Sen. Laura Fine

Filed: 3/3/2023

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 86

2    AMENDMENT NO. ______. Amend Senate Bill 86 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Know Before You Owe Private Education Loan
5Act is amended by changing Sections 5 and 15 and by adding
6Sections 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
10calculated according to the Federal Reserve Board's
11methodology as set forth under Regulation Z, 12 CFR Part 1026.
12    "Cosigner" means any individual who is liable for the
13obligation of another without compensation, regardless of how
14the individual is designated in the contract or instrument
15with respect to that obligation, including an obligation under
16a private education loan extended to consolidate a borrower's

 

 

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1preexisting student loans. The term includes any individual
2whose signature is requested, as a condition, to grant credit
3or to forbear on collection. The term does not include a spouse
4of an individual if the spouse's signature is needed solely to
5perfect the security interest in a loan.
6    "Educational expense" means any expense, in whole or in
7part, expressly used to finance postsecondary education,
8regardless of whether the debt incurred by a student to pay
9that expense is owed to the provider of postsecondary
10education whose school, program, or facility the student
11attends.
12    "Income share agreement" means an agreement under which a
13borrower commits to pay a percentage of his or her future
14income in exchange for money, payments, or credits applied to
15or on behalf of a borrower. An income share agreement
16constitutes a loan and debt within the meaning of this Act.
17    "Income share agreement provider" means:
18        (1) a person that provides money, payments, or credits
19    to or on behalf of a borrower pursuant to the terms of an
20    income share agreement; or
21        (2) any other person engaged in the business of
22    soliciting, making, funding, or extending income share
23    agreements.
24    "Institution of higher education" includes, but is not
25limited to, institutions falling under the Private Business
26and Vocational Schools Act of 2012, the Private College Act,

 

 

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1and public institutions of higher education as defined in
2Section 1 of the Board of Higher Education Act. "Institution
3of higher education" also includes a person engaged in the
4business of providing postsecondary education, via
5correspondence, online, or in this State, to a person located
6in this State, regardless of whether the person has obtained
7authorization from the Illinois Board of Higher Education to
8operate in this State or is accredited.
9    "Private educational lender" and "private education loan"
10have the meanings ascribed to the terms in Section 140 of the
11Truth in Lending Act (15 U.S.C. 1650). In addition, "private
12educational lender" includes an income share agreement
13provider and a student financing company and "private
14education loan" includes an income share agreement and student
15financing.
16    "Student financing company" means a person engaged in the
17business of securing, making, or extending student financing.
18"Student financing company" does not include the following
19persons, only to the extent that State regulation is preempted
20by federal law:
21        (1) a federally chartered bank, savings bank, savings
22    and loan association, or credit union;
23        (2) a wholly owned subsidiary of a federally chartered
24    bank or credit union; and
25        (3) an operating subsidiary where each owner of the
26    operating subsidiary is wholly owned by the same federally

 

 

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1    chartered bank or credit union.
2    "Student financing" means an extension of credit that:
3        (1) is not made, insured, or guaranteed under Title IV
4    of the Higher Education Act of 1965 (20 U.S.C. 1070 et
5    seq.);
6        (2) is extended to a consumer expressly, in whole or
7    in part, for postsecondary educational expenses,
8    regardless of whether the extension of credit is provided
9    by the institution of higher education that the student
10    attends;
11        (3) does not include a private education loan;
12        (4) does not include an income share agreement; and
13        (5) does not include a loan that is secured by real
14    property or a dwelling.
15(Source: P.A. 102-583, eff. 8-26-21.)
 
16    (110 ILCS 983/15)
17    Sec. 15. Provision of information.
18    (a) Provision of loan statement to borrowers and
19cosigners.
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 and cosigners of those funds not less
24    than once every 3 months during the time that the borrower
25    is enrolled at an institution of higher education.

