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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 Student Loan Servicing Rights Act is
5 amended by changing Sections 1-5 and 25-5 and by adding
6 Article 7 as follows:
7 (110 ILCS 992/1-5)
8 Sec. 1-5. Definitions. As used in this Act:
9 "Applicant" means a person applying for a license pursuant
10 to this Act.
11 "Borrower" or "student loan borrower" means a person who
12 has received or agreed to pay a student loan for his or her own
13 educational expenses.
14 "Cosigner" means any individual who is liable for the
15 obligation of another without compensation, regardless of how
16 the individual is designated in the contract or instrument
17 with respect to that obligation, including an obligation under
18 a private education loan extended to consolidate a borrower's
19 preexisting student loans. The term includes any individual
20 whose signature is requested, as a condition, to grant credit
21 or to forbear on collection. The term does not include a spouse
22 of an individual if the spouse's signature is needed solely to
23 perfect the security interest in a loan.
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1 "Department" means the Department of Financial and
2 Professional Regulation.
3 "Division of Banking" means the Division of Banking of the
4 Department of Financial and Professional Regulation.
5 "Federal loan borrower eligible for referral to a
6 repayment specialist" means a borrower who possesses any of
7 the following characteristics:
8 (1) requests information related to options to reduce
9 or suspend his or her monthly payment;
10 (2) indicates that he or she is experiencing or
11 anticipates experiencing financial hardship, distress, or
12 difficulty making his or her payments;
13 (3) has missed 2 consecutive monthly payments;
14 (4) is at least 75 days delinquent;
15 (5) is enrolled in a discretionary forbearance for
16 more than 9 of the previous 12 months;
17 (6) has rehabilitated or consolidated one or more
18 loans out of default within the past 12 months; or
19 (7) has not completed a course of study, as reflected
20 in the servicer's records, or the borrower identifies
21 himself or herself as not having completed a program of
22 study.
23 "Federal education loan" means any loan made, guaranteed,
24 or insured under Title IV of the federal Higher Education Act
25 of 1965.
26 "Income-driven payment plan certification" means the
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1 documentation related to a federal student loan borrower's
2 income or financial status the borrower must submit to renew
3 an income-driven repayment plan.
4 "Income-driven repayment options" includes the
5 Income-Contingent Repayment Plan, the Income-Based Repayment
6 Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
7 Plan, the Revised Pay As You Earn Plan, and any other federal
8 student loan repayment plan that is calculated based on a
9 borrower's income.
10 "Licensee" means a person licensed pursuant to this Act.
11 "Other repayment plans" means the Standard Repayment Plan,
12 the Graduated Repayment Plan, the Extended Repayment Plan, or
13 any other federal student loan repayment plan not based on a
14 borrower's income.
15 "Private education loan" has the meaning ascribed to the
16 term in Section 140 of the federal Truth in Lending Act (15
17 U.S.C. 1650). In addition, "private education loan" includes
18 an income share agreement and student financing.
19 "Private loan borrower eligible for referral to a
20 repayment specialist" means a borrower who possesses any of
21 the following characteristics:
22 (1) requests information related to options to reduce
23 or suspend his or her monthly payments; or
24 (2) indicates that he or she is experiencing or
25 anticipates experiencing financial hardship, distress, or
26 difficulty making his or her payments.
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1 "Requester" means any borrower or cosigner that submits a
2 request for assistance.
3 "Request for assistance" means all inquiries, complaints,
4 account disputes, and requests for documentation a servicer
5 receives from borrowers or cosigners.
6 "Secretary" means the Secretary of Financial and
7 Professional Regulation, or his or her designee, including the
8 Director of the Division of Banking of the Department of
9 Financial and Professional Regulation.
10 "Servicing" means: (1) receiving any scheduled periodic
11 payments from a student loan borrower or cosigner pursuant to
12 the terms of a student loan; (2) applying the payments of
13 principal and interest and such other payments with respect to
14 the amounts received from a student loan borrower or cosigner,
15 as may be required pursuant to the terms of a student loan; and
16 (3) performing other administrative services with respect to a
17 student loan.
18 "Student loan" or "loan" means any federal education loan
19 or other loan primarily for use to finance a postsecondary
20 education and costs of attendance at a postsecondary
21 institution, including, but not limited to, tuition, fees,
22 books and supplies, room and board, transportation, and
23 miscellaneous personal expenses. "Student loan" includes a
24 loan made to refinance a student loan.
25 "Student loan" shall not include an extension of credit
26 under an open-end consumer credit plan, a reverse mortgage
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1 transaction, a residential mortgage transaction, or any other
2 loan that is secured by real property or a dwelling.
3 "Student loan" shall not include an extension of credit
4 made by a postsecondary educational institution to a borrower
5 if one of the following apply:
6 (1) The term of the extension of credit is no longer
7 than the borrower's education program.
8 (2) The remaining, unpaid principal balance of the
9 extension of credit is less than $1,500 at the time of the
10 borrower's graduation or completion of the program.
11 (3) The borrower fails to graduate or successfully
12 complete his or her education program and has a balance
13 due at the time of his or her disenrollment from the
14 postsecondary institution.
15 "Student loan servicer" or "servicer" means any person
16 engaged in the business of servicing student loans. "Student
17 loan servicer" or "servicer" includes persons or entities
18 acting on behalf of the State Treasurer. "Student loan
19 servicer" includes an EISA provider covered under Article 7 of
20 this Act.
21 "Student loan servicer" shall not include:
22 (1) a bank, savings bank, savings association, or
23 credit union organized under the laws of the State or any
24 other state or under the laws of the United States;
25 (2) a wholly owned subsidiary of any bank, savings
26 bank, savings association, or credit union organized under
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1 the laws of the State or any other state or under the laws
2 of the United States;
3 (3) an operating subsidiary where each owner of the
4 operating subsidiary is wholly owned by the same bank,
5 savings bank, savings association, or credit union
6 organized under the laws of the State or any other state or
7 under the laws of the United States;
8 (4) the Illinois Student Assistance Commission and its
9 agents when the agents are acting on the Illinois Student
10 Assistance Commission's behalf;
11 (5) a public postsecondary educational institution or
12 a private nonprofit postsecondary educational institution
13 servicing a student loan it extended to the borrower;
14 (6) a licensed debt management service under the Debt
15 Management Service Act, except to the extent that the
16 organization acts as a subcontractor, affiliate, or
17 service provider for an entity that is otherwise subject
18 to licensure under this Act;
19 (7) any collection agency licensed under the
20 Collection Agency Act that is collecting post-default
21 debt;
22 (8) in connection with its responsibilities as a
23 guaranty agency engaged in default aversion, a State or
24 nonprofit private institution or organization having an
25 agreement with the U.S. Secretary of Education under
26 Section 428(b) of the Higher Education Act (20 U.S.C.
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1 1078(B));
2 (9) a State institution or a nonprofit private
3 organization designated by a governmental entity to make
4 or service student loans, provided in each case that the
5 institution or organization services fewer than 20,000
6 student loan accounts of borrowers who reside in Illinois;
7 (10) a law firm or licensed attorney that is
8 collecting post-default debt; or
9 (11) the State Treasurer.
