A proposed law could help dig struggling students out of debt in Illinois.
Illinois Attorney General Lisa Madigan has asked Governor Bruce Rauner to sign a “Student Loan Bill of Rights,” which is a law designed to reform the student loan industry and help borrowers repay their lenders.
It would also require lenders to provide the right information to students asking them for money. […]
The governor’s office said the bill is being reviewed.
Attorney General Lisa Madigan today convened a student loan forum with education advocates and community organizations and urged Gov. Rauner to sign into law a bill to reform the student loan industry to help student loan borrowers repay their loans. The bill addresses widespread abuses and failures in the student loan industry that were revealed by her investigation and lawsuit against one of the country’s largest student loan servicing companies, Navient.
Senate Bill 1351, sponsored by Sen. Daniel Biss and Rep. Will Guzzardi and drafted with Madigan’s office, would create a Student Loan Bill of Rights to better protect borrowers from abuses in the student loan industry.
“For too long, student loan borrowers have been put into more difficult and more expensive repayment plans because of fraudulent practices by student loan companies,” Madigan said. “The Student Loan Bill of Rights will finally crack down on abuse and make Illinois a national leader in protecting borrowers. The Governor should sign this bill into law immediately on behalf of Illinois students, families and our economy.”
Over the past decade, student loan debt has doubled to become the largest form of unsecured consumer debt in the country with more than 40 million borrowers owing over $1.4 trillion. Nearly 70 percent of graduates leave college with an average debt burden of $30,000, and one-in-four borrowers are behind on their payments or in default.
Students who attended for-profit colleges are particularly hard hit, making up the vast majority of borrowers in default. While federal income-based repayment options are available, the U.S. Treasury has reported that only 20 percent of eligible borrowers are enrolled in these options, which can lower payments based on income to as low as $0 a month.
Madigan’s investigation into Navient revealed that borrowers frequently experience problems with their student loan servicers and are put into more expensive repayment options when more affordable plans are available. Specifically, borrowers in Illinois have complained to her office that their loan servicers failed to inform them of affordable repayment options, follow borrower payment instructions and answer questions consistently.
Because it is so difficult to get legitimate help from loan servicers, student loan borrowers are increasingly turning elsewhere for help. Scam artists have rushed in to exploit desperate borrowers, much like they did during the mortgage crisis, with false promises to help in exchange for large, illegal upfront fees. Madigan has led the country in shutting down illegal student loan debt relief operations preying on borrowers.
Senate Bill 1351 would create a Student Loan Bill of Rights to protect student loan borrowers by prohibiting student loan servicers from misleading borrowers and requiring that they:
• Properly process payments;
• Require specialists to provide and explain to struggling borrowers all of their repayment options, starting with income-driven plans; and
• Inform borrowers that they may be eligible to have their loans forgiven due to a disability or a problem with the school they attended.
The bill 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.
Attorney General Madigan is a national leader in investigating and enforcing consumer protection violations in the higher education field. In addition to her lawsuit against Navient and Sallie Mae, Madigan has investigated for-profit schools for fraud and repeatedly called on the U.S. Department of Education to immediately forgive federal loans of students who attended fraudulent for-profit schools. Madigan has also testified before Congress and urged the U.S. Department of Education to crack down on the many abuses and scams facing student borrowers.
Madigan also instituted a free Student Loan Helpline to provide student borrowers with resources about repayment options, avoiding default or how to file a complaint about loan servicing at (800) 455-2456 (TTY: 1-800-964-3013). More information can also be found on her website.
- Responsa - Wednesday, Aug 16, 17 @ 11:35 am:
I don’t care what your name is, bossy arrogant politicians need to quit telling the voting public what to do. Make the case that causes them to decide own their own how to respond. It means more that way and actually involves them in the thought process about the issue. Retweeting is ineffective and is the lazy man’s way to petition their government.
- SAP - Wednesday, Aug 16, 17 @ 11:43 am:
The Constitution gives the Governor another 12 days to act on SB1351. It’s not like he is using a parliamentary maneuver to delay it from taking effect.
- Blue dog dem - Wednesday, Aug 16, 17 @ 11:49 am:
The student loan scam needs to be turned inside out. This needs to be also addressed at the National level. We can lend money to BAC and Wells at 2%, but the kids get to borrow it at 7.5% if they are lucky.
- Anon 47696 - Wednesday, Aug 16, 17 @ 11:56 am:
Responsa - you clearly do not have student loan debt. Tell me, really…..what is the difference between Rauner or Trump using Twitter to govern the country/state and Madigan using it to promote signing a bill into law that actually helps people with astronomical student debt? I happen to be among the students that were defrauded and lied to. I have student loan debt that is higher than my mortgage and they want payments more than what I pay for my mortgage! But God forbid someone else besides Trump use Twitter for a political agenda…..the ignorance of people never ceases to amaze me. At least she didn’t resort to off color cartoons to ask for a signature on a bill that clearly has no Dem/Rep side - the student loan crisis affects everyone regardless of political bias. I sure hope the Twitter Gods can forgive me for being ineffective in delivering messages to people that don’t care about humanity. The fact that every single bill that crosses his desk has to be begged a signature for is pure ridiculousness. Even the blind (or blonde if you prefer) can see that this is a bill that would help countless people in IL and across the US as a whole. Student Loan scams are no laughing matter and as financially screwed as IL residents already are, help in this area has never been more needed.
- RNUG - Wednesday, Aug 16, 17 @ 12:51 pm:
Haven’t read the bill but hopefully it addresses some of the problems with current law.
The one item that catchs a lot of people unaware when they co-sign e) a student loan. If the non-student dies (likely it was a parent or grandparent), Sally Mae (don’t remember the new name) immediately calls the loan, and if the student can’t come up with the money, it has to be paid out of the estate. FYI, if you end up in that situation, challenge it in your local probate court. Odds are, with all the changes and switching around, there won’t be a valid paper trail of assignments.
- ChrisB - Wednesday, Aug 16, 17 @ 1:03 pm:
If there are fraudulent practices or illegal scams, why doesn’t AG Madigan prosecute them?
- Henry Francis - Wednesday, Aug 16, 17 @ 1:20 pm:
If you can’t afford college without taking out a loan, then maybe college just isn’t for you.
Gov. Rauner (fake?)
- Nearly Normal - Wednesday, Aug 16, 17 @ 2:20 pm:
If the person with the loan dies, a non-government loan may dun the parents for the payoff if they co-signed. It’s in the fine print which most do not check. Good idea for parents to take out an insurance policy on the student for the amount owed on the loan.
- All Knowing Oz - Wednesday, Aug 16, 17 @ 2:35 pm:
Don’t cosign for anyone. Problem solved!