 

 

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1        (2) Contents of statements for income share
2    agreements. Each statement described in subparagraph (1)
3    with respect to income share agreements, shall:
4            (A) report the consumer's total amounts financed
5        under each income share agreement;
6            (B) report the percentage of income payable under
7        each income share agreement;
8            (C) report the maximum number of monthly payments
9        required to be paid under each income share agreement;
10            (D) report the maximum amount payable under each
11        income share agreement;
12            (E) report the maximum duration of each income
13        share agreement;
14            (F) report the minimum annual income above which
15        payments are required under each income share
16        agreement; and
17            (G) report the annual percentage rate for each
18        income share agreement at the minimum annual income
19        above which payments are required and at $10,000
20        income increments thereafter up to the annual income
21        where the maximum number of monthly payments results
22        in the maximum amount payable.
23        (3) Contents of all other loan statements. Each
24    statement described in subparagraph (1) that does not fall
25    under subparagraph (2) shall:
26            (A) report the borrower's total remaining debt to

 

 

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1        the private educational lender, including accrued but
2        unpaid interest and capitalized interest;
3            (B) report any debt increases since the last
4        statement; and
5            (C) list the current annual percentage rate for
6        each loan.
7    (b) Certification of exhaustion of federal student loan
8funds to private educational lender. Upon the request of a
9private educational lender, acting in connection with an
10application initiated by a borrower for a private education
11loan in accordance with Section 5, the institution of higher
12education shall within 15 days of receipt of the request
13provide certification to such private educational lender:
14        (1) that the borrower who initiated the application
15    for the private education loan, or on whose behalf the
16    application was initiated, is enrolled or is scheduled to
17    enroll at the institution of higher education;
18        (2) of the borrower's cost of attendance at the
19    institution of higher education as determined under
20    paragraph (2) of subsection (a) of this Section;
21        (3) of the difference between:
22            (A) the cost of attendance at the institution of
23        higher education; and
24            (B) the borrower's estimated financial assistance
25        received under the federal Higher Education Act of
26        1965 and other assistance known to the institution of

 

 

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1        higher education, as applicable;
2        (4) that the institution of higher education has
3    received the request for certification and will need
4    additional time to comply with the certification request;
5    and
6        (5) if applicable, that the institution of higher
7    education is refusing to certify the private education
8    loan.
9    (c) Certification of exhaustion of federal student loan
10funds to borrower. With respect to a certification request
11described under subsection (b), and prior to providing such
12certification in paragraph (1) of subsection (b) or providing
13notice of the refusal to provide certification under paragraph
14(5) of subsection (b), the institution of higher education
15shall:
16        (1) determine whether the borrower who initiated the
17    application for the private education loan, or on whose
18    behalf the application was initiated, has applied for and
19    exhausted the federal financial assistance available to
20    such borrower under the federal Higher Education Act of
21    1965 and inform the borrower and any cosigners
22    accordingly;
23        (2) provide the borrower and any cosigners whose loan
24    application has prompted the certification request by a
25    private educational lender, as described in paragraph (1)
26    of subsection (b), with the following information and

 

 

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1    disclosures:
2            (A) the amount of additional federal student
3        assistance for which the borrower is eligible and the
4        advantages of federal loans under the federal Higher
5        Education Act of 1965, including disclosure of income
6        driven repayment options, fixed interest rates,
7        deferments, flexible repayment options, loan
8        forgiveness programs, additional protections, and the
9        higher student loan limits for dependent borrowers
10        whose parents are not eligible for a Federal Direct
11        PLUS Loan;
12            (B) the borrower's ability to select a private
13        educational lender of the borrower's choice;
14            (C) the impact of a proposed private education
15        loan on the borrower's potential eligibility for other
16        financial assistance, including federal financial
17        assistance under the federal Higher Education Act; and
18            (D) the borrower's right to accept or reject a
19        private education loan within the 30-day period
20        following a private educational lender's approval of a
21        borrower's application and the borrower's 3-day right
22        to cancel period; and
23        (3) Any institution of higher education that is also
24    acting as a private educational lender shall provide the
25    certification of exhaustion of federal student loan funds
26    described in paragraphs (1) and (2) of this subsection (c)

 

 

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1    to the borrower and any cosigners prior to disbursing
2    funds to the borrower. Any institution of higher education
3    that is not eligible for funding under Title IV of the
4    federal Higher Education Act of 1965 is not required to
5    provide this certification to the borrower or any
6    cosigners.
7(Source: P.A. 102-583, eff. 8-26-21; 102-813, eff. 5-13-22.)
 