10 "Total and permanent disability" means a physical or
11 mental impairment, disease, or loss of a permanent nature that
12 prevents employment with or without reasonable accommodation,
13 with proof of disability being in the form of a declaration
14 from the United States Social Security Administration, the
15 Illinois Workers' Compensation Commission, the United States
16 Department of Defense, or an insurer authorized to transact
17 business in this State who is providing disability insurance
18 coverage to a contractor. The term does not include a
19 condition that has not progressed or been exacerbated or that
20 the individual did not acquire until after the closing of the
21 loan agreement. In addition, documentation sufficient to
22 establish a total and permanent disability for a federal
23 student loan made pursuant to Title IV of the federal Higher
24 Education Act of 1965 is sufficient to establish a total and
25 permanent disability under this Act.
26 (Source: P.A. 103-748, eff. 8-2-24.)
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1 (110 ILCS 992/Art. 7 heading new)
2 ARTICLE 7. EDUCATIONAL INCOME SHARE AGREEMENTS
3 (110 ILCS 992/7-1 new)
4 Sec. 7-1. Purpose and construction. This Article shall be
5 construed as a consumer-protection law for all purposes and
6 shall be liberally construed to effectuate its purpose.
7 (110 ILCS 992/7-3 new)
8 Sec. 7-3. Applicability. This Article applies only to
9 educational income share agreements.
10 (110 ILCS 992/7-5 new)
11 Sec. 7-5. Definitions. As used in this Article:
12 "Amount financed" means the amounts advanced by the EISA
13 provider to the consumer or on behalf of the consumer, or if
14 the EISA provider is a merchant financing the sale of goods or
15 services to the consumer using an EISA, "amount financed"
16 means the amount credited by the EISA provider toward the
17 purchase of expenses described in the definition of
18 "educational income share agreement".
19 "Annual percentage rate" or "APR" means the percentage
20 rate calculated according to the Federal Reserve Board's
21 methodology as set forth under Regulation Z, 12 CFR Part 1026.
22 The "annual percentage rate" of an EISA is the measure of the
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1 cost of the EISA, expressed as a yearly rate, that relates to
2 the amount and timing of value received by the consumer to the
3 amount and timing of payments made, including any charges or
4 fees that would be included in the APR as set forth under
5 Regulation Z, 12 CFR Part 1026. The "annual percentage rate"
6 is determined in accordance with either the actuarial method
7 or the United States rule method.
8 "Cash price" has the meaning given in 12 CFR 1026.2(a)(9).
9 "Consumer" means a natural person who enters into an EISA.
10 "Educational income share agreement" or "EISA" means an
11 agreement between a consumer and an EISA provider under which:
12 (1) the EISA provider credits or advances a sum of
13 money to the consumer or to a third party on the consumer's
14 behalf or, if the EISA provider is a seller of goods or
15 services to the consumer, the EISA provider credits or
16 advances toward the purchase of such goods or services;
17 (2) the consumer is obligated to make periodic
18 payments, if any become due, to the EISA provider
19 calculated, based upon, or determined by the consumer's
20 income;
21 (3) the consumer incurs an obligation in each payment
22 period only if the individual's income in that period is
23 above an income threshold specified in the EISA;
24 (4) there is an EISA duration after which the
25 obligation is complete, regardless of how much has been
26 paid, as long as the consumer has paid any prior amounts
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1 due;
2 (5) each of these elements is available at the time
3 the agreement is executed;
4 (6) the agreement is not made, insured, or guaranteed
5 under Title IV of the federal Higher Education Act of 1965
6 or another federally subsidized educational finance
7 program; and
8 (7) the agreement is extended to a consumer expressly,
9 in whole or in part, for postsecondary educational
10 expenses, tuition, or other obligations of, or pay amounts
11 to or on behalf of such an individual, for the costs
12 associated with a postsecondary training program or any
13 other program designed to increase the individual's human
14 capital, employability, or earning potential, including,
15 but not limited to, a program eligible to participate as a
16 program under Title IV of the federal Higher Education Act
17 of 1965, as well as any personal expenses, such as books,
18 supplies, transportation, and living costs, incurred by
19 the individual while enrolled in such a program and any
20 other costs or expenses included in the definition of
21 "qualified higher education expenses" under 26 U.S.C.
22 529(e)(3)(A), including the refinancing of loans or
23 agreements used for the purposes described in this
24 paragraph (7) and regardless of whether the agreement is
25 provided by the educational institution that the consumer
26 attends.
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1 For purposes of this definition, an EISA shall be
2 treated as a credit, within the meaning of that term under
3 15 U.S.C. 1602(f), and as a "private education loan",
4 within the meaning of that term under 15 U.S.C.
5 1650(a)(8), to the extent the proceeds of the EISA are
6 used for postsecondary educational expenses in a manner
7 consistent with the definition of that term.
8 "EISA duration" means the maximum time during which a
9 consumer could remain obligated on the EISA, other than
10 periods when an EISA provider is attempting to collect
11 past-due amounts and absent periods of payment relief pauses,
12 forbearance, military service suspension, or other suspension
13 of obligations at the request of the consumer, regardless of
14 whether the consumer's income is greater than the minimum
15 income.
16 "EISA maximum number of payments" means the maximum number
17 of EISA payments during EISA payment periods in which the
18 consumer's income is equal to or greater than the income
19 threshold that a consumer could be required to make under the
20 terms of the EISA. "EISA maximum number of payments" does not
21 include periods of payment relief pause.
22 "EISA payment" means a calculated monthly payment in
23 excess of $0.00 that counts toward the maximum income-based
24 payments under the EISA. An "EISA payment" is required only
25 for income earned during an EISA payment period in which the
26 consumer's income was equal to or greater than the income
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1 threshold.
2 "EISA payment calculation method" means the mechanism,
3 formula, percentage, dollar figure, or other means of
4 calculating a student's payment obligation, based on the
5 student's income, under the terms of the EISA.
6 "EISA payment cap" means the maximum amount of money a
7 consumer must pay to satisfy the terms of an EISA, which may be
8 expressed as a dollar value, a multiple of the amount funded to
9 the student or on the student's behalf, or as a maximum
10 effective annual percentage rate.
11 "EISA payment cap" does not include charges that would be
12 excluded from the definition of the term "finance charge"
13 under 12 CFR 1026.
14 "EISA provider" means:
15 (1) a person or entity that provides money, payments,
16 or credits to or on behalf of a consumer pursuant to the
17 terms of an EISA;
18 (2) any person or entity engaged in the business of
19 soliciting, making, funding, or extending EISAs; or
20 (3) any person or entity that is providing educational
21 services to the consumer and receiving compensation from
22 an EISA provider (separate from proceeds of the EISA to
23 cover educational expenses of the consumer) for
24 advertising, marketing, or recommending EISAs, on behalf
25 of an EISA provider, for those educational services.
