Illinois Legislature Enacts Protections for Student Loan Debtors, Leaving Enforcement to the Department of Professional and Financial Regulation and the Attorney General: Student Loan Servicing Rights Act (110 ILCS 992)
The Attorney General has successfully championed additional protections for Illinois student loan debtors. The AG stated that borrowers were not being made aware of their repayment options, including income-driven plans and possible loan forgiveness in the case of disability.
The Student Loan Servicing Rights Act is scheduled to become effective December 31, 2018. The Act establishes a baseline of behavior required of entities receiving and applying payments for student loans. The Act imposes the requirement of a professional license to service student loans and grants the Department of Financial and Professional Regulation the authority to enforce the act. The Department can impose fines of up to $75,000.00 or act to revoke any license granted under the act for violations. The Act also creates a new position within the Attorney General’s office to work with borrowers and educate the public.
The act is being described as a borrower bill of rights but does not create a private cause of action for violations. The legislature has left enforcement to either the Attorney General (Consumer Fraud Act), or the Department of Financial and Professional Regulation. Any complaints should be directed to those offices.
In addition to general requirements that all communications from the servicer be accurate and truthful, servicers will also be required to abide by the following rules:
The act also requires personnel working for servicers to discuss discharge, forgiveness of the debt, or deferment (no interest) when a borrower is expressing difficulty making payments before automatically turning to a forbearance (the interest continues).
Servicers must provide methodical treatment of any complaint or request from a borrower and suspend any collection efforts or negative credit reporting until the dispute is resolved.[vi] They must conduct investigations and send written notice of any determination. They must also allow Borrowers to appeal any determination, and generally escalate a complaint up the chain of command.
[i] 110 ILCS 992/5-110(b)(c)
[ii] 110 ILCS 993/5-15(a)
[iii] 110 ILCS 993/5-15(b)
[iv] 110 ILCS 993/5-25
[v] 110 ILCS 993/5-55
[vi] 110 ILCS 993/5-65
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