8    (110 ILCS 983/25 new)
9    Sec. 25. Cosigner disclosure; notice. Before extending a
10private education loan that requires a cosigner, a private
11educational lender shall disclose to the cosigner:
12        (1) how the private education loan obligation will
13    appear on the cosigner's credit report;
14        (2) how the cosigner will be notified if the private
15    education loan becomes delinquent, including how the
16    cosigner can cure the delinquency in order to avoid
17    negative credit furnishing and the loss of cosigner
18    release eligibility; and
19        (3) eligibility for release of the cosigner's
20    obligation on the private education loan, including the
21    number of on-time payments and any other criteria required
22    to approve the release of the cosigner from the loan
23    obligation.
 
24    (110 ILCS 983/30 new)

 

 

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1    Sec. 30. Refinancing. Before offering a person a private
2education loan that is being used to refinance an existing
3education loan, a private educational lender shall provide the
4person with a disclosure explaining that the benefits and
5protections applicable to the existing loan may be lost due to
6the refinancing. The disclosure must be provided on a one-page
7information sheet in at least 12-point type and must be
8written in simple, clear, understandable, and easily readable
9language.
 
10    Section 10. The Student Loan Servicing Rights Act is
11amended by changing Sections 1-5, 5-30, and 5-50 and by adding
12Sections 5-70, 5-75, 5-80, and 5-85 as follows:
 
13    (110 ILCS 992/1-5)
14    Sec. 1-5. Definitions. As used in this Act:
15    "Applicant" means a person applying for a license pursuant
16to this Act.
17    "Borrower" or "student loan borrower" means a person who
18has received or agreed to pay a student loan for his or her own
19educational expenses.
20    "Cosigner" means any individual who is liable for the
21obligation of another without compensation, regardless of how
22the individual is designated in the contract or instrument
23with respect to that obligation, including an obligation under
24a private education loan extended to consolidate a borrower's

 

 

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1preexisting student loans. The term includes any individual
2whose signature is requested, as a condition, to grant credit
3or to forbear on collection. The term does not include a spouse
4of an individual if the spouse's signature is needed solely to
5perfect the security interest in a loan a person who has agreed
6to share responsibility for repaying a student loan with a
7borrower.
8    "Department" means the Department of Financial and
9Professional Regulation.
10    "Division of Banking" means the Division of Banking of the
11Department of Financial and Professional Regulation.
12    "Federal loan borrower eligible for referral to a
13repayment specialist" means a borrower who possesses any of
14the following characteristics:
15        (1) requests information related to options to reduce
16    or suspend his or her monthly payment;
17        (2) indicates that he or she is experiencing or
18    anticipates experiencing financial hardship, distress, or
19    difficulty making his or her payments;
20        (3) has missed 2 consecutive monthly payments;
21        (4) is at least 75 days delinquent;
22        (5) is enrolled in a discretionary forbearance for
23    more than 9 of the previous 12 months;
24        (6) has rehabilitated or consolidated one or more
25    loans out of default within the past 12 months; or
26        (7) has not completed a course of study, as reflected

 

 

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1    in the servicer's records, or the borrower identifies
2    himself or herself as not having completed a program of
3    study.
4    "Federal education loan" means any loan made, guaranteed,
5or insured under Title IV of the federal Higher Education Act
6of 1965.
7    "Income-driven payment plan certification" means the
8documentation related to a federal student loan borrower's
9income or financial status the borrower must submit to renew
10an income-driven repayment plan.
11    "Income-driven repayment options" includes the
12Income-Contingent Repayment Plan, the Income-Based Repayment
13Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
14Plan, the Revised Pay As You Earn Plan, and any other federal
15student loan repayment plan that is calculated based on a
16borrower's income.
17    "Licensee" means a person licensed pursuant to this Act.
18    "Other repayment plans" means the Standard Repayment Plan,
19the Graduated Repayment Plan, the Extended Repayment Plan, or
20any other federal student loan repayment plan not based on a
21borrower's income.
22    "Private education loan" has the meaning ascribed to the
23term in Section 140 of the federal Truth in Lending Act (15
24U.S.C. 1650). In addition, "private education loan" includes
25an income share agreement and student financing.
26    "Private loan borrower eligible for referral to a