26 This definition does not apply to an entity that either
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1 (i) has no direct interactions with the consumer and is not
2 responsible for making credit decisions regarding the consumer
3 or (ii) is the provider of the educational services to the
4 consumer, unless the entity qualifies under paragraph (1),
5 (2), or (3).
6 "Federal poverty guidelines" means the poverty guidelines
7 updated periodically in the Federal Register by the U.S.
8 Department of Health and Human Services under the authority of
9 42 U.S.C. 9902(2).
10 "Garnishment" means any legal or equitable procedure
11 through which earnings of an individual are required to be
12 withheld for payment of obligations to an EISA provider as set
13 forth in the Code of Civil Procedure.
14 "Income threshold" means a fixed dollar amount that is the
15 minimum income per payment period that an EISA recipient is
16 required to earn before the EISA recipient is required to make
17 a payment on an EISA for such payment period.
18 "Index" means the Consumer Price Index for Urban Wage
19 Earners and Clerical Workers: U.S. City Average, All Items,
20 1967=100, compiled by the Bureau of Labor Statistics, United
21 States Department of Labor.
22 "Payment relief pause" means a period of time that is
23 requested by the consumer during which the consumer is not
24 required to make payments despite the consumer's income
25 exceeding the income threshold.
26 "Sales price" means the "total sale price" as set forth in
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1 12 CFR 1026.18(j).
2 (110 ILCS 992/7-10 new)
3 Sec. 7-10. Monthly payment affordability.
4 (a) Each EISA shall specify the EISA payment calculation
5 method applicable to the EISA. An EISA shall not require
6 payments from the consumer toward that EISA that exceed 8% of
7 the consumer's income. An EISA provider shall not enter into
8 an EISA with a consumer if the consumer would be committing to
9 pay more than 15% of the consumer's income at any time during
10 the EISA duration, based on information available to the EISA
11 provider at the time of the projection, inclusive of any
12 payment obligations that the EISA provider knows will arise in
13 the future for other EISAs and education loans upon which the
14 consumer is obligated at the time of the projection. The EISA
15 provider must confirm a consumer's EISA and education loan
16 liabilities through a verifiable third-party source. At a
17 minimum, the EISA provider must confirm such liabilities using
18 information maintained by a nationwide consumer reporting
19 agency, as defined by 15 U.S.C. 1681a(f), and doing so is
20 sufficient for meeting the requirement in this subsection.
21 However, nothing in this subsection shall prohibit an EISA
22 provider from using other sources to provide additional
23 verification. For the purposes of calculating the portion of a
24 student's future income that would be consumed by the EISA for
25 which the student has applied and other EISAs and education
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1 loans known at the time, the EISA provider shall calculate the
2 aggregate future burden of all such obligations, including the
3 EISA for which the student is applying, at the hypothetical
4 future income levels described in subdivision (a)(15)(iii) of
5 Section 7-75, ranging from the income threshold of the EISA
6 for which the student has applied up to the maximum income
7 described in subdivision (a)(15)(iii) of Section 7-75. The
8 terms of the EISA for which the student has applied cannot
9 cause the student's aggregate future burden to exceed the
10 percentage limits in this subsection at any of the income
11 increments stated in this Section. For the purpose of
12 calculating the percentage burden of an EISA at a given future
13 income level, the EISA provider shall use the EISA payment
14 amount that would be applicable for the EISA at such income
15 level. For the purpose of calculating the percentage burden of
16 an educational loan at a given future income level, the EISA
17 provider shall divide the annual payment obligation by income
18 level using the most affordable payment plan or option which
19 would yield the lowest monthly payments that would be
20 available to the student at such income level under such loan.
21 For students enrolled in a program eligible to receive federal
22 student loans under Title IV of the federal Higher Education
23 Act of 1965, as part of this analysis the EISA provider shall
24 assume a federal loan balance equal to the larger of (1) the
25 student's existing federal loan balance and (2) the aggregate
26 maximum amount the student is eligible to borrow under Federal
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1 Direct Stafford Loans for the student's status, dependent or
2 independent.
3 (b) The EISA must state that when a consumer has income
4 that is equal to or below the income threshold set forth in the
5 EISA that the consumer's payment obligation is zero dollars.
6 The income threshold must be equal to or greater than $47,000;
7 however, that amount shall be increased on January 1, 2026,
8 and every other January 1 thereafter, by the annual unadjusted
9 percentage increase (but not less than zero) in the index for
10 the 12 months ending with the preceding September, including
11 all previous adjustments.
12 (c) An EISA must offer at least 3 months of voluntary
13 payment relief pauses for every 30 income-determined payments
14 required under the EISA.
15 (d) During the payment process for the EISA, the consumer
16 may request that the income threshold on the EISA be adjusted
17 upward to ensure the consumer's income, less any payments
18 required by the EISA, would be greater than or equal to the
19 minimum essential income based on the consumer's current place
20 of residence.
21 As used in this subsection (d), the consumer's minimum
22 essential income is equal to 275% of the federal poverty
23 guidelines for a single person (for the year in which the
24 calculation is performed), multiplied by a cost-of-living
25 adjustment factor equal to the ratio of (i) one plus the
26 current locality payment percentage issued by the U.S. Office
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1 of Personnel Management for the locality pay area in which the
2 consumer resides, divided by (ii) one plus the current
3 locality payment percentage issued by the U.S. Office of
4 Personnel Management for the "Rest of U.S." locality pay area.
5 The locality pay areas described in this subsection (d) are
6 the locality pay areas described in 5 CFR 531.603.
7 An EISA provider must notify consumers of this option on
8 each monthly billing statement. Nothing in this provision
9 shall prevent an EISA provider from taking reasonable steps to
10 confirm a consumer's place of residence (such as requiring a
11 copy of a utility bill or a driver's license) for the purpose
12 of establishing the consumer's minimum essential income,
13 including if the EISA provider believes a consumer's place of
14 residence has changed. Furthermore, an EISA provider may
15 require that a consumer has resided at a location for at least
16 90 days before adjusting the consumer's minimum essential
17 income.
18 The requirements for repayment options in subsection (k)
19 of Section 5-30 apply to this Section.
20 (110 ILCS 992/7-15 new)
21 Sec. 7-15. Maximum effective annual percentage rate. An
22 EISA must specify that the maximum amount that a consumer
23 could be required to pay under the EISA will not result in a
24 consumer ever being required to pay an effective annual
25 percentage rate that is greater than 9% or the high yield of
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1 the 10-year United States Constant Maturity Treasury Notes
2 auctioned at the final auction held before the current
3 calendar year in which the EISA is originated plus 6%,
4 whichever is greater. If at any time the EISA provider accepts
5 a payment of an amount that would cause the limit in this
6 Section to apply, the EISA provider shall, within 20 calendar
7 days, refund any amounts necessary to ensure that the
8 consumer's payments do not result in an effective annual
9 percentage rate that is greater than the limit specified in
10 this Section.
11 (110 ILCS 992/7-20 new)
12 Sec. 7-20. Limits on duration of EISAs.
13 (a) The EISA maximum number of payments shall not exceed
14 180 monthly payments.
