Illinois Attorney General Lisa Madigan recently organized a forum at Southern Illinois University to discuss the student loan crisis. Madigan joined with education advocates to urge lawmakers to override Governor Bruce Rauner’s veto of Senate Bill 1351. SB1351 passed the House of Representatives in June and was vetoed by the governor in late August.
Known as the Student Loan Bill of Rights, SB1351 would give borrowers added protections from student loan servicers. It would prohibit servicers from misleading borrowers and require them to correctly process payments. It would also require servicers to make borrowers aware of their eligibility for loan forgiveness. Servicers would have to hire a specialist to help borrowers understand their repayment options, and it would require all student loan servicers to be licensed to operate in the state of Illinois.
Madigan was a leading proponent for SB1351 after her own investigation into the student loan industry revealed widespread abuse. Her investigation revealed that fraudulent practices taken by student loan servicers made it harder and more expensive for student loan borrowers in repayment. It was found that servicers often failed to inform borrowers of their repayment options or provide basic information.
This isn’t the first time that Madigan has taken action against student loan servicers.
Madigan has already taken legal action against Navient, one of the leading student loan companies. She claimed that Navient repeatedly put borrowers on the most expensive repayment plans when more affordable options were available. Navient’s CEO defended the company from Madigan’s allegations and claimed they were politically driven.
Last February, Madigan wrote an open letter to Secretary of Education Betsy DeVos. Her letter urged DeVos to maintain the borrower defense rules that were put in place by the Obama Administration. These borrower defense rules aim to protect borrowers from predatory tactics taken by for-profit colleges. DeVos froze the borrower defense rules shortly before they were scheduled to take effect on July 1, 2017.
These actions prompted Attorney Generals from 18 different states to file lawsuits against both Secretary DeVos and the Department of Education. The lawsuit stated that Secretary DeVos’ actions signaled the eventual repeal and replacement of the borrower defense rules. The goal of the lawsuit was to have the borrower defense rules fully restored. The Department of Education did not comment on the lawsuit.
Student loan debt totals over $1.4 trillion and is shared by over 44 million borrowers. It is now the largest source of unsecured consumer debt in the United States.
Author: Andrew Rombach
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