 

 

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1repayment specialist" means a borrower who possesses any of
2the following characteristics:
3        (1) requests information related to options to reduce
4    or suspend his or her monthly payments; or
5        (2) indicates that he or she is experiencing or
6    anticipates experiencing financial hardship, distress, or
7    difficulty making his or her payments.
8    "Requester" means any borrower or cosigner that submits a
9request for assistance.
10    "Request for assistance" means all inquiries, complaints,
11account disputes, and requests for documentation a servicer
12receives from borrowers or cosigners.
13    "Secretary" means the Secretary of Financial and
14Professional Regulation, or his or her designee, including the
15Director of the Division of Banking of the Department of
16Financial and Professional Regulation.
17    "Servicing" means: (1) receiving any scheduled periodic
18payments from a student loan borrower or cosigner pursuant to
19the terms of a student loan; (2) applying the payments of
20principal and interest and such other payments with respect to
21the amounts received from a student loan borrower or cosigner,
22as may be required pursuant to the terms of a student loan; and
23(3) performing other administrative services with respect to a
24student loan.
25    "Student loan" or "loan" means any federal education loan
26or other loan primarily for use to finance a postsecondary

 

 

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1education and costs of attendance at a postsecondary
2institution, including, but not limited to, tuition, fees,
3books and supplies, room and board, transportation, and
4miscellaneous personal expenses. "Student loan" includes a
5loan made to refinance a student loan.
6    "Student loan" shall not include an extension of credit
7under an open-end consumer credit plan, a reverse mortgage
8transaction, a residential mortgage transaction, or any other
9loan that is secured by real property or a dwelling.
10    "Student loan" shall not include an extension of credit
11made by a postsecondary educational institution to a borrower
12if one of the following apply:
13        (1) The term of the extension of credit is no longer
14    than the borrower's education program.
15        (2) The remaining, unpaid principal balance of the
16    extension of credit is less than $1,500 at the time of the
17    borrower's graduation or completion of the program.
18        (3) The borrower fails to graduate or successfully
19    complete his or her education program and has a balance
20    due at the time of his or her disenrollment from the
21    postsecondary institution.
22    "Student loan servicer" or "servicer" means any person
23engaged in the business of servicing student loans. "Student
24loan servicer" or "servicer" includes persons or entities
25acting on behalf of the State Treasurer.
26    "Student loan servicer" shall not include:

 

 

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1        (1) a bank, savings bank, savings association, or
2    credit union organized under the laws of the State or any
3    other state or under the laws of the United States;
4        (2) a wholly owned subsidiary of any bank, savings
5    bank, savings association, or credit union organized under
6    the laws of the State or any other state or under the laws
7    of the United States;
8        (3) an operating subsidiary where each owner of the
9    operating subsidiary is wholly owned by the same bank,
10    savings bank, savings association, or credit union
11    organized under the laws of the State or any other state or
12    under the laws of the United States;
13        (4) the Illinois Student Assistance Commission and its
14    agents when the agents are acting on the Illinois Student
15    Assistance Commission's behalf;
16        (5) a public postsecondary educational institution or
17    a private nonprofit postsecondary educational institution
18    servicing a student loan it extended to the borrower;
19        (6) a licensed debt management service under the Debt
20    Management Service Act, except to the extent that the
21    organization acts as a subcontractor, affiliate, or
22    service provider for an entity that is otherwise subject
23    to licensure under this Act;
24        (7) any collection agency licensed under the
25    Collection Agency Act that is collecting post-default
26    debt;

 

 