15 (b) The EISA duration shall not exceed 240 months,
16 excluding any months in which a consumer has requested and
17 received a payment relief pause.
18 (110 ILCS 992/7-25 new)
19 Sec. 7-25. Risk sharing.
20 (a) An EISA provider may not contract for EISA terms that
21 would result in a consumer having income that is less than or
22 equal to 450% of the federal poverty guidelines for a single
23 person for the EISA duration being required to make a stream of
24 EISA payments that would yield an effective APR greater than
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1 8.5%, or the high yield of the 10-year United States Constant
2 Maturity Treasury Notes auctioned at the final auction held
3 before the current calendar year in which an EISA offering is
4 made plus 4.5%, whichever is greater.
5 (b) An EISA provider shall calculate the effective APR in
6 subsection (a) by determining the federal poverty guidelines
7 at the time the consumer's EISA is originated and assuming
8 such amount is fixed through the EISA duration.
9 (c) For the purposes of determining EISA duration in this
10 Section, an EISA provider shall assume the EISA duration
11 started after a period equal to the expected length of the
12 program for which a consumer is enrolling.
13 (d) If there is a discrepancy between the effective annual
14 percentage rate as calculated in this Section and the maximum
15 effective annual percentage rate as calculated in Section
16 7-15, the lower effective annual percentage rate shall apply
17 in this Section 7-25.
18 (110 ILCS 992/7-30 new)
19 Sec. 7-30. Limits on covered income. An EISA must specify
20 the definition of income to be used for the purposes of
21 calculating a consumer's payment obligation under the EISA. No
22 EISA shall include any of the following in its definition of
23 income:
24 (1) the income of the consumer's spouse, children, or
25 dependents or a party to a civil union with the consumer
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1 under the Illinois Religious Freedom and Civil Union Act;
2 or
3 (2) any amount paid by the consumer under Title II or
4 XVI of the Social Security Act, 42 U.S.C. 401 et seq. or 42
5 U.S.C. 1381 et seq., or under a State program funded by
6 Title IV of the Social Security Act, 42 U.S.C. 601 et seq;
7 (3) individual retirement account distributions;
8 (4) pensions and annuities;
9 (5) social security benefits;
10 (6) any sources of government aid provided to
11 individuals, including, but not limited to:
12 (A) unemployment programs;
13 (B) disaster relief programs;
14 (C) Medicare or Medicaid benefits;
15 (D) benefits received through the Supplemental
16 Nutrition Assistance Program;
17 (E) economic impact payments;
18 (F) the earned income tax credit or child tax
19 credit;
20 (G) other income excluded from the definition of
21 taxable income set forth by the Internal Revenue
22 Service; or
23 (H) passive income that is not derived as a result
24 of a consumer's active participation in any trade or
25 business.
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1 (110 ILCS 992/7-35 new)
2 Sec. 7-35. Fees permitted. (a) In addition to the EISA
3 obligation permitted by this Act, an EISA provider may
4 contract for and receive the following additional charges:
5 (1) government fees and taxes;
6 (2) a fee, which shall not exceed the sum of $25, for a
7 failure to provide documentation to the EISA provider for
8 the confirmation and reconciliation of the consumer's
9 income within 30 days after the date on which such
10 documentation is due, as reflected in the written notice
11 to the consumer;
12 (3) a fee for processing any forms to confirm the
13 consumer's income with the United States Internal Revenue
14 Service or a state department of revenue or taxation on a
15 dollar-for-dollar, pass-through basis of the expenses
16 incurred by the EISA provider;
17 (4) a late payment fee in the amount of $15 or 5% of
18 the late payment, whichever is less, for any payment that
19 is more than 15 days past due; no late payment fee may be
20 charged more than once per late payment;
21 (5) an amount not exceeding $25, plus any actual
22 expenses incurred in connection with a check or draft that
23 is not honored because of insufficient or uncollected
24 funds or because no such account exists; and
25 (6) other fees authorized by the Secretary.
26 In determining whether to authorize a charge, the
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1 Secretary shall consider whether the charge benefits the
2 consumer and is reasonable.
3 (b) Before or after default in payment of a scheduled
4 payment of an EISA, the parties to the EISA may agree in
5 writing to a deferral of all or part of one or more unpaid
6 payments and the EISA provider may make, at the time of
7 deferral and receive at that time or at any time thereafter, a
8 deferral charge not exceeding an amount equal to 5% of the
9 missed payment, except that this subsection (b) shall not
10 apply to voluntary payment relief pauses.
11 (110 ILCS 992/7-40 new)
12 Sec. 7-40. Restriction on security interest. Under no
13 circumstances shall an EISA provider take a security interest
14 in any collateral in connection with an EISA.
15 (110 ILCS 992/7-41 new)
16 Sec. 7-41. Refinancing. Before offering a person an EISA
17 that is being used to refinance an existing loan, an EISA
18 provider shall provide the person with a disclosure explaining
19 that the benefits and protections applicable to the existing
20 loan may be lost due to the refinancing. The disclosure must be
21 provided on a one-page information sheet in at least 12-point
22 type and must be written in simple, clear, understandable, and
23 easily readable language.
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1 (110 ILCS 992/7-45 new)
2 Sec. 7-45. Discharge of obligations.
3 (a) All obligations under an EISA shall terminate if the
4 consumer is deemed totally and permanently disabled by the
5 applicable governmental agency.
6 (b) All obligations under an EISA shall terminate upon the
7 death of the consumer.
8 (c) The requirements for total and permanent disability of
9 a borrower or cosigner in subsections (b) through (e) of
10 Section 5-85 that apply to borrowers apply to this Section.
11 (110 ILCS 992/7-50 new)
12 Sec. 7-50. Prohibition on cosigners. No EISA shall include
13 or permit the use of a cosigner in connection with any
14 obligation related to an EISA.
15 (110 ILCS 992/7-55 new)
16 Sec. 7-55. Limitation on acceleration.
17 (a) EISA providers shall not attempt to accelerate or
18 otherwise liquidate a future payment stream under an EISA.
19 (b) Notwithstanding subsection (a), nothing in this
20 Section shall prevent an EISA provider from collecting or
21 pursuing any other remedy available to the EISA provider for
22 the collection of amounts that were due from the consumer
23 under an EISA that were not paid or properly remitted to the
24 EISA provider. Nothing in this Section shall prevent an EISA
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1 provider from calculating a projected future income for a
2 consumer and calculating a consumer's payment obligation using
3 that projection if the consumer does not provide contractually
4 obligated documentation of income.
5 (c) Notwithstanding subsection (a), an EISA may contain a
6 provision that allows a consumer to terminate the consumer's
7 EISA before the events terminating further obligations under
8 the EISA. The early termination mechanisms, such as total caps
9 on payments due to the EISA provider or other rights to
10 partially or fully terminate further obligations under the
11 EISA, must be optional to the consumer and within the
12 consumer's control. In such circumstances, such mechanisms
13 shall not be deemed a form of acceleration.
