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Full Text of SB1351  100th General Assembly

SB1351enr 100TH GENERAL ASSEMBLY



 


 
SB1351 EnrolledLRB100 10505 MLM 20720 b

1    AN ACT concerning education.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4
ARTICLE 1. GENERAL PROVISIONS

 
5    Section 1-1. Short title. This Act may be cited as the
6Student Loan Servicing Rights Act.
 
7    Section 1-5. Definitions. As used in this Act:
8    "Applicant" means a person applying for a license pursuant
9to this Act.
10    "Borrower" or "student loan borrower" means a person who
11has received or agreed to pay a student loan for his or her own
12educational expenses.
13    "Cosigner" means a person who has agreed to share
14responsibility for repaying a student loan with a borrower.
15    "Department" means the Department of Financial and
16Professional Regulation.
17    "Division of Banking" means the Division of Banking of the
18Department of Financial and Professional Regulation.
19    "Federal loan borrower eligible for referral to a repayment
20specialist" means a borrower who possesses any of the following
21characteristics:
22        (1) requests information related to options to reduce

 

 

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1    or suspend his or her monthly payment;
2        (2) indicates that he or she is experiencing or
3    anticipates experiencing financial hardship, distress, or
4    difficulty making his or her payments;
5        (3) has missed 2 consecutive monthly payments;
6        (4) is at least 75 days delinquent;
7        (5) is enrolled in a discretionary forbearance for more
8    than 9 of the previous 12 months;
9        (6) has rehabilitated or consolidated one or more loans
10    out of default within the past 12 months; or
11        (7) has not completed a course of study, as reflected
12    in the servicer's records, or the borrower identifies
13    himself or herself as not having completed a program of
14    study.
15    "Federal education loan" means any loan made, guaranteed,
16or insured under Title IV of the federal Higher Education Act
17of 1965.
18    "Income-driven payment plan certification" means the
19documentation related to a federal student loan borrower's
20income or financial status the borrower must submit to renew an
21income-driven repayment plan.
22    "Income-driven repayment options" includes the
23Income-Contingent Repayment Plan, the Income-Based Repayment
24Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
25Plan, the Revised Pay As You Earn Plan, and any other federal
26student loan repayment plan that is calculated based on a

 

 

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1borrower's income.
2    "Licensee" means a person licensed pursuant to this Act.
3    "Other repayment plans" means the Standard Repayment Plan,
4the Graduated Repayment Plan, the Extended Repayment Plan, or
5any other federal student loan repayment plan not based on a
6borrower's income.
7    "Private loan borrower eligible for referral to a repayment
8specialist" means a borrower who possesses any of the following
9characteristics:
10        (1) requests information related to options to reduce
11    or suspend his or her monthly payments; or
12        (2) indicates that he or she is experiencing or
13    anticipates experiencing financial hardship, distress, or
14    difficulty making his or her payments.
15    "Requester" means any borrower or cosigner that submits a
16request for assistance.
17    "Request for assistance" means all inquiries, complaints,
18account disputes, and requests for documentation a servicer
19receives from borrowers or cosigners.
20    "Secretary" means the Secretary of Financial and
21Professional Regulation, or his or her designee, including the
22Director of the Division of Banking of the Department of
23Financial and Professional Regulation.
24    "Servicing" means: (1) receiving any scheduled periodic
25payments from a student loan borrower or cosigner pursuant to
26the terms of a student loan; (2) applying the payments of

 

 

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1principal and interest and such other payments with respect to
2the amounts received from a student loan borrower or cosigner,
3as may be required pursuant to the terms of a student loan; and
4(3) performing other administrative services with respect to a
5student loan.
6    "Student loan" or "loan" means any federal education loan
7or other loan primarily for use to finance a postsecondary
8education and costs of attendance at a postsecondary
9institution, including, but not limited to, tuition, fees,
10books and supplies, room and board, transportation, and
11miscellaneous personal expenses. "Student loan" includes a
12loan made to refinance a student loan.
13    "Student loan" shall not include an extension of credit
14under an open-end consumer credit plan, a reverse mortgage
15transaction, a residential mortgage transaction, or any other
16loan that is secured by real property or a dwelling.
17    "Student loan" shall not include an extension of credit
18made by a postsecondary educational institution to a borrower
19if one of the following apply:
20        (1) The term of the extension of credit is no longer
21    than the borrower's education program.
22        (2) The remaining, unpaid principal balance of the
23    extension of credit is less than $1,500 at the time of the
24    borrower's graduation or completion of the program.
25        (3) The borrower fails to graduate or successfully
26    complete his or her education program and has a balance due

