STUDENT LOAN SERVICING RIGHTS
SB1537 amends the Illinois Student Loan Servicing Rights Act and related laws to create a new Article 7 governing Educational Income Share Agreements (EISAs). The bill defines EISAs as agreements in which a provider advances money or credits for postsecondary educational expenses and the consumer repays based on income, and it treats certain EISAs as credit/private education loans for purposes of disclosure and consumer protection. It also expands and clarifies definitions related to student loan servicing, repayment specialists, income-driven repayment options, and disability discharge, while expressly bringing EISA providers within the student loan servicing framework.
The bill imposes detailed substantive limits on EISAs. It caps monthly payments at 8% of income, limits the effective annual percentage rate to the lesser of 9% or a Treasury-based benchmark, restricts duration to 180 monthly payments and 240 months, prohibits cosigners, security interests, wage assignments, acceleration, and garnishment before judgment, and requires early completion options, discharge upon death or total and permanent disability, and specified fee limits. It also requires extensive disclosures, income-verification procedures, recordkeeping, and consumer notices, and it authorizes the Department of Financial and Professional Regulation and the Attorney General to regulate and enforce the new rules. The bill further amends the Consumer Installment Loan Act and the Interest Act to recognize EISA-related licensing and to align interest-rate and exemption provisions with the new article.
The overall sentiment around the bill appears strongly favorable and noncontroversial in recorded votes. It passed the Senate 54-0 and the House 114-0, indicating broad bipartisan support. No committee transcript was provided, so there is no recorded debate to suggest organized opposition in the available materials.
The main points of contention likely concern the policy design of income share agreements themselves: whether they function more like loans, how much consumer protection is needed, and whether the bill’s caps and disclosure rules are strict enough to prevent predatory terms while still allowing the market to operate. The statute’s explicit treatment of EISAs as credit/private education loans, its restrictions on fees and collection remedies, and its detailed income-assignment rules suggest the legislature was focused on preventing evasion and protecting borrowers, while still permitting a regulated product for education financing.
SB1537 creates a new regulatory article in the Student Loan Servicing Rights Act for educational income share agreements and amends the Consumer Installment Loan Act and Interest Act to integrate EISAs into Illinois lending and servicing law. It subjects EISA providers to DFPR oversight, consumer-fraud enforcement, licensing/rulemaking authority, and a set of mandatory disclosures, while also carving out or coordinating with existing statutes governing student loans, private education loans, predatory lending, and interest-rate limits. The bill affects EISA providers, borrowers, cosigners, servicers, and related educational finance entities by imposing new compliance duties and limiting collection and contract terms.
The recorded sentiment is overwhelmingly supportive. The bill passed both chambers unanimously, with 54-0 in the Senate and 114-0 in the House, suggesting broad agreement that the measure was a consumer-protection bill rather than a partisan or highly divisive proposal. No committee discussion transcripts were available, so the vote record is the primary indicator of sentiment.
No specific objections appear in the available record, but the bill’s structure shows the likely policy tensions: consumer advocates would favor the payment caps, disclosure requirements, and bans on cosigners, wage assignments, and security interests, while industry participants might view the APR cap, duration limits, income-verification rules, and collection restrictions as burdensome. Another possible point of debate is the bill’s decision to treat EISAs as credit/private education loans for certain purposes, which could be seen either as necessary consumer protection or as a regulatory expansion that may affect product availability.