14 (110 ILCS 992/7-60 new)
15 Sec. 7-60. No assignment of wages.
16 (a) An EISA provider may not take an assignment of
17 earnings or wages of the consumer for payment or as security
18 for payment of a debt arising out of an EISA. An assignment of
19 earnings in violation of this Section is unenforceable by the
20 assignee of the earnings and revocable by the consumer. This
21 Section does not limit the ability of the consumer to
22 voluntarily elect to use a revocable payroll deduction
23 mechanism, such as one offered by an employer or payroll
24 provider, provided that the consumer is not assigning the
25 consumer's earnings or wages.
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1 (b) A sale of unpaid earnings made in consideration of the
2 payment of money to or for the account of the seller of the
3 earnings is deemed to be a loan to the seller secured by an
4 assignment of earnings.
5 (110 ILCS 992/7-65 new)
6 Sec. 7-65. Limitations on garnishment. Before entry of
7 judgment in an action against a consumer for a payment arising
8 from an EISA, a licensee may not attach unpaid earnings of the
9 consumer by garnishment or like proceedings.
10 (110 ILCS 992/7-70 new)
11 Sec. 7-70. Use of multiple agreements. An EISA provider
12 shall not use multiple agreements with respect to a single
13 EISA with intent to violate any limitations of this Act.
14 (110 ILCS 992/7-75 new)
15 Sec. 7-75. Required disclosures.
16 (a) An EISA provider shall disclose the following
17 information to each consumer, clearly and conspicuously, in a
18 form that the consumer can keep at the time the transaction is
19 consummated:
20 (1) the date of the EISA;
21 (2) the dollar amount of the amount financed;
22 (3) the sales price of the transaction if different
23 from the amount financed;
SB1537 Enrolled - 26 - LRB104 08584 JDS 18636 b
1 (4) the EISA payment calculation method, including any
2 percentages used in the EISA payment calculation method,
3 which shall be rounded to the nearest one-hundredth of 1%
4 if the percentage is not a whole number;
5 (5) the maximum number of payments expressed as a
6 whole number;
7 (6) the maximum duration expressed as a whole number
8 of the period of time;
9 (7) the income threshold expressed as a dollar amount
10 and a statement that payments will only be required during
11 periods when the consumer's income is equal to or exceeds
12 the income threshold;
13 (8) an itemization of the amount financed and, if the
14 EISA provider is a seller of goods or services, an
15 itemization of the amount of any down payment and any
16 additional fees or costs;
17 (9) the definition of "income" to be used for the
18 purposes of calculating the consumer's obligations under
19 the EISA;
20 (10) a description of the terms under which the
21 obligations of the consumer under the EISA will be
22 extinguished before the full EISA duration;
23 (11) a payment schedule that shows the date on which
24 the first payment will be due and reflects each date
25 thereafter during the EISA duration that a payment may be
26 due;
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1 (12) an itemization of any permissible fees associated
2 with the EISA;
3 (13) a description of the methods used by the EISA
4 provider to engage in a process of reconciliation and
5 verification to determine if the consumer's payments are
6 more than, equal to, or less than the payments owed by the
7 consumer under the consumer's EISA; this description shall
8 include the following:
9 (i) a description of the frequency or triggers for
10 the commencement of the income verification process;
11 (ii) a description of the requirements and timing
12 of the process in which the consumer must participate
13 in order for the EISA provider to verify the
14 consumer's income; and
15 (iii) a description of any records or forms,
16 including tax records, that the consumer may be
17 required to execute or submit;
18 (14) the name and address of the EISA provider;
19 (15) a table that displays the dollar amounts of each
20 payment, the number of payments, the effective annual
21 percentage rate, and the total of all payments that a
22 consumer would be required to pay under the EISA at a range
23 of annual income levels based on the EISA duration and
24 that includes a statement that "This comparison table is
25 for illustrative purposes only and may not reflect the
26 amounts that you are likely to pay under this educational
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1 income share agreement. This table assumes you have the
2 same income over the entire term of your educational
3 income share agreement. It does not take into account
4 changes in income. Your income will likely change over
5 time. This table does not represent the income or range of
6 incomes that you are likely to earn in the future.". In
7 computing the APR, the EISA provider shall use the amount
8 financed and may assume that the EISA will be disbursed in
9 the amount and with the disbursement schedule that it
10 reasonably expects to follow for such EISA and that
11 payments would commence on the date set forth in the EISA.
12 The income used in this disclosure shall include, at
13 minimum, the obligations at the following incomes:
14 (i) no income;
15 (ii) income equal to the annual equivalent of the
16 income threshold;
17 (iii) various income scenarios with at least
18 calculations at annual incomes of $40,000, $60,000,
19 $80,000, $100,000, $125,000, $150,000, $175,000, and
20 $200,000; and
21 (iv) if known by the EISA provider, the consumer's
22 current income;
23 (16) a statement that the EISA is not a fixed payment
24 installment loan and that the amount the consumer will be
25 required to pay under the EISA:
26 (i) may be more or less than the amount financed by
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1 the EISA provider; and
2 (ii) will vary in proportion with the consumer's
3 income; and
4 (17) a statement relating to the bankruptcy treatment
5 of the EISA consistent with the requirements set forth in
6 12 CFR 1026.47(a)(3)(iv), as it may be amended or
7 interpreted.
8 (b) The disclosures required by this Section shall be
9 grouped together and segregated from all other information.
10 (c) The disclosures required by this Section may be
11 provided to a consumer in electronic form, subject to
12 compliance with the consumer's consent and other applicable
13 provisions of the Electronic Signatures in Global and National
14 Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
15 law.
16 (d) If model documents are established pursuant to any
17 federal law covering income share agreements, compliance with
18 those forms shall be considered compliance with this Act with
19 respect to the disclosure requirements contained in this Act.
20 (110 ILCS 992/7-80 new)
21 Sec. 7-80. Early completion. An EISA shall specify the
22 terms and conditions by which the consumer may extinguish the
23 consumer's obligations under the EISA before the end of the
24 EISA's duration. An EISA must not include a prepayment penalty
25 that violates the prohibition found in 15 U.S.C. 1650(e), as
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1 it may be amended or interpreted. A consumer may always cancel
2 an EISA by making aggregate payments, excluding payments to
3 fees, equal to the EISA payment cap. The consumer is entitled
4 to this early completion regardless of whether the consumer
5 makes this early completion payment by making regularly
6 scheduled payments or by making a single lump-sum payment in
7 the amount of the early completion payment.
8 This Section shall create an early completion mechanism
9 for EISAs that is in lieu of other State laws regarding
10 prepayment penalties.
