IllinoisSB1537104th General Assembly (2025–2026)SenateWALLET

STUDENT LOAN SERVICING RIGHTS

Sponsored By: Elgie R. Sims, Jr. (Democratic)

Became Law

assignmentsexecutivefinancial institutions and licensing

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 5 benefits, 1 costs, 2 mixed.

End income-share early or after hardship

All EISA duties end if a government agency finds you totally and permanently disabled, or if you die. You can also finish early by paying up to the contract’s payment cap. No unlawful prepayment penalty applies.

Stronger protections from income-share collections

Providers cannot take collateral or liens, cannot use cosigners, and cannot split contracts to dodge legal limits. They cannot take your wages by assignment or garnish pay before a court judgment. They cannot speed up or sell your future payment stream. You may choose a revocable payroll deduction if you want.

Caps on payments for education income-share agreements

For Educational Income Share Agreements (EISAs), you never pay more than 8% of your income each month. A provider cannot make you sign if payments would ever top 15% of your income. If your yearly income is $47,000 or less, you owe $0; that amount rises every other January 1 starting in 2026. You can ask to raise your threshold so your income after payments is at least 275% of the federal poverty level for one person, adjusted by local pay; providers may require 90 days of residency. Payments use your own income only, excluding a spouse’s or dependents’ income and many benefits like Social Security, SNAP, unemployment, and Medicaid. You get at least 3 months of payment pause for every 30 income‑based payments. Agreements cannot require more than 180 payments or last over 240 months, not counting approved pauses.

Limits on interest for income-share agreements

Your EISA’s effective APR can never be higher than the greater of 9% or the 10‑year Treasury high yield plus 6%. If a payment pushes costs over the cap, the provider refunds the extra within 20 days. If your income is at or below 450% of the federal poverty guideline, a tighter cap applies: the greater of 8.5% or the 10‑year Treasury high yield plus 4.5%. Providers use the guideline in effect when you sign. When two caps conflict, the lower cap applies.

Tougher oversight of income-share providers

EISAs and their providers must follow the consumer‑protection laws named in this Act, and this Article applies only to EISAs. The Department of Financial and Professional Regulation can license, examine, and enforce rules on providers that do not service student loans. The Attorney General can enforce violations of these EISA rules as consumer fraud.

Which laws and charges apply to income-share agreements

The Interest Act recognizes interest and charges allowed under this law as lawful to collect. Licensed income‑share providers are exempt from the Consumer Installment Loan Act, but only for activities covered by this Article. For borrowers, this means providers can collect the authorized charges under the caps and rules in this Act.

Capped fees and clear income-share bills

Providers may charge only limited fees: up to $25 for late documents; one late fee of the lesser of $15 or 5% after 15 days; up to $25 plus costs for a returned payment; and up to 5% for a written, agreed deferral (not for voluntary pauses). Other fees need the Secretary’s approval. At signing, you get clear written disclosures, including how payments are set and a table showing costs at incomes of $40,000, $60,000, $80,000, $100,000, $125,000, $150,000, $175,000, $200,000, no income, and at the threshold. You get a receipt for every payment, a free payment history within 21 days, a payoff statement within 10 days, and a paid‑in‑full notice within 30 days. If you do not provide income proof, the provider may estimate income using disclosed sources. Bills must show when income is assigned, and past bills must be fixed within 15 days if you submit proof within one year.

Indexed updates to income-share dollar limits

Certain dollar amounts in this law update with an index. On July 1 of even‑numbered years, amounts change in 10% steps when the index moves 10% or more. The Department sets the new numbers by April 30 in those years. Following the Department’s published amounts is a defense against violations.

Sponsors & Cosponsors

Sponsor

Elgie R. Sims, Jr.
Democratic • Senate

Cosponsors

Bill Cunningham
Democratic • Senate
Katie Stuart
Democratic • House
Kevin Schmidt
Republican • House
Kimberly A. Lightford
Democratic • Senate
Mattie Hunter
Democratic • Senate
Maurice A. West, II
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 204 • No: 0

House vote • 5/22/2025

Third Reading - Short Debate - Passed

Yes: 114 • No: 0

House vote • 4/29/2025

Do Pass / Short Debate Financial Institutions and Licensing Committee;

Yes: 12 • No: 0

Senate vote • 4/9/2025

Third Reading - Passed;

Yes: 55 • No: 0

Senate vote • 4/3/2025

Senate Floor Amendment No. 2 Recommend Do Adopt Executive;