Senate Bill 1351, a legislative piece aimed at protecting borrowers from abuses in the student loan industry, passed the Illinois House of Representatives yesterday by a vote of 63 to 48 according to a bill status update from the Illinois General Assembly.
The bill, sponsored in the House by Rep. Will Guzzardi, will now go to Governor Bruce Rauner’s desk for final approval. It was recently passed by the state Senate earlier in May.
Senate Bill 1351 would create a Student Loan Bill of Rights to protect student loan borrowers by prohibiting student loan servicers from misleading borrowers. The bill also requires servicers to properly process payments, hire specialists to better explain repayment options to borrowers, and inform borrowers of their potential eligibility for student loan forgiveness due to a disability or problem with the school they attended.
The legislation would also create a Student Loan Ombudsman in the Attorney General’s office and require student loan servicers to obtain a license to operate in Illinois.
The passing of the bill through the House on June 1st was celebrated by Attorney General Lisa Madigan, the champion of the legislation. Madigan led an investigation that revealed widespread abuses and failures in the student loan industry; she also filed a lawsuit against Navient, one of the country’s largest student loan servicing companies.
“The Student Loan Bill of Rights is a great success for Illinois student borrowers, their families and our economy,” Madigan said. “For too long, student loan companies have engaged in fraudulent and abusive practices that make it difficult and expensive for borrowers to repay their loans. The Student Loan Bill of Rights will make Illinois a national leader in protecting borrowers and addressing the student loan crisis.”
Attorney General Madigan’s investigation showed that borrowers often run into problems with their student loan servicers. Illinois borrowers have complained to the AG’s office that loan servicers have failed to inform them of affordable repayment options, follow borrower payment instructions and answer questions consistently.
Furthermore, scam artists have taken advantage of desperate student loan borrowers, who look elsewhere when their servicers fail to help. Many borrowers get scammed into paying large, illegal upfront fees in exchange for help that never arrives. Madigan has taken an initiative to shut down illegal student debt relief operations preying on borrowers.
This isn’t the first time that Madigan has made her mark on the issue of student borrower rights. In February, she urged Secretary of Education Betsy DeVos to maintain borrower protections in place safeguarding students from fraudulent for-profit college tactics with an open letter.
Representative Guzzardi, the bill’s sponsor, said the following: “Student debt is a crisis of epic proportions in this country, and the federal government is walking away from consumer protections at the worst possible moment. The Student Loan Bill of Rights is Illinois’ response to this crisis. It’ll protect borrowers from abuse by servicers and ensure everyone gets access to the best possible payment plan.”
In the U.S., student loan debt has become the largest form of unsecured consumer debt in the country with roughly 43.3 million borrowers owing over $1.41 trillion. 60 percent of graduates leave school with student debt. On average, the typical borrower is $28,400 in debt.
Author: Dave Rathmanner
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