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1        (8) in connection with its responsibilities as a
2    guaranty agency engaged in default aversion, a State or
3    nonprofit private institution or organization having an
4    agreement with the U.S. Secretary of Education under
5    Section 428(b) of the Higher Education Act (20 U.S.C.
6    1078(B));
7        (9) a State institution or a nonprofit private
8    organization designated by a governmental entity to make
9    or service student loans, provided in each case that the
10    institution or organization services fewer than 20,000
11    student loan accounts of borrowers who reside in Illinois;
12        (10) a law firm or licensed attorney that is
13    collecting post-default debt; or
14        (11) the State Treasurer.
15    "Total and permanent disability" means a physical or
16mental impairment, disease, or loss of a permanent nature that
17prevents employment with or without reasonable accommodation,
18with proof of disability being in the form of a declaration
19from the United States Social Security Administration, the
20Illinois Workers' Compensation Commission, the United States
21Department of Defense, or an insurer authorized to transact
22business in this State who is providing disability insurance
23coverage to a contractor. The term does not include a
24condition that has not progressed or been exacerbated or that
25the individual did not acquire until after the closing of the
26loan agreement. In addition, documentation sufficient to

 

 

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1establish a total and permanent disability for a federal
2student loan made pursuant to Title IV of the federal Higher
3Education Act of 1965 is sufficient to establish a total and
4permanent disability under this Act.
5(Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18;
6101-586, eff. 8-26-19.)
 
7    (110 ILCS 992/5-30)
8    Sec. 5-30. Specialized assistance for student loan
9borrowers.
10    (a) A servicer shall specially designate servicing and
11collections personnel deemed repayment specialists who have
12received enhanced training related to repayment options.
13    (b) A servicer shall refrain from presenting forbearance
14as the sole or first repayment option to a student loan
15borrower struggling with repayment unless the servicer has
16determined that, based on the borrower's financial status, a
17short term forbearance is appropriate.
18    (c) All inbound and outbound calls from a federal loan
19borrower eligible for referral to a repayment specialist and a
20private loan borrower eligible for referral to a repayment
21specialist shall be routed to a repayment specialist.
22    (d) During each inbound or outbound communication with an
23eligible federal loan borrower, a repayment specialist shall
24first inform a federal loan borrower eligible for referral to
25a repayment specialist that federal income-driven repayment

 

 

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1plans that can reduce the borrower's monthly payment may be
2available, discuss such plans, and assist the borrower in
3determining whether a particular repayment plan may be
4appropriate for the borrower.
5    (e) A repayment specialist shall assess the long-term and
6short-term financial situation and needs of a federal loan
7borrower eligible for referral to a repayment specialist and
8consider any available specific information from the borrower
9as necessary to assist the borrower in determining whether a
10particular income-driven repayment option may be available to
11the borrower.
12    (f) In each discussion with a federal loan borrower
13eligible for referral to a repayment specialist, a repayment
14specialist shall present and explain the following options, as
15appropriate:
16        (1) total and permanent disability discharge, public
17    service loan forgiveness, closed school discharge, and
18    defenses to repayment;
19        (2) other repayment plans;
20        (3) deferment; and
21        (4) forbearance.
22    (g) A repayment specialist shall assess the long-term and
23short-term financial situation and needs of a private loan
24borrower eligible for referral to a repayment specialist in
25determining whether any private loan repayment options may be
26appropriate for the borrower.

 

 

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1    (h) A servicer shall present and explain all private loan
2repayment options, including alternative repayment
3arrangements applicable to private student loan borrowers.
4    (i) A servicer shall be prohibited from implementing any
5compensation plan that has the intended or actual effect of
6incentivizing a repayment specialist to violate this Act or
7any other measure that encourages undue haste or lack of
8quality.
9    (j) The requirements of this Section shall not apply if a
10repayment specialist has already conversed with a borrower
11consistent with the requirements of this Section.
12    (k) A servicer shall:
13        (1) provide on its website a description of any
14    modified or flexible repayment options offered by the
15    lender for private education loans;
16        (2) establish policies and procedures and implement
17    modified or flexible repayment options consistently in
18    order to facilitate the evaluation of such option
19    requests, including providing accurate information
20    regarding any options that may be available to the
21    borrower through the promissory note or that may have been
22    marketed to the borrower through marketing materials; and
23        (3) consistently present and offer private education
24    loan modification or flexible repayment options to all
25    borrowers with similar financial circumstances if the
26    servicer offers such modification or repayment options.