 

 

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1    at the time of his or her disenrollment from the
2    postsecondary institution.
3    "Student loan servicer" or "servicer" means any person
4engaged in the business of servicing student loans.
5    "Student loan servicer" shall not include:
6        (1) a bank, savings bank, savings association, or
7    credit union organized under the laws of the State or any
8    other state or under the laws of the United States;
9        (2) a wholly owned subsidiary of any bank, savings
10    bank, savings association, or credit union organized under
11    the laws of the State or any other state or under the laws
12    of the United States;
13        (3) an operating subsidiary where each owner of the
14    operating subsidiary is wholly owned by the same bank,
15    savings bank, savings association, or credit union
16    organized under the laws of the State or any other state or
17    under the laws of the United States;
18        (4) the Illinois Student Assistance Commission and its
19    agents when the agents are acting on the Illinois Student
20    Assistance Commission's behalf;
21        (5) a public postsecondary educational institution or
22    a private nonprofit postsecondary educational institution
23    servicing a student loan it extended to the borrower;
24        (6) a licensed debt management service under the Debt
25    Management Service Act, except to the extent that the
26    organization acts as a subcontractor, affiliate, or

 

 

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1    service provider for an entity that is otherwise subject to
2    licensure under this Act;
3        (7) any collection agency licensed under the
4    Collection Agency Act that is collecting post-default
5    debt;
6        (8) in connection with its responsibilities as a
7    guaranty agency engaged in default aversion, a State or
8    nonprofit private institution or organization having an
9    agreement with the U.S. Secretary of Education under
10    Section 428(b) of the Higher Education Act (20 U.S.C.
11    1078(B)); or
12        (9) a State institution or a nonprofit private
13    organization designated by a governmental entity to make or
14    service student loans, provided in each case that the
15    institution or organization services fewer than 20,000
16    student loan accounts of borrowers who reside in Illinois.
 
17
ARTICLE 5. STUDENT LOAN BILL OF RIGHTS

 
18    Section 5-5. General provisions.
19    (a) A servicer shall not engage in any unfair or deceptive
20practice toward any borrower or cosigner or misrepresent or
21omit any material information in connection with the servicing
22of a student loan, including, but not limited to,
23misrepresenting the amount, nature, or terms of any fee or
24payment due or claimed to be due on a student loan, the terms

 

 

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1and conditions of the student loan agreement, or the borrower's
2or cosigner's obligations under the student loan or the terms
3of any repayment plans.
4    (b) A servicer shall not misapply payments made by a
5borrower to the outstanding balance of a student loan.
6    (c) A servicer shall oversee third parties, including
7subservicers, debt collectors, independent contractors,
8subsidiaries, affiliates, or other agents, to ensure that those
9companies comply with this Article 5 when working on behalf of
10the servicer.
 
11    Section 5-10. Payment processing.
12    (a) A servicer shall credit borrower and cosigner payments
13promptly and accurately.
14    (b) A servicer shall provide borrowers and cosigners with
15prompt notice if the servicer changes the address to which the
16borrower or cosigner needs to send payments.
17    (c) A servicer shall not charge a penalty to a borrower or
18cosigner if a student loan payment is received at an address
19used for payments for a period of 90 days after the change in
20address.
21    (d) A servicer shall not misrepresent the delinquent amount
22of the loan on any call with a borrower or cosigner.
23    (e) A servicer shall allow a borrower or cosigner to
24specify instructions as to how an overpayment should be applied
25to the balance of the loan as consistent with the promissory

 

 

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1note.
 
2    Section 5-15. Fees.
3    (a) Unless otherwise provided by federal law, a servicer
4may only charge late fees that are reasonable and proportional
5to the cost it incurs related to a late payment.
6    (b) Unless otherwise provided by federal law, a servicer
7shall not charge a borrower or cosigner any fee to modify,
8defer, forbear, renew, extend, or amend the borrower's or
9cosigner's loan.
 
