SPRINGFIELD — A Student Loan Bill of Rights will take effect in Illinois on Dec. 31, 2018, after the Illinois House joined the Senate in overriding a veto of Senate Bill 1351 by Gov. Bruce Rauner.
The measure is aimed at stopping abuses by loan servicing companies. It was promoted by Illinois Attorney General Lisa Madigan, whose office investigated thousands of complaints from borrowers who said they were not informed of all their repayment options after going into default or their payments were not properly credited to their accounts.
The chief sponsors were state Sen. Daniel Biss, D-Evanston, and state Rep. Will Guzzardi, D-Chicago.
The override vote on Tuesday was a bipartisan 98-16, with a number of lawmakers changing the “no” votes they made in May when the bill passed the House 63-48. Seventy-one votes were needed to override the veto.
The Illinois Senate voted 37-19 to override on Oct. 25. Thirty-six votes were needed to override.
Among those in the House who changed from “no” to “yes” were state Reps. Dan Brady of Bloomington and Bill Mitchell of Forsyth, both Republicans.
Brady said before the vote that he was reconsidering his “no” vote because the federal government seemed to be backing away from policing the loans and he wanted to do what was best "to protect student borrowers.”
This spring, federal Education Secretary Betsy DeVos, rescinded several directives put in place during the Obama administration that had placed more requirements on loan servicers.
In his veto message, Rauner called the intent of the bill “laudable” and indicating he would support “a more narrowly tailored bill” with “common-sense student protections.”
Madigan said many loan servicers were not telling borrowers who were in default of options such as income-based payments plans and the ability of some people with disabilities to have their loans dismissed.
“The Student Loan Bill of Rights will ensure that borrowers receive the necessary information to handle repayment of their student loans in a financially responsible manner,” said Madigan.
The bill creates a student loan ombudsmen position in the attorney general's office. It also will require loan servicers to provide clear information about all repayment options, properly credit payments and be licensed by the Illinois Department of Financial and Professional Regulation.
More than 44 million borrowers owe a total of more than $1.4 trillion and one in four is behind on payments or in default, according to Madigan's office.
Despite the ability to lower payments through an income-based payment plan, the U.S. Treasury has reported that only 20 percent of eligible borrowers are enrolled in such options.