AG Madigan & Sen. Daniel Biss Applaud Passage of Senate Bill 1351 to Better Illinois Student Loan Borrowers
Chicago, IL-(ENEWSPF)- Attorney General Lisa Madigan announced the Illinois Senate passed legislation to reform the student loan servicing 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 Madigan’s investigation and lawsuit against one of the country’s largest student loan servicing companies, Navient.
Senate Bill 1351, drafted by Madigan’s office and Sen. Daniel Biss, would create a Student Loan Bill of Rights to better protect borrowers from abuses in the student loan industry. The bill passed the Senate by a vote of 34 to 15 with one member voting present, and will now be considered in the House, where it will be sponsored by Rep. Will Guzzardi.
“This bill is critically important now that the U.S. Department of Education has abandoned student loan borrowers by revoking reforms to prevent the abuses uncovered in my investigation,” Madigan said. “These commonsense measures will improve the financial futures of student loan borrowers, their families and our economy.”
“The U.S. Department of Education’s decision to roll back protections for student loan borrowers is extremely disappointing, particularly when investigations into the industry – such as those conducted by Attorney General Madigan – have revealed misleading and self-serving practices,” Sen. Biss said. “I encourage my colleagues in the House to support these commonsense reforms.”
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 said Illinois borrowers frequently experience problems with their student loan servicers. 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 who 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.