Bill
HB 2850
Illinois would regulate Educational Income Share Agreements under the Student Loan Servicing Rights Act, boosting transparency and protections for borrowers and oversight of EISA p
Status (most recent)
- Introduced: February 2025 (Rep. Maurice A. West, II). Co‑sponsor: Rep. Camille Y. Lilly.
- Committee: Assigned to Financial Institutions & Licensing; Committee amendment adopted; Do Pass as Amended (11–1–0).
- Floor: House Floor Amendment No. 2 filed and recommended; re‑referred to Rules Committee under Rule 19(c) (April 2025).
- Current: Pending in Rules; effective date language in bill says “effective immediately” (if enacted).
Note on legislative file: the bill packet contains an unrelated Arizona corporate‑tax text inserted in one printed version. The substantive Illinois measure described below is the Student Loan Servicing Rights Act amendments and the new Article 7 on Educational Income Share Agreements (EISAs).
Purpose and intent
- To expand the Student Loan Servicing Rights Act by creating a new Article governing Educational Income Share Agreements (EISAs), to regulate private student‑finance products that tie repayment to a borrower’s future income, and to strengthen consumer protections and oversight for student loan servicers generally.
Key provisions (high‑level)
- Creates an Article 7 within the Student Loan Servicing Rights Act specifically regulating EISAs (educational income share agreements).
- Definitions: clarifies terms such as borrower, cosigner, student loan servicer (explicitly including EISA providers), federal/private student loans, and triggers for referral to repayment specialists.
- Consumer protections for EISAs (enumerated in synopsis and bill text): requirements addressing
- monthly payment affordability and income‑based calculations;
- caps on effective annual percentage rates / maximum costs (bill language contains limits though full numeric caps are in the detailed text);
- limits on contract duration and on the percentage of future income that may be covered;
- fee limits and restrictions on permitted charges;
- restrictions on creating security interests, assignment of wages, acceleration, garnishment and collection practices;
- prohibitions on requiring cosigners in many circumstances;
- risk‑sharing requirements and limitations on using multiple agreements to circumvent protections;
- required disclosures to consumers, receipts and annual/transactional notices;
- rules for early completion or termination and treatment of disability or death.
- Refinancing disclosure (House Amendment No. 2): before offering an EISA to refinance an existing loan, providers must give a one‑page, 12‑point type disclosure stating that refinancing may cause loss of benefits and protections applicable to the existing loan (written in clear, simple language).
- Applicability and cross‑reference edits: Amendment No.2 makes repayment option requirements (subsection (k) of Sec. 5‑30) apply to the EISA provisions; applies total and permanent disability provisions to this section; and makes minor drafting changes (e.g., removing “or cosigner” in one clause).
- Enforcement: Attorney General may enforce violations of the EISA article as unlawful practices under the Consumer Fraud & Deceptive Business Practices Act.
- Conforming changes: amendments to the Consumer Installment Loan Act and the Interest Act to align definitions/rules with the new EISA provisions.
- Severability: provisions are severable in the event parts are invalidated.
Who is affected
- Primary: borrowers (current and prospective students) who receive private student financing, including income share agreements; potential cosigners; and existing federal and private loan holders if refinancing occurs.
- Regulated parties: EISA providers, student loan servicers, lenders and entities acting as servicers (licensed under the Student Loan Servicing Rights Act); overseen by the Department of Financial and Professional Regulation / Division of Banking.
- Enforcement/consumer protection actors: Illinois Attorney General and state regulators.
Procedural/timeline notes
- The bill advanced through Financial Institutions & Licensing with amendments and is pending Rules Committee review following adoption of House Floor Amendment No. 2. If advanced from Rules and passed by both chambers and signed by the Governor, the bill indicates immediate effect.
Practical impact
- Establishes a regulatory framework for EISAs that would increase transparency and consumer protections, potentially restricting some practices (e.g., certain fees, security interests, cosigner requirements) and imposing disclosure obligations. It brings EISA providers formally under state servicer regulation and creates state enforcement mechanisms.
Compiled from official sources — confirm details with the bill’s official record.
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