PRIVATE EDUCATION LOANS-REPORT

Illinois General Assembly - Full Text of HB4754

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Full Text of HB4754

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HB4754 - 104th General Assembly

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HB4754 Enrolled
LRB104 17949 LNS 31386 b
1

AN ACT concerning education.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Know Before You Owe Private Education Loan
5
Act is amended by changing Sections 5 and 10 as follows:

6

(110 ILCS 983/5)
7

Sec. 5.
Definitions.
As used in this Act:
8

"Annual percentage rate" means the percentage rate
9
calculated according to the Federal Reserve Board's
10
methodology as set forth under Regulation Z, 12 CFR Part 1026.
11

"Cosigner" means any individual who is liable for the
12
obligation of another without compensation, regardless of how
13
the individual is designated in the contract or instrument
14
with respect to that obligation, including an obligation under
15
a private education loan extended to consolidate a borrower's
16
preexisting student loans. The term includes any individual
17
whose signature is requested, as a condition, to grant credit
18
or to forbear on collection. The term does not include a spouse
19
of an individual if the spouse's signature is needed solely to
20
perfect the security interest in a loan.
21

"Default amount" means the loan amount of each outstanding
22
loan at the time the loan is declared in default.
23

"Default rate" means the default amount required to be

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1
reported during a reporting period divided by the loan amount
2
of all outstanding loans required to be reported at the
3
beginning of the reporting period.

4

"Educational expense" means any expense, in whole or in
5
part, expressly used to finance postsecondary education,
6
regardless of whether the debt incurred by a student to pay
7
that expense is owed to the provider of postsecondary
8
education whose school, program, or facility the student
9
attends.
10

"Income share agreement" means an agreement under which a
11
borrower commits to pay a percentage of his or her future
12
income in exchange for money, payments, or credits applied to
13
or on behalf of a borrower. An income share agreement
14
constitutes a loan and debt within the meaning of this Act.
15

"Income share agreement provider" means:
16

(1) a person that provides money, payments, or credits
17

to or on behalf of a borrower pursuant to the terms of an
18

income share agreement; or
19

(2) any other person engaged in the business of
20

soliciting, making, funding, or extending income share
21

agreements.
22

"Institution of higher education" includes, but is not
23
limited to, institutions falling under the Private Business
24
and Vocational Schools Act of 2012, the Private College Act,
25
and public institutions of higher education as defined in
26
Section 1 of the Board of Higher Education Act. "Institution

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1
of higher education" also includes a person engaged in the
2
business of providing postsecondary education, via
3
correspondence, online, or in this State, to a person located
4
in this State, regardless of whether the person has obtained
5
authorization from the Illinois Board of Higher Education to
6
operate in this State or is accredited.
7

"Loan amount" means the total outstanding balance on each
8
loan owed by a borrower to a lender at any given time.

9

"Private educational lender" and "private education loan"
10
have the meanings ascribed to the terms in Section 140 of the
11
Truth in Lending Act (15 U.S.C. 1650). In addition, "private
12
educational lender" includes an income share agreement
13
provider and a student financing company and "private
14
education loan" includes an income share agreement and student
15
financing.
16

"Student financing company" means a person engaged in the
17
business of securing, making, or extending student financing.
18
"Student financing company" does not include the following
19
persons, only to the extent that State regulation is preempted
20
by federal law:
21

(1) a federally chartered bank, savings bank, savings
22

and loan association, or credit union;
23

(2) a wholly owned subsidiary of a federally chartered
24

bank or credit union; and
25

(3) an operating subsidiary where each owner of the
26

operating subsidiary is wholly owned by the same federally

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1

chartered bank or credit union.
2

"Student financing" means an extension of credit that:
3

(1) is not made, insured, or guaranteed under Title IV
4

of the Higher Education Act of 1965 (20 U.S.C. 1070 et
5

seq.);
6

(2) is extended to a consumer expressly, in whole or
7

in part, for postsecondary educational expenses,
8

regardless of whether the extension of credit is provided
9

by the institution of higher education that the student
10

attends;
11

(3) does not include a private education loan;
12

(4) does not include an income share agreement; and
13

(5) does not include a loan that is secured by real
14

property or a dwelling.
15
(Source: P.A. 102-583, eff. 8-26-21; 103-748, eff. 8-2-24.)