11 (110 ILCS 992/7-85 new)
12 Sec. 7-85. Assumption of increase in future income.
13 (a) If a consumer fails to provide income documentation as
14 reasonably required by an EISA, an EISA provider may assign an
15 amount of income to the consumer and compute the consumer's
16 monthly payment amount by any of the following methods, to the
17 extent disclosed in the EISA:
18 (1) assigning an income amount obtained from a
19 reasonably reliable third party or a credit reporting
20 agency;
21 (2) if the consumer previously provided income
22 documentation or has had an income assigned in the prior
23 12-month period that has increased by an amount not to
24 exceed 10%, but such increase may not be applied more than
25 once per 12-month period;
SB1537 Enrolled - 31 - LRB104 08584 JDS 18636 b
1 (3) contacting the Department of Revenue or the
2 Internal Revenue Service to obtain the most recent
3 information available about the student's income; or
4 (4) assigning a reasonable qualified income based on
5 the incomes of the nearest reasonably relevant quantile of
6 income of consumers who attended the same or a reasonably
7 comparable covered educational program or course of study,
8 as determined by information published by the Bureau of
9 Labor Statistics or other reasonably reliable publicly
10 available data sources.
11 (b) If an EISA provider assigns an income to a consumer's
12 EISA, then it shall notify the consumer in the monthly billing
13 statement, and in each billing statement thereafter while the
14 assigned income remains applicable to the consumer's EISA,
15 that income has been assigned and of the consumer's rights
16 under this Section.
17 (c) If the consumer does provide income information as
18 reasonably required by the EISA within one year of the date on
19 which the EISA provider notified the consumer that assigned
20 income will be applied to the EISA, then, within 15 days after
21 the EISA provider's receipt of such information, the EISA
22 provider shall update each prior instance in which assigned
23 income was applied using the income information provided by
24 the consumer; if the consumer provides income information more
25 than one year after the EISA provider first assigned income to
26 the consumer's EISA, then the EISA provider may, but is not
SB1537 Enrolled - 32 - LRB104 08584 JDS 18636 b
1 obligated to, update each prior instance in which assigned
2 income was applied using the income information provided by
3 the consumer.
4 (d) An EISA provider that assigns income to an EISA shall
5 retain all applicable records relating to the method and data
6 sources used to make such estimation for 3 years after the end
7 of that EISA.
8 (110 ILCS 992/7-90 new)
9 Sec. 7-90. Receipts; statements of account; evidence of
10 payment.
11 (a) The EISA provider shall deliver or mail to the
12 consumer, without request, a written receipt for each payment
13 made pursuant to an EISA. A periodic statement showing a
14 payment received by mail complies with this subsection (a).
15 (b) An EISA provider shall provide a written payment
16 history to a borrower upon request at no cost within 21
17 calendar days of receiving the request.
18 (c) An EISA provider shall indicate on its website that a
19 borrower may request a payoff statement. An EISA provider
20 shall provide the payoff statement within 10 days, including
21 information the requester needs to pay off the loan. If a
22 payoff is made, the EISA provider must send a paid-in-full
23 notice within 30 days.
24 (110 ILCS 992/7-95 new)
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1 Sec. 7-95. Adjustment of dollar amounts.
2 (a) From time to time, the dollar amounts in this Act
3 designated as subject to change shall change, as provided in
4 this Section, according to and to the extent of changes in the
5 index.
6 (b) The index for December of the year preceding the year
7 in which this Act becomes effective is the reference base
8 index.
9 (c) The designated dollar amounts shall change on July 1
10 of each even-numbered year if the percentage of change,
11 calculated to the nearest whole percentage point, between the
12 index and the end of the preceding year and the reference base
13 index is 10% or more, but:
14 (1) the portion of the percentage change in the index
15 in excess of a multiple of 10% shall be disregarded and the
16 dollar amounts shall change only in multiples of 10% of
17 the amounts provided in this Act on the date of enactment;
18 and
19 (2) the dollar amounts shall not change if the amounts
20 required by this Section are those currently in effect
21 pursuant to this Act as a result of earlier application of
22 this Section.
23 (d) If the index is revised, the percentage of change
24 pursuant to this Section shall be calculated on the basis of
25 the revised index. If a revision of the index changes the
26 reference base index, a revised reference base index shall be
SB1537 Enrolled - 34 - LRB104 08584 JDS 18636 b
1 determined by multiplying the reference base index then
2 applicable by the rebasing factor furnished by the Bureau of
3 Labor Statistics. If the index is superseded, the index
4 referred to in this Section is the one represented by the
5 Bureau of Labor Statistics as reflecting most accurately
6 changes in the purchasing power of the dollar for consumers.
7 (e) The Department shall adopt a rule setting forth, on or
8 before April 30 of each year in which dollar amounts are to
9 change, the changes in dollar amounts required by this
10 Section. As soon as practical after the changes occur, the
11 Department shall adopt a rule setting forth the changes in the
12 index required by subsection (d), including, if applicable,
13 the numerical equivalent of the reference base index under a
14 revised reference base index and the designation or title of
15 any index superseding the index.
16 (f) A person does not violate this Act with respect to a
17 transaction otherwise complying with this Act if the person
18 relies on dollar amounts either determined according to
19 subsection (c) or appearing in the last rule of the Department
20 announcing the then-current dollar amounts.
21 (110 ILCS 992/7-100 new)
22 Sec. 7-100. Construction against implicit authority. This
23 Act is a general Act intended as a unified coverage of its
24 subject matter. No part of this Act shall be construed to be
25 impliedly repealed by subsequent law if that construction can
SB1537 Enrolled - 35 - LRB104 08584 JDS 18636 b
1 reasonably be avoided.
2 (110 ILCS 992/7-105 new)
3 Sec. 7-105. Application of other Acts. EISAs and EISA
4 providers are subject to other Articles of this Act, the Know
5 Before You Owe Private Education Loan Act, and the Predatory
6 Loan Prevention Act and shall comply with their requirements
7 and any rules adopted by the Department of Financial and
8 Professional Regulation pursuant to those Acts. Nothing in
9 this Section is intended to imply that: (i) an EISA is not a
10 credit transaction or (ii) an EISA does not create a debt upon
11 the accrual of an obligation under the EISA.
12 (110 ILCS 992/7-110 new)
13 Sec. 7-110. Rulemaking. Notwithstanding any other
14 provision of this Act, the Secretary may adopt rules for the
15 regulation of any EISA provider that does not engage in the
16 servicing of student loans, including, but not limited to,
17 EISAs. The Secretary's authority to adopt rules shall include,
18 but is not limited to, licensure, examination, supervision,
19 investigation, confidentiality, and enforcement. The rules
20 adopted by the Secretary shall not incorporate any provision
21 of Article 1, 5, 10, 15, 20, or 25 of this Act if that
22 provision conflicts with this Article.
23 (110 ILCS 992/25-5)
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1 Sec. 25-5. Enforcement; Consumer Fraud and Deceptive
2 Business Practices Act. The Attorney General may enforce a
3 violation of Article 5 or 7 of this Act as an unlawful practice
4 under the Consumer Fraud and Deceptive Business Practices Act.
5 (Source: P.A. 100-540, eff. 12-31-18.)