10    Section 5-20. Billing statements.
11    (a) In any student loan billing statement, a servicer shall
12not misrepresent the:
13        (1) fees assessed;
14        (2) total amount due for each loan;
15        (3) payment due date;
16        (4) date to avoid late fees;
17        (5) accrued interest during the billing cycle;
18        (6) default payment methodology;
19        (7) means to provide instructions for a payment; or
20        (8) procedure regarding escalated requests for
21    assistance.
22    (b) A servicer shall not misrepresent information
23regarding the $0 bill and advancement of the due date on any
24billing statement that reflects $0 owed.
 

 

 

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1    Section 5-25. Payment histories. A servicer shall provide a
2written payment history to a borrower or cosigner upon request
3at no cost within 21 calendar days of receiving the request.
 
4    Section 5-30. Specialized assistance for student loan
5borrowers.
6    (a) A servicer shall specially designate servicing and
7collections personnel deemed repayment specialists who have
8received enhanced training related to repayment options.
9    (b) A servicer shall refrain from presenting forbearance as
10the sole or first repayment option to a student loan borrower
11struggling with repayment unless the servicer has determined
12that, based on the borrower's financial status, a short term
13forbearance is appropriate.
14    (c) All inbound and outbound calls from a federal loan
15borrower eligible for referral to a repayment specialist and a
16private loan borrower eligible for referral to a repayment
17specialist shall be routed to a repayment specialist.
18    (d) During each inbound or outbound communication with an
19eligible federal loan borrower, a repayment specialist shall
20first inform a federal loan borrower eligible for referral to a
21repayment specialist that federal income-driven repayment
22plans that can reduce the borrower's monthly payment may be
23available, discuss such plans, and assist the borrower in
24determining whether a particular repayment plan may be

 

 

SB1351 Enrolled- 10 -LRB100 10505 MLM 20720 b

1appropriate for the borrower.
2    (e) A repayment specialist shall assess the long-term and
3short-term financial situation and needs of a federal loan
4borrower eligible for referral to a repayment specialist and
5consider any available specific information from the borrower
6as necessary to assist the borrower in determining whether a
7particular income-driven repayment option may be available to
8the borrower.
9    (f) In each discussion with a federal loan borrower
10eligible for referral to a repayment specialist, a repayment
11specialist shall present and explain the following options, as
12appropriate:
13        (1) total and permanent disability discharge, public
14    service loan forgiveness, closed school discharge, and
15    defenses to repayment;
16        (2) other repayment plans;
17        (3) deferment; and
18        (4) forbearance.
19    (g) A repayment specialist shall assess the long-term and
20short-term financial situation and needs of a private loan
21borrower eligible for referral to a repayment specialist in
22determining whether any private loan repayment options may be
23appropriate for the borrower.
24    (h) A servicer shall present and explain all private loan
25repayment options, including alternative repayment
26arrangements applicable to private student loan borrowers.

 

 

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1    (i) A servicer shall be prohibited from implementing any
2compensation plan that has the intended or actual effect of
3incentivizing a repayment specialist to violate this Act or any
4other measure that encourages undue haste or lack of quality.
5    (j) The requirements of this Section shall not apply if a
6repayment specialist has already conversed with a borrower
7consistent with the requirements of this Section.
 
8    Section 5-35. Disclosures related to discharge and
9cancellation. If a servicer is aware that a student loan
10borrower attended a school the United States Department of
11Education has made findings supporting a defense to repayment
12claim or closed school discharge, or that a borrower may be
13eligible to have his or her loans forgiven under a total and
14permanent disability discharge program, the servicer's
15personnel shall disclose information related to the Department
16of Education's procedure for asserting a defense to repayment
17claim, closed school discharge, or submitting an application
18for a total and permanent disability discharge.
 
19    Section 5-40. Income-driven repayment plan certifications.
20A servicer shall disclose the date that a borrower's
21income-driven payment plan certification will expire and the
22consequences to the borrower for failing to recertify by the
23date, including the new repayment amount.
 

