ATTORNEY GENERAL MADIGAN CONVENES STUDENT LOAN FORUM & URGES GOVERNOR TO SIGN STUDENT LOAN BILL OF RIGHTS
AG Madigan & Advocates Urge Governor to sign Senate Bill 1351 to Better Protect Illinois Student Loan Borrowers
Chicago — Attorney General Lisa Madigan today convened a student loan forum with education advocates and community organizations and urged Gov. Rauner to sign into law a bill to reform the student loan 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 her investigation and lawsuit against one of the country’s largest student loan servicing companies, Navient.
Senate Bill 1351, sponsored by Sen. Daniel Biss and Rep. Will Guzzardi and drafted with Madigan's office, would create a Student Loan Bill of Rights to better protect borrowers from abuses in the student loan industry.
“For too long, student loan borrowers have been put into more difficult and more expensive repayment plans because of fraudulent practices by student loan companies,” Madigan said. “The Student Loan Bill of Rights will finally crack down on abuse and make Illinois a national leader in protecting borrowers. The Governor should sign this bill into law immediately on behalf of Illinois students, families and our economy.”
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’s investigation into Navient revealed that borrowers frequently experience problems with their student loan servicers and are put into more expensive repayment options when more affordable plans are available. 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:
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.