 

 

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1    (l) A servicer may not place a loan or account into default
2or accelerate a loan while a borrower is seeking a loan
3modification or enrollment in a modified or flexible repayment
4plan, except that a servicer may place a loan or account into
5default or accelerate a loan for payment default 90 days or
6more after the borrower's default.
7(Source: P.A. 100-540, eff. 12-31-18.)
 
8    (110 ILCS 992/5-50)
9    Sec. 5-50. Cosigner release.
10    (a) For private student loans, a servicer shall provide
11information on its website concerning the availability and
12criteria for a cosigner release.
13    (b) For any private education loan that obligates a
14cosigner, a servicer shall provide the borrower and the
15cosigner an annual written notice containing information about
16cosigner release, including the administrative and objective
17criteria the servicer requires to approve the release of the
18cosigner from the loan obligation and the process for applying
19for cosigner release. If the borrower has met the applicable
20payment requirement to be eligible for cosigner release, the
21servicer shall send the borrower and the cosigner a written
22notification by mail, and by electronic mail if the borrower
23or cosigner has elected to receive electronic communications
24from the servicer, informing the borrower and cosigner that
25the payment requirement to be eligible for cosigner release

 

 

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1has been met. The notification must also include information
2about any additional criteria to qualify for cosigner release
3and the procedure to apply for cosigner release.
4    (c) A servicer shall provide written notice to a borrower
5who applies for cosigner release but whose application is
6incomplete. The written notice must include a description of
7the information needed to consider the application complete
8and the date by which the applicant must furnish the missing
9information in order to complete the application.
10    (d) Within 30 days after a borrower submits a completed
11application for cosigner release, the servicer shall send the
12borrower and cosigner a written notice that informs the
13borrower and cosigner whether the servicer has approved or
14denied the cosigner release application. If the servicer
15denies a request for cosigner release, the borrower may
16request copies of any documents or information used in the
17determination, including the credit score threshold used by
18the servicer, the borrower's credit report, the borrower's
19credit score, and any other documents or information specific
20to the borrower. The servicer shall also provide any adverse
21action notices required under applicable federal law if the
22denial is based in whole or in part on any information
23contained in a credit report.
24    (e) In response to a written or oral request by the
25borrower for cosigner release, a servicer shall provide to the
26borrower the information described in subsection (b) of this

 

 

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1Section.
2(Source: P.A. 100-540, eff. 12-31-18.)
 
3    (110 ILCS 992/5-70 new)
4    Sec. 5-70. Cosigner release rights.
5    (a) A servicer may not impose any restriction that
6permanently bars a borrower from qualifying for cosigner
7release, including restricting the number of times a borrower
8may apply for cosigner release.
9    (b) A servicer may not impose any negative consequences on
10a borrower or cosigner during the 60 days following the
11issuance of the notice required pursuant to subsection (c) of
12Section 5-50 of this Act or until the servicer makes a final
13determination about a borrower's cosigner release application,
14whichever occurs later. As used in this subsection (b),
15"negative consequences" includes the imposition of additional
16eligibility criteria, negative credit reporting, lost
17eligibility or cosigner release, late fees, interest
18capitalization, or other financial injury.
19    (c) For any private education loan issued on or after the
20effective date of this amendatory Act of the 103rd General
21Assembly, a servicer may not require proof of more than 12
22consecutive, on-time payments as part of the criteria for
23cosigner release. A borrower who has paid the equivalent of 12
24months of principal and interest payments within any 12-month
25period is deemed to have satisfied the consecutive, on-time

 

 

