STUDENT LOAN SERVICING RIGHTS
HB2850 would expand the Illinois Student Loan Servicing Rights Act to create a new Article 7 regulating educational income share agreements (EISAs). The bill defines EISAs as agreements in which a provider advances money or credits for postsecondary education-related expenses and the consumer repays through income-based payments, with the obligation ending after a set duration or when a payment cap is reached. The new article treats EISAs as consumer-protection transactions and sets detailed rules for how they may be offered, serviced, disclosed, and enforced.
The bill imposes substantive limits on EISA terms. It caps monthly payments at 8% of income, limits the total effective annual percentage rate, requires a minimum income threshold, restricts the duration and number of payments, bars cosigners and security interests, prohibits wage assignments and pre-judgment garnishment, and requires early-completion options and mandatory disclosures. It also excludes certain income sources from repayment calculations, including Social Security, unemployment, SNAP, Medicare and Medicaid benefits, tax credits, and other government aid. The Attorney General could enforce violations as consumer fraud, and the Department of Financial and Professional Regulation would have rulemaking and oversight authority. The bill also makes conforming changes to the Consumer Installment Loan Act and the Interest Act so EISA providers are exempt from certain lending provisions while still subject to the new article and related consumer-credit laws.
The bill’s impact on state law would be to create a new regulatory framework for a relatively new form of education financing and to fold EISAs into Illinois consumer-credit and student-loan servicing law. It would give state regulators and the Attorney General explicit authority to police EISA practices, require standardized disclosures and accounting, and set enforceable limits on pricing, collection, and repayment structure. It would also clarify that EISAs are treated as credit transactions and debts when obligations accrue, which could affect how they are analyzed under other lending and consumer-protection statutes.
Because there are no committee transcripts or recorded votes in the provided material, there is no documented public debate or voting history to gauge sentiment. Based on the bill text alone, the measure appears designed to protect consumers and borrowers from potentially abusive or opaque income-share financing terms, suggesting a generally pro-consumer policy orientation. The absence of recorded opposition or amendments in the supplied context means no specific legislative sentiment can be confirmed from the available history.
The main points of contention likely concern how tightly EISAs should be regulated and whether the bill’s limits are too restrictive for providers or too permissive for borrowers. Potential issues include the 8% monthly payment cap, the APR and duration limits, the broad exclusion of government benefits from income, and the treatment of EISAs as credit subject to consumer-fraud enforcement. Providers and education-finance businesses may view the bill as imposing heavy compliance burdens and reducing product flexibility, while consumer advocates would likely support the restrictions as necessary safeguards against debt traps and aggressive collection practices.
HB2850 would amend the Student Loan Servicing Rights Act to add a new Article 7 governing educational income share agreements, while also making conforming changes to the Consumer Installment Loan Act and the Interest Act. It would subject EISA providers to licensing, disclosure, collection, and enforcement rules, authorize the Attorney General to pursue violations as consumer fraud, and establish detailed limits on repayment terms, fees, income definitions, and collection remedies. The bill would also clarify that EISAs are treated as credit and, in some cases, private education loans for regulatory purposes.
No committee testimony or vote history was provided, so there is no direct evidence of support or opposition from the legislative record in the supplied materials. The bill’s structure and findings suggest a consumer-protection approach aimed at curbing abusive financing terms, which implies likely support from borrower advocates and consumer regulators. At the same time, the extensive restrictions indicate that education-finance providers could view the measure as burdensome or overly prescriptive.
The likely areas of contention are the bill’s strict caps on payments, APR, and duration; the prohibition on cosigners, security interests, wage assignments, and pre-judgment garnishment; and the exclusion of many public benefits and tax credits from income calculations. Another possible dispute is whether EISAs should be regulated as credit transactions under student-loan and consumer-fraud laws, which could expand state oversight and liability. Consumer advocates would likely favor these protections, while EISA providers and some education-finance stakeholders may argue that the bill limits product availability and underwriting flexibility.