16

(110 ILCS 983/10)
17

Sec. 10.
Institutional certification required.
18

(a) In general. Except as provided in subsection (b) of
19
this Section, before a private educational lender may disburse
20
any funds with respect to a private education loan described
21
in this Act, the private educational lender shall obtain from
22
the relevant institution of higher education where such loan
23
is to be used on the behalf of the borrower, such institution's
24
certification of:
25

(1) the enrollment status of the borrower;

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1

(2) the borrower's cost of attendance at the
2

institution as determined by the institution under Title
3

IV, Part F, of the Higher Education Act of 1965 as amended;
4

and
5

(3) the difference between:
6

(A) such cost of attendance; and
7

(B) the borrower's estimated financial assistance,
8

including such assistance received under Title IV of
9

the Higher Education Act of 1965 (20 U.S.C. 1070 et
10

seq.) and other financial assistance known to the
11

institution, as applicable.
12

(b) Notwithstanding subsection (a), a private educational
13
lender may disburse funds with respect to a private education
14
loan described in this subsection without obtaining the
15
institution's certification if the institution fails to
16
provide the certification within 15 business days of the
17
private educational lender's request for the certification if
18
the private educational lender has received:
19

(1) notification of the institution's refusal to
20

certify the request; or
21

(2) notification that the institution has received the
22

request for certification and will need additional time to
23

comply with the certification request.
24

(c) Loans disbursed without certification. If a private
25
educational lender disburses funds without obtaining the
26
certification as described in subsection (b), the private

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1
educational lender shall report the disbursement of the funds
2
in a manner determined by the Student Loan Ombudsman.
3

(d) Notification of loans disbursed without certification.
4
On or before the date a private educational lender issues any
5
funds with respect to a private education loan described in
6
this Section, the private educational lender shall notify the
7
relevant institution of higher education, in writing, of the
8
amount of the extension of credit and the borrower on whose
9
behalf credit is extended.
10

(e) Annual report. A private educational lender that
11
disburses funds with respect to a private education loan
12
described in this Section shall prepare and submit an annual
13
report to the Department of Financial and Professional
14
Regulation and the Student Loan Ombudsman containing the
15
required information about private education loans to be
16
determined by the Student Loan Ombudsman. Such a report shall
17
include, at a minimum, the following information about private
18
education loans described in this Section, including any
19
private education loans disbursed without certification:
20

(1)

(A)
a list of all institutions of higher education
21

at which a private educational lender disburses funds with
22

respect to a private education loan described in this
23

Section;
24

(2)

(B)
the
total number and dollar amount

volume
of
25

private education loans described in this Section made
26

annually by a private educational lender;

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1

(3)

(C)
the
total number and dollar amount

volume
of
2

private education loans described in this Section made
3

annually at each school identified under paragraph
(1)

4

(A)
;
5

(4) the total number and dollar amount of private
6

education loans made annually with a cosigner;

7

(5)

(D)
the historical lifetime default rate for
8

borrowers obtaining a private education loan described in
9

this Section from the private educational lender;
and
10

(6) the default rate for the private education loans
11

reported by the private educational lender pursuant to
12

paragraph (3) for the previous reporting period under this
13

Act;
14

(7) the default rate for the private education loans
15

reported by the private educational lender pursuant to
16

paragraph (4) for the previous reporting period under this
17

Act; and

18

(8)

(E)
a copy of each model or template promissory
19

note, agreement, contract or other instrument used by a
20

private educational lender during the previous year to
21

substantiate that a private education loan described in
22

this Section has been extended to the borrower or that a
23

borrower owes a debt to the private educational lender.
24

(f) Annual report exemption. A private educational
25

lender that funds 10 or fewer new private education loans
26

in a calendar year shall be exempt from submitting the

HB4754 Enrolled
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LRB104 17949 LNS 31386 b
1

annual report for that year. Any lender claiming this
2

exemption shall submit a statement to the Department of
3

Financial and Professional Regulation and the Student Loan
4

Ombudsman certifying the number of private education loans
5

made in that calendar year.
6
(Source: P.A. 102-583, eff. 8-26-21.)

7

Section 99.
Effective date.
This Act takes effect upon
8
becoming law.

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