Bill
SB 1537
Illinois now regulates income‑share agreements and student loan servicers to protect borrowers, with disclosures, fees limits, and state enforcement.
Status: Enacted (Public Act 104‑0383) — Effective August 15, 2025
Overview
- SB 1537 amends the Illinois Student Loan Servicing Rights Act by adding a new Article governing Educational Income Share Agreements (EISAs) and makes related changes to student‑loan servicing rules. The measure establishes definitions, consumer protections, licensing/oversight elements, disclosure requirements, and enforcement mechanisms for EISA providers and student‑loan servicers.
Main purposes and intent
- Create a regulatory framework for income‑share financing products used to fund postsecondary education (EISAs).
- Protect borrowers (and, in some provisions, cosigners) from predatory or opaque practices by EISA providers and student‑loan servicers.
- Provide state enforcement authority (including the Attorney General) to pursue violations as unlawful consumer practices.
Key provisions and requirements
- Definitions and scope: Adds precise definitions for terms such as “EISA,” “student loan servicer,” “borrower,” “cosigner,” and categories of borrowers eligible for referral to a repayment specialist.
- Consumer protections for EISAs: Establishes limits and requirements that may include (as summarized in the bill synopsis and amendments):
- Requirements on monthly payment affordability and maximum effective annual rates.
- Limits on contract duration and on the portion of future income that may be covered.
- Risk‑sharing rules, fee limits, limits on security interests, and restrictions on using cosigners.
- Limits on acceleration, wage assignment, and garnishment; rules on multiple concurrent agreements.
- Required plain‑language disclosures, including a one‑page disclosure when refinancing an existing obligation explaining lost protections.
- Provisions for early completion, receipt documentation, and adjustment of dollar amounts.
- Servicer responsibilities: Expands or clarifies servicer duties — e.g., criteria under which a borrower (federal or private) is eligible for referral to a repayment specialist (missed payments, delinquency, hardship, long forbearance, failure to complete study, etc.).
- Licensing / oversight: Places EISA providers and student‑loan servicing activities under the Department of Financial and Professional Regulation and the Division of Banking (definitions and licensing/registration constructs appear throughout the Act and amendments).
- Enforcement: Authorizes the Illinois Attorney General to enforce violations of the EISA provisions as unlawful practices under the Consumer Fraud and Deceptive Business Practices Act. Conforming amendments to the Consumer Installment Loan Act and the Interest Act are included.
- Procedural safeguards: Includes severability language and other technical/administrative provisions.
Who is affected
- Primary: Borrowers and potential borrowers using EISAs or private education financing; cosigners (in provisions where they are referenced).
- Regulated entities: EISA providers, student‑loan servicers, lenders offering income‑share or student‑financing products.
- State government: Department of Financial and Professional Regulation, Division of Banking, and the Attorney General (enforcement).
Legislative/timing highlights
- Introduced in early 2025; passed both legislative chambers in spring 2025.
- Enacted as Public Act 104‑0383 and listed with an effective date of August 15, 2025 (chaptered). Some materials reflect immediate‑effect language for particular provisions; the chaptered act provides the official effective date.
Practical impact
- Establishes a state regulatory baseline for EISAs and tighter controls over student‑loan servicing interactions with at‑risk borrowers.
- Increases disclosure and consumer protection obligations for providers of income‑share agreements and servicers; creates new enforcement pathways for the state.
Compiled from official sources — confirm details with the bill’s official record.
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