Attorney General Lisa Madigan was joined by Senator Daniel Biss, Illinois students and consumer advocates to urge the Illinois Senate to reject pressure from student loan servicers and their lobbyists and pass legislation to help student loan borrowers repay their loans. The Student Loan Bill of Rights, Senate Bill 1351, addresses widespread abuses and failures in the student loan industry that were revealed by Madigan’s investigation and lawsuit against Navient, one of the country’s largest student loan servicing companies. The legislation would reform the student loan industry to better protect borrowers from rampant student loan abuses. In addition to Navient’s lobbyist efforts opposing the bill in Springfield, the U.S. Department of Education has abandoned protections for borrowers, making it more important than ever to pass state-level protections for student loan borrowers.

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 only 20 percent of eligible borrowers were enrolled in these options, which can lower payments based on income to as low as $0 a month. Senate Bill 1351 would create a Student Loan Bill of Rights to protect student loan borrowers by requiring student loan servicers to:

• Require specialists to provide and explain to struggling borrowers all of their repayment options, starting with income-driven plans;
• Properly process payments;
• Inform borrowers about whether they could be eligible to have their loans forgiven due to a disability or a problem with the school they attended; and
• Ensure servicers are prohibited from misleading borrowers.

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. 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).