear information about the money they borrow for higher education and how their student loans are serviced. Among the protections offered in the legislation:

  • Creates a student loan ombudsman in the office of the attorney general to assist borrowers with student loans.
  • Requires student loan servicers to provide specialized employees to assist borrowers with questions about loan payments, explain repayment options and evaluate a borrower’s financial situation to determine which payment plan is appropriate.
  • Requires loan servicers to give borrowers accurate information on billing statements and properly process borrowers’ payments, and bars servicers from charging unreasonable fees.
  • Requires loan servicers to tell borrowers when and how their federal loans may be discharged due to a borrower’s disability or a problem with the school the borrower attended.
  • Requires loan servicers to provide information so cosigners know the conditions of being released from their obligations.
  • Requires servicers to follow procedures when a loan is transferred to a new servicer to ensure continuity and ensure borrowers’ payments are properly handled.
  • Ensures borrowers have the right to request information and file account disputes with their servicer and appeal any servicer determination.
  • Establishes a student loan servicing license with the Illinois Department of Financial and Professional Regulation to qualify, oversee and discipline services for violating the Student Loan Bill of Rights.

Illinois Attorney General Lisa Madigan has investigated abuses in the student loan industry and filed a lawsuit against Navient, one of the largest student loan servicing companies in the nation. She said she supports Senate Bill 1351 because it would reform the student loan industry to better protect borrowers from rampant student loan abuses.

“My investigation revealed Navient boosted its profits by unfairly putting struggling student borrowers into plans that allowed its operators to get off the phone faster and added on millions of dollars in unnecessary debt for borrowers,” Madigan said.

“Further, U.S. Education Secretary (Betsy) DeVos has abandoned student loan borrowers and their families by revoking reforms designed to rein in the widespread abuses revealed in my investigation, making it critical to set standards at the state level for borrowers to get the proper assistance to repay their loans.”

Additional supporters of the legislation include the Woodstock Institute and Illinois PIRG.

Senate Bill 1351 passed in the Senate 34 to 15. It will move to the Illinois House for consideration.

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