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1payment requirement even if the borrower has not made payments
2monthly during the 12-month period. If a borrower or cosigner
3requests a change in terms that restarts the count of
4consecutive, on-time payments required for cosigner release,
5the servicer shall notify the borrower and cosigner in writing
6of the impact of the change and provide the borrower and
7cosigner with the right to withdraw or reverse the request to
8avoid the impact.
9    (d) A borrower may request an appeal of a servicer's
10determination to deny a request for cosigner release, and the
11servicer shall permit the borrower to submit additional
12documentation evidencing the borrower's ability, willingness,
13and stability to meet the payment obligations. The borrower
14may request that another employee of the servicer review the
15cosigner release determination.
16    (e) A servicer shall establish and maintain a
17comprehensive record management system reasonably designed to
18ensure the accuracy, integrity, and completeness of
19information about cosigner release applications and to ensure
20compliance with applicable State and federal laws. The system
21must include the number of cosigner-release applications
22received, the approval and denial rate, and the primary
23reasons for any denial.
 
24    (110 ILCS 992/5-75 new)
25    Sec. 5-75. Cosigner and borrower rights.

 

 

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1    (a) A servicer shall provide a cosigner with access to all
2documents or records related to the cosigned private education
3loan that are available to the borrower.
4    (b) If a servicer provides electronic access to documents
5and records for a borrower, it shall provide equivalent
6electronic access to the cosigner.
7    (c) Upon a borrower's request, the servicer shall redact
8the borrower's contact information from documents and records
9provided to a cosigner.
10    (d) A servicer may not include in a private education loan
11executed on or after the effective date of this amendatory Act
12of the 103rd General Assembly a provision that permits the
13servicer to accelerate payments, in whole or in part, except
14upon a payment default. A servicer may not place any loan or
15account into default or accelerate a loan for any reason other
16than payment default.
17    (e) A private education loan executed before the effective
18date of this amendatory Act of the 103rd General Assembly may
19permit the servicer to accelerate payments only if the
20promissory note or loan agreement explicitly authorizes an
21acceleration and only for the reasons stated in the note or
22agreement.
 
23    (110 ILCS 992/5-80 new)
24    Sec. 5-80. Bankruptcy or death of cosigner.
25    (a) If a cosigner dies, the servicer may not attempt to

 

 

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1collect against the cosigner's estate other than for payment
2default.
3    (b) With regard to the death or bankruptcy of a cosigner,
4if a private education loan is not more than 60 days delinquent
5at the time the servicer is notified of the cosigner's death or
6bankruptcy, the servicer may not change any terms or benefits
7under the promissory note, the repayment schedule, the
8repayment terms, or the monthly payment amount or any other
9provision associated with the loan.
 
10    (110 ILCS 992/5-85 new)
11    Sec. 5-85. Total and permanent disability of borrower or
12cosigner.
13    (a) For any private education loan issued on or after the
14effective date of this amendatory Act of the 103rd General
15Assembly, a servicer, when notified of the total and permanent
16disability of a borrower or cosigner, shall release the
17cosigner from the obligations of a cosigner under the private
18education loan. The servicer may not attempt to collect a
19payment from a cosigner following a notification of total and
20permanent disability of the borrower or cosigner.
21    (b) A servicer shall be notified of the total and
22permanent disability of a borrower and discharge the liability
23of the borrower and cosigner on the loan.
24    (c) After receiving a notification described in subsection
25(b) of this Section, the servicer may not:

 

 

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1        (1) attempt to collect on the outstanding liability of
2    the borrower or cosigner; or
3        (2) monitor the disability status of the borrower at
4    any point after the date of discharge.
5    (d) A servicer shall, within 30 days after the release of
6either a cosigner or borrower from the obligation of a private
7education loan pursuant to subsection (a) or (b) of this
8Section, notify both the borrower and cosigner of the release.
9    (e) A servicer shall, within 30 days after receiving
10notice of the total and permanent disability of a borrower
11pursuant to subsection (a) of this Section, provide the
12borrower with an option to designate an individual to have the
13legal authority to act on behalf of the borrower.
14    (f) If a cosigner is released from the obligations of a
15private education loan pursuant to subsection (a) of this
16Section, the servicer may not require the borrower to obtain
17another cosigner on the loan obligation.
18    (g) A servicer may not declare a default or accelerate the
19debt against a borrower on the sole bases of the release of the
20cosigner from the loan obligation due to total and permanent
21disability pursuant to subsection (a) of this Section.
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.".