6 Section 10. The Consumer Installment Loan Act is amended
7 by changing Section 1 as follows:
8 (205 ILCS 670/1) (from Ch. 17, par. 5401)
9 Sec. 1. License required to engage in business. No person,
10 partnership, association, limited liability company, or
11 corporation shall engage in the business of making loans of
12 money and charge, contract for, or receive on any such loan a
13 greater annual percentage rate than 9% except as authorized by
14 this Act after first obtaining a license from the Director of
15 Financial Institutions (hereinafter called the Director). No
16 licensee, or employee or affiliate thereof, that is licensed
17 under the Payday Loan Reform Act shall obtain a license under
18 this Act except that a licensee under the Payday Loan Reform
19 Act may obtain a license under this Act for the exclusive
20 purpose and use of making title-secured loans, as defined in
21 subsection (a) of Section 15 of this Act and governed by Title
22 38, Section 110.300 of the Illinois Administrative Code. For
23 the purpose of this Section, "affiliate" means any person or
24 entity that directly or indirectly controls, is controlled by,
SB1537 Enrolled - 37 - LRB104 08584 JDS 18636 b
1 or shares control with another person or entity. A person or
2 entity has control over another if the person or entity has an
3 ownership interest of 25% or more in the other. A person or
4 entity licensed to provide educational income share agreements
5 is exempt from the requirements of this Act to the extent of
6 its operation under Article 7 of the Student Loan Servicing
7 Rights Act.
8 In this Act, "Director" means the Director of Financial
9 Institutions of the Department of Financial and Professional
10 Regulation.
11 (Source: P.A. 101-658, eff. 3-23-21.)
12 Section 15. The Interest Act is amended by changing
13 Section 4 as follows:
14 (815 ILCS 205/4) (from Ch. 17, par. 6404)
15 Sec. 4. General interest rate.
16 (1) Except as otherwise provided in Section 4.05, in all
17 written contracts it shall be lawful for the parties to
18 stipulate or agree that an annual percentage rate of 9%, or any
19 less sum, shall be taken and paid upon every $100 of money
20 loaned or in any manner due and owing from any person to any
21 other person or corporation in this state, and after that rate
22 for a greater or less sum, or for a longer or shorter time,
23 except as herein provided.
24 The maximum rate of interest that may lawfully be
SB1537 Enrolled - 38 - LRB104 08584 JDS 18636 b
1 contracted for is determined by the law applicable thereto at
2 the time the contract is made. Any provision in any contract,
3 whether made before or after July 1, 1969, which provides for
4 or purports to authorize, contingent upon a change in the
5 Illinois law after the contract is made, any rate of interest
6 greater than the maximum lawful rate at the time the contract
7 is made, is void.
8 It is lawful for a state bank or a branch of an
9 out-of-state bank, as those terms are defined in Section 2 of
10 the Illinois Banking Act, to receive or to contract to receive
11 and collect interest and charges at any rate or rates agreed
12 upon by the bank or branch and the borrower. It is lawful for a
13 savings bank chartered under the Savings Bank Act or a savings
14 association chartered under the Illinois Savings and Loan Act
15 of 1985 to receive or contract to receive and collect interest
16 and charges at any rate agreed upon by the savings bank or
17 savings association and the borrower.
18 It is lawful to receive or to contract to receive and
19 collect interest and charges as authorized by this Act and as
20 authorized by the Consumer Installment Loan Act, the Payday
21 Loan Reform Act, the Retail Installment Sales Act, the
22 Illinois Financial Services Development Act, the Motor Vehicle
23 Retail Installment Sales Act, or the Consumer Legal Funding
24 Act, or the Student Loan Servicing Rights Act. It is lawful to
25 charge, contract for, and receive any rate or amount of
26 interest or compensation, except as otherwise provided in the
SB1537 Enrolled - 39 - LRB104 08584 JDS 18636 b
1 Predatory Loan Prevention Act, with respect to the following
2 transactions:
3 (a) Any loan made to a corporation;
4 (b) Advances of money, repayable on demand, to an
5 amount not less than $5,000, which are made upon warehouse
6 receipts, bills of lading, certificates of stock,
7 certificates of deposit, bills of exchange, bonds or other
8 negotiable instruments pledged as collateral security for
9 such repayment, if evidenced by a writing;
10 (c) Any credit transaction between a merchandise
11 wholesaler and retailer; any business loan to a business
12 association or copartnership or to a person owning and
13 operating a business as sole proprietor or to any persons
14 owning and operating a business as joint venturers, joint
15 tenants or tenants in common, or to any limited
16 partnership, or to any trustee owning and operating a
17 business or whose beneficiaries own and operate a
18 business, except that any loan which is secured (1) by an
19 assignment of an individual obligor's salary, wages,
20 commissions or other compensation for services, or (2) by
21 his household furniture or other goods used for his
22 personal, family or household purposes shall be deemed not
23 to be a loan within the meaning of this subsection; and
24 provided further that a loan which otherwise qualifies as
25 a business loan within the meaning of this subsection
26 shall not be deemed as not so qualifying because of the
SB1537 Enrolled - 40 - LRB104 08584 JDS 18636 b
1 inclusion, with other security consisting of business
2 assets of any such obligor, of real estate occupied by an
3 individual obligor solely as his residence. The term
4 "business" shall be deemed to mean a commercial,
5 agricultural or industrial enterprise which is carried on
6 for the purpose of investment or profit, but shall not be
7 deemed to mean the ownership or maintenance of real estate
8 occupied by an individual obligor solely as his residence;
9 (d) Any loan made in accordance with the provisions of
10 Subchapter I of Chapter 13 of Title 12 of the United States
11 Code, which is designated as "Housing Renovation and
12 Modernization";
13 (e) Any mortgage loan insured or upon which a
14 commitment to insure has been issued under the provisions
15 of the National Housing Act, Chapter 13 of Title 12 of the
16 United States Code;
17 (f) Any mortgage loan guaranteed or upon which a
18 commitment to guaranty has been issued under the
19 provisions of the Veterans' Benefits Act, Subchapter II of
20 Chapter 37 of Title 38 of the United States Code;
21 (g) Interest charged by a broker or dealer registered
22 under the Securities Exchange Act of 1934, as amended, or
23 registered under the Illinois Securities Law of 1953,
24 approved July 13, 1953, as now or hereafter amended, on a
25 debit balance in an account for a customer if such debit
26 balance is payable at will without penalty and is secured
SB1537 Enrolled - 41 - LRB104 08584 JDS 18636 b
1 by securities as defined in Uniform Commercial
2 Code-Investment Securities;
3 (h) Any loan made by a participating bank as part of
4 any loan guarantee program which provides for loans and
5 for the refinancing of such loans to medical students,
6 interns and residents and which are guaranteed by the
7 American Medical Association Education and Research
8 Foundation;
9 (i) Any loan made, guaranteed, or insured in
10 accordance with the provisions of the Housing Act of 1949,
11 Subchapter III of Chapter 8A of Title 42 of the United
12 States Code and the Consolidated Farm and Rural
13 Development Act, Subchapters I, II, and III of Chapter 50
14 of Title 7 of the United States Code;
15 (j) Any loan by an employee pension benefit plan, as
16 defined in Section 3 (2) of the Employee Retirement Income
17 Security Act of 1974 (29 U.S.C.A. Sec. 1002), to an
18 individual participating in such plan, provided that such
19 loan satisfies the prohibited transaction exemption
20 requirements of Section 408 (b) (1) (29 U.S.C.A. Sec. 1108
21 (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975 (d)
22 (1)) of the Employee Retirement Income Security Act of
23 1974;
24 (k) Written contracts, agreements or bonds for deed
25 providing for installment purchase of real estate,
26 including a manufactured home as defined in subdivision
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1 (53) of Section 9-102 of the Uniform Commercial Code that
2 is real property as defined in the Conveyance and
3 Encumbrance of Manufactured Homes as Real Property and
4 Severance Act;
5 (l) Loans secured by a mortgage on real estate,
6 including a manufactured home as defined in subdivision
7 (53) of Section 9-102 of the Uniform Commercial Code that
8 is real property as defined in the Conveyance and
9 Encumbrance of Manufactured Homes as Real Property and
10 Severance Act;
11 (m) Loans made by a sole proprietorship, partnership,
12 or corporation to an employee or to a person who has been
13 offered employment by such sole proprietorship,
14 partnership, or corporation made for the sole purpose of
15 transferring an employee or person who has been offered
16 employment to another office maintained and operated by
17 the same sole proprietorship, partnership, or corporation;
18 (n) Loans to or for the benefit of students made by an
19 institution of higher education.