 

 

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1    Section 5-45. Information to be provided to private
2education loan borrowers.
3    (a) A servicer shall provide on its website a description
4of any alternative repayment plan offered by the servicer for
5private education loans.
6    (b) A servicer shall establish policies and procedures and
7implement them consistently in order to facilitate evaluation
8of private student loan alternative repayment arrangement
9requests, including providing accurate information regarding
10any private student loan alternative repayment arrangements
11that may be available to the borrower through the promissory
12note or that may have been marketed to the borrower through
13marketing materials.
14    A private student loan alternative repayment arrangements
15shall consider the affordability of repayment plans for a
16distressed borrower, as well as investor, guarantor, and
17insurer guidelines and previous outcome and performance
18information.
19    (c) If a servicer offers private student loan repayment
20arrangements, a servicer shall consistently present and offer
21those arrangements to borrowers with similar financial
22circumstances.
 
23    Section 5-50. Cosigner release. For private student loans,
24a servicer shall provide information on its website concerning
25the availability and criteria for a cosigner release.
 

 

 

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1    Section 5-55. Payoff statements. A servicer shall indicate
2on its website that a borrower may request a payoff statement.
3A servicer shall provide the payoff statement within 10 days,
4including information the requester needs to pay off the loan.
5If a payoff is made, the servicer must send a paid-in-full
6notice within 30 days.
 
7    Section 5-60. Requirements related to the transfer of
8servicing.
9    (a) When acting as the transferor servicer, a servicer
10shall provide to each borrower subject to the transfer a
11written notice not less than 15 calendar days before the
12effective date of the transfer. The transferee servicer and
13transferor servicer may provide a single notice, in which case
14the notice shall be provided not less than 15 calendar days
15before the effective date of the transfer. The notice by the
16transferor servicer or, if applicable, the combined notice of
17transfer shall contain the following information:
18        (1) the effective date of the transfer of servicing;
19        (2) the name, address, and toll-free telephone number
20    for the transferor servicer's designated point of contact
21    that can be contacted by the borrower to obtain answers to
22    servicing inquiries;
23        (3) the name, address, and toll-free telephone number
24    for the transferee servicer's designated point of contact

 

 

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1    that can be contacted by the borrower to obtain answers to
2    servicing inquiries;
3        (4) the date on which the transferor servicer will
4    cease to accept payments relating to the loan and the date
5    on which the transferee servicer will begin to accept such
6    payments; the dates shall either be the same or consecutive
7    days;
8        (5) a statement that the transfer of servicing does not
9    affect any term or condition of the loan other than terms
10    directly related to the servicing of a loan;
11        (6) information on whether the borrower's
12    authorization for recurring electronic fund transfers, if
13    applicable, will be transferred to the transferee
14    servicer; if any such recurring electronic funds transfers
15    cannot be transferred, the transferee servicer shall
16    provide information explaining how the borrower may
17    establish new recurring electronic funds transfers with
18    the transferee servicer; and
19        (7) a statement of the current loan balance, including
20    the current unpaid amount of principal, interest, and fees.
21    (b) When acting as the transferee servicer, a servicer
22shall provide to each borrower subject to the transfer a
23written notice not more than 15 calendar days after the
24effective date of the transfer. The transferee servicer and
25transferor servicer may provide a combined notice of transfer,
26in which case the notice shall be provided not less than 15

 

 

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1days before the effective date of the transfer. The notice by
2the transferee servicer or, if applicable, the combined notice
3of transfer shall contain the following information:
4        (1) the effective date of the transfer of servicing;
5        (2) the name, address, and toll-free telephone number
6    for the transferee servicer's designated point of contact
7    that can be contacted by the borrower to obtain answers to
8    servicing inquiries;
9        (3) the date on which the transferor servicer will
10    cease to accept payments relating to the loan and the date
11    on which the transferee servicer will begin to accept such
12    payments; the dates shall either be the same or consecutive
13    days;
14        (4) a statement that the transfer of servicing does not
15    affect any term or condition of the student loan other than
16    terms directly related to the servicing of a loan;
17        (5) information on whether the borrower's
18    authorization for recurring electronic fund transfers, if
19    applicable, will be transferred to the transferee
20    servicer; if any such recurring electronic funds transfers
21    cannot be transferred, the transferee servicer shall
22    provide information explaining how the borrower may
23    establish new recurring electronic funds transfers with
24    the transferee servicer; and
25        (6) a statement of the current loan balance, including
26    the current unpaid amount of principal, interest, and fees.