20 (2) Except for loans described in subparagraph (a), (c),
21 (d), (e), (f) or (i) of subsection (1) of this Section, and
22 except to the extent permitted by the applicable statute for
23 loans made pursuant to Section 4a or pursuant to the Consumer
24 Installment Loan Act:
25 (a) Whenever the rate of interest exceeds an annual
26 percentage rate of 8% on any written contract, agreement
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1 or bond for deed providing for the installment purchase of
2 residential real estate, or on any loan secured by a
3 mortgage on residential real estate, it shall be unlawful
4 to provide for a prepayment penalty or other charge for
5 prepayment.
6 (b) No agreement, note or other instrument evidencing
7 a loan secured by a mortgage on residential real estate,
8 or written contract, agreement or bond for deed providing
9 for the installment purchase of residential real estate,
10 may provide for any change in the contract rate of
11 interest during the term thereof. However, if the Congress
12 of the United States or any federal agency authorizes any
13 class of lender to enter, within limitations, into
14 mortgage contracts or written contracts, agreements or
15 bonds for deed in which the rate of interest may be changed
16 during the term of the contract, any person, firm,
17 corporation or other entity not otherwise prohibited from
18 entering into mortgage contracts or written contracts,
19 agreements or bonds for deed in Illinois may enter into
20 mortgage contracts or written contracts, agreements or
21 bonds for deed in which the rate of interest may be changed
22 during the term of the contract, within the same
23 limitations.
24 (3) In any contract or loan which is secured by a mortgage,
25 deed of trust, or conveyance in the nature of a mortgage, on
26 residential real estate, the interest which is computed,
SB1537 Enrolled - 44 - LRB104 08584 JDS 18636 b
1 calculated, charged, or collected pursuant to such contract or
2 loan, or pursuant to any regulation or rule promulgated
3 pursuant to this Act, may not be computed, calculated, charged
4 or collected for any period of time occurring after the date on
5 which the total indebtedness, with the exception of late
6 payment penalties, is paid in full.
7 (4) For purposes of this Section, a prepayment shall mean
8 the payment of the total indebtedness, with the exception of
9 late payment penalties if incurred or charged, on any date
10 before the date specified in the contract or loan agreement on
11 which the total indebtedness shall be paid in full, or before
12 the date on which all payments, if timely made, shall have been
13 made. In the event of a prepayment of the indebtedness which is
14 made on a date after the date on which interest on the
15 indebtedness was last computed, calculated, charged, or
16 collected but before the next date on which interest on the
17 indebtedness was to be calculated, computed, charged, or
18 collected, the lender may calculate, charge and collect
19 interest on the indebtedness for the period which elapsed
20 between the date on which the prepayment is made and the date
21 on which interest on the indebtedness was last computed,
22 calculated, charged or collected at a rate equal to 1/360 of
23 the annual rate for each day which so elapsed, which rate shall
24 be applied to the indebtedness outstanding as of the date of
25 prepayment. The lender shall refund to the borrower any
26 interest charged or collected which exceeds that which the
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1 lender may charge or collect pursuant to the preceding
2 sentence. The provisions of this amendatory Act of 1985 shall
3 apply only to contracts or loans entered into on or after the
4 effective date of this amendatory Act, but shall not apply to
5 contracts or loans entered into on or after that date that are
6 subject to Section 4a of this Act, the Consumer Installment
7 Loan Act, the Payday Loan Reform Act, the Predatory Loan
8 Prevention Act, or the Retail Installment Sales Act, or that
9 provide for the refund of precomputed interest on prepayment
10 in the manner provided by such Act.
11 (5) For purposes of items (a) and (c) of subsection (1) of
12 this Section, a rate or amount of interest may be lawfully
13 computed when applying the ratio of the annual interest rate
14 over a year based on 360 days. The provisions of this
15 amendatory Act of the 96th General Assembly are declarative of
16 existing law.
17 (6) For purposes of this Section, "real estate" and "real
18 property" include a manufactured home, as defined in
19 subdivision (53) of Section 9-102 of the Uniform Commercial
20 Code that is real property as defined in the Conveyance and
21 Encumbrance of Manufactured Homes as Real Property and
22 Severance Act.
23 (Source: P.A. 101-658, eff. 3-23-21; 102-987, eff. 5-27-22.)
24 Section 97. Severability. The provisions of this Act are
25 severable under Section 1.31 of the Statute on Statutes.
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.
SB1537 Enrolled - 47 - LRB104 08584 JDS 18636 b
1 INDEX
2 Statutes amended in order of appearance
3 110 ILCS 992/1-5
4 110 ILCS 992/Art. 7
5 heading new
6 110 ILCS 992/7-1 new
7 110 ILCS 992/7-3 new
8 110 ILCS 992/7-5 new
9 110 ILCS 992/7-10 new
10 110 ILCS 992/7-15 new
11 110 ILCS 992/7-20 new
12 110 ILCS 992/7-25 new
13 110 ILCS 992/7-30 new
14 110 ILCS 992/7-35 new
15 110 ILCS 992/7-40 new
16 110 ILCS 992/7-45 new
17 110 ILCS 992/7-50 new
18 110 ILCS 992/7-55 new
19 110 ILCS 992/7-60 new
20 110 ILCS 992/7-65 new
21 110 ILCS 992/7-70 new
22 110 ILCS 992/7-75 new
23 110 ILCS 992/7-80 new
24 110 ILCS 992/7-85 new
25 110 ILCS 992/7-90 new
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1 110 ILCS 992/7-95 new from Ch. 17, par. 5401
2 110 ILCS 992/7-100 new from Ch. 17, par. 6404
3 110 ILCS 992/7-105 new
4 110 ILCS 992/7-110 new
5 110 ILCS 992/25-5
6 205 ILCS 670/1
7 815 ILCS 205/4Every fact on this page links to its source, starting with the official bill record.