 

 

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1    (c) During the 60 calendar day period beginning on the
2effective date of transfer of the servicing of any loan, a
3payment timely made to the transferor servicer may not be
4treated as late for any purpose by the transferee servicer,
5including the assessment of late fees, accrual of additional
6interest, and furnishing negative credit information.
7    (d) To the extent practicable, for at least 120 calendar
8days beginning on the effective date of transfer of servicing
9of any loan, when acting as the transferor servicer, a servicer
10shall promptly transfer payments received to the transferee
11servicer for application to the borrower's loan account.
12    (e) Unless a borrower's authorizations for recurring
13electronic fund transfers are automatically transferred to the
14transferee servicer, when acting as transferee servicer, a
15servicer shall make available to a borrower whose loan
16servicing is transferred an online process through which a
17borrower may make a new authorization for recurring electronic
18fund transfers. A servicer shall also provide a process through
19which the borrower may make a new authorization for recurring
20electronic funds transfers by phone or through written
21approval.
 
22    Section 5-65. Requests for assistance; account dispute
23resolution; appeals.
24    (a) A servicer shall implement reasonable policies and
25procedures for accepting, processing, investigating, and

 

 

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1responding to requests for assistance in a timely and effective
2manner, including, but not limited to, the following
3requirements:
4        (1) A servicer shall provide readily accessible
5    methods for consumers to submit a request for assistance to
6    the servicer, including such methods as phone, email, and
7    U.S. mail.
8        (2) A servicer shall post on its website and disclose
9    on its billing statements:
10            (A) the toll-free telephone number, email address,
11        and mailing address for consumers to submit a requests
12        for assistance to the servicer; and
13            (B) the procedures for a requester to send a
14        written communication to the servicer regarding any
15        request for assistance.
16        (3) For any request for assistance that includes a
17    request for documentation or information, where a response
18    cannot be immediately provided, a servicer shall provide
19    the requested documentation or information to the
20    requester within 14 calendar days of the request; if a
21    servicer determines in good faith that it is unable to
22    provide the documentation or information within 14
23    calendar days, promptly after making the determination,
24    the servicer shall notify the requester of the expected
25    response period, which must be reasonable for the request
26    for assistance.

 

 

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1    (b) A servicer shall implement a process by which a
2requester can escalate any request for assistance. Such process
3shall allow a requester who has made a request for assistance
4on the phone and who receives a response during the call to
5obtain immediate review of the response by an employee of the
6servicer at a higher supervisory level.
7    (c) The following requirements shall apply when a requester
8submits a written or oral request for assistance which contains
9an account dispute to a servicer:
10        (1) Within 14 calendar days after its receipt of the
11    written communication or oral request for further
12    escalation, a servicer shall attempt to make contact,
13    including providing the requester with name and contact
14    information of the representative handling the account
15    dispute, by phone or in writing, to the requester and
16    document such attempt in the borrower's account.
17        (2) A servicer shall complete the following actions
18    within 30 calendar days of its receipt of the written
19    communication or oral request for further escalation,
20    subject to paragraph (3) of this subsection:
21            (A) conduct a thorough investigation of the
22        account dispute;
23            (B) make all appropriate corrections to the
24        account of the requester, including crediting any late
25        fees assessed and derogatory credit furnishing as the
26        result of any error, and, if any corrections are made,

 

 

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1        sending the requester a written notification that
2        includes the following information:
3                (i) an explanation of the correction or
4            corrections to the requester's account that have
5            been made; and
6                (ii) the toll-free telephone number, email
7            address, and mailing address of the servicer's
8            personnel knowledgeable about the investigation
9            and resolution of the account dispute.
10        (3) If a servicer determines in good faith that it
11    cannot complete a thorough investigation of the account
12    dispute within 30 calendar days after receiving the written
13    communication or oral request for further escalation
14    regarding the account dispute, then, promptly after making
15    the determination, the servicer shall notify the requester
16    of the expected resolution time period, which must be
17    reasonable for the account dispute. A servicer must
18    complete the actions listed in the investigation and
19    resolution of account dispute within this time period.
20        (4) If a servicer determines as a result of its
21    investigation that the requested changes to a requester's
22    dispute will not be made, the servicer shall provide the
23    requester with a written notification that includes the
24    following information:
25            (A) a description of its determination and an
26        explanation of the reasons for that determination;

 

 

SB1351 Enrolled- 20 -LRB100 10505 MLM 20720 b

1            (B) the toll-free telephone number, email address,
2        and mailing address of the servicer's personnel
3        knowledgeable about the investigation and resolution
4        of the account dispute;
5            (C) instructions about how the requester can
6        appeal the servicer's determination in accordance with
7        paragraph (5) of this subsection; and
8            (D) information regarding the method by which a
9        borrower may request copies of documents a servicer
10        relied on to make a determination that no changes to a
11        requester's account will be made.
12        (5) After the requester receives a determination
13    regarding an account dispute in accordance with paragraph
14    (4) of this subsection, the servicer shall allow a process
15    by which the requester can appeal, in writing, the
16    determination. The appeals process shall include:
17            (A) a written acknowledgment notifying the
18        requester that the servicer has commenced the appeals
19        process; such acknowledgment shall be sent within 14
20        calendar days after receiving a written request for
21        appeal from the requester;
22            (B) an independent reassessment of the servicer's
23        determination regarding the account dispute, performed
24        by another employee of the servicer at an equal or
25        higher supervisory level than the employee or
26        employees involved in the initial account dispute

 

 

SB1351 Enrolled- 21 -LRB100 10505 MLM 20720 b

1        determination;
2            (C) investigation and resolution of appeals within
3        30 calendar days after a servicer's commencement of the
4        appeals process; and
5            (D) notification sent to the requester, in
6        writing, documenting the outcome of the appeal,
7        including any reason for denial.
8    (d) While a requester has a pending account dispute,
9including any applicable appeal, a servicer shall take
10reasonable steps to:
11        (1) prevent negative credit reporting with respect to
12    the borrower's or cosigner's account while the dispute is
13    under review; and
14        (2) suspend all collection activities on the account
15    while the account dispute is being researched or resolved,
16    if the account dispute is related to the delinquency.
 
17
ARTICLE 10. STUDENT LOAN OMBUDSMAN

 
18    Section 10-5. Student Loan Ombudsman.
19    (a) The position of Student Loan Ombudsman is created
20within the Office of the Attorney General to provide timely
21assistance to student loan borrowers.
22    (b) The Student Loan Ombudsman, in consultation with the
23Secretary, shall:
24        (1) receive, review, and attempt to resolve any

 

 

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1    complaints from student loan borrowers, including, but not
2    limited to, attempts to resolve complaints in
3    collaboration with institutions of higher education,
4    student loan servicers, and any other participants in
5    student loan lending;
6        (2) compile and analyze data on student loan borrower
7    complaints;
8        (3) assist student loan borrowers to understand their
9    rights and responsibilities under the terms of student
10    education loans;
11        (4) provide information to the public, agencies,
12    legislators, and others regarding the problems and
13    concerns of student loan borrowers and make
14    recommendations for resolving those problems and concerns;
15        (5) analyze and monitor the development and
16    implementation of federal, State, and local laws,
17    regulations, and policies relating to student loan
18    borrowers and recommend any changes the Student Loan
19    Ombudsman deems necessary;
20        (6) review the complete student education loan history
21    for any student loan borrower who has provided written
22    consent for such review;
23        (7) disseminate information concerning the
24    availability of the Student Loan Ombudsman to assist
25    student loan borrowers and potential student loan
26    borrowers, as well as public institutions of higher

 

 

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1    education, student loan servicers, and any other
2    participant in student education loan lending, with any
3    student loan servicing concerns; and
4        (8) take any other actions necessary to fulfill the
5    duties of the Student Loan Ombudsman as set forth in this
6    subsection.
 
7
ARTICLE 15. LICENSURE

 
8    Section 15-5. Scope; requirement for student loan
9servicing license.
10    (a) It shall be unlawful for any person to operate as a
11student loan servicer in Illinois except as authorized by this
12Act and without first having obtained a license in accordance
13with this Act.
14    (b) The provisions of this Act do not apply to any of the
15following:
16        (1) a bank, savings bank, savings association, or
17    credit union organized under the laws of the State or any
18    other state or under the laws of the United States;
19        (2) a wholly owned subsidiary of any bank, savings
20    bank, savings association, or credit union organized under
21    the laws of the State or any other state or under the laws
22    of the United States;
23        (3) an operating subsidiary where each owner of the
24    operating subsidiary is wholly owned by the same bank,

 

 

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1    savings bank, savings association, or credit union
2    organized under the laws of the State or any other state or
3    under the laws of the United States;
4        (4) the Illinois Student Assistance Commission and its
5    agents when the agents are acting on the Illinois Student
6    Assistance Commission's behalf;
7        (5) a public postsecondary educational institution or
8    a private nonprofit postsecondary educational institution
9    servicing a student loan it extended to the borrower;
10        (6) a licensed debt management service under the Debt
11    Management Service Act, except to the extent that the
12    organization acts as a subcontractor, affiliate, or
13    service provider for an entity that is otherwise subject to
14    licensure under this Act;
15        (7) any collection agency licensed under the
16    Collection Agency Act that is collecting post-default
17    debt;
18        (8) in connection with its responsibilities as a
19    guaranty agency engaged in default aversion, a State or
20    nonprofit private institution or organization having an
21    agreement with the U.S. Secretary of Education under
22    Section 428(b) of the Higher Education Act (20 U.S.C.
23    1078(B); or
24        (9) a State institution or a nonprofit private
25    organization designated by a governmental entity to make or
26    service student loans, provided in each case that the

 

 

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1    institution or organization services fewer than 20,000
2    student loan accounts of borrowers who reside in Illinois.
 
3    Section 15-10. Licensee name. No person, partnership,
4association, corporation, limited liability company, or other
5entity engaged in the business regulated by this Act shall
6operate such business under a name other than the real names of
7the entity and individuals conducting such business. Such
8business may in addition operate under an assumed corporate
9name pursuant to the Business Corporation Act of 1983, an
10assumed limited liability company name pursuant to the Limited
11Liability Company Act, or an assumed business name pursuant to
12the Assumed Business Name Act.
 
13    Section 15-15. Application process; investigation; fees.
14    (a) The Secretary shall issue a license upon completion of
15all of the following:
16        (1) the filing of an application for license with the
17    Secretary or the Nationwide Mortgage Licensing System and
18    Registry as approved by the Secretary;
19        (2) the filing with the Secretary of a listing of
20    judgments entered against, and bankruptcy petitions by,
21    the license applicant for the preceding 10 years;
22        (3) the payment, in certified funds, of investigation
23    and application fees, the total of which shall be in an
24    amount equal to $1,000 for an initial application and $800

 

 

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1    for a background investigation;
2        (4) the filing of an audited balance sheet, including
3    all footnotes prepared by a certified public accountant in
4    accordance with generally accepted accounting principles
5    and generally accepted auditing standards; notwithstanding
6    the requirements of this subsection, an applicant that is a
7    subsidiary may submit audited consolidated financial
8    statements of its parent, intermediary parent, or ultimate
9    parent as long as the consolidated statements are supported
10    by consolidating statements that include the applicant's
11    financial statement; if the consolidating statements are
12    unaudited, the applicant's chief financial officer shall
13    attest to the applicant's financial statements disclosed
14    in the consolidating statements; and
15        (5) an investigation of the averments required by
16    Section 15-30, which investigation must allow the
17    Secretary to issue positive findings stating that the
18    financial responsibility, experience, character, and
19    general fitness of the license applicant and of the members
20    thereof if the license applicant is a partnership or
21    association, of the officers and directors thereof if the
22    license applicant is a corporation, and of the managers and
23    members that retain any authority or responsibility under
24    the operating agreement if the license applicant is a
25    limited liability company, are such as to command the
26    confidence of the community and to warrant belief that the

 

 

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1    business will be operated honestly, fairly, and
2    efficiently within the purpose of this Act; if the
3    Secretary does not so find, he or she shall not issue the
4    license, and he or she shall notify the license applicant
5    of the denial.
6    The Secretary may impose conditions on a license if the
7Secretary determines that those conditions are necessary or
8appropriate. These conditions shall be imposed in writing and
9shall continue in effect for the period prescribed by the
10Secretary.
11    (b) All licenses shall be issued to the license applicant.
12Upon receipt of the license, a student loan servicing licensee
13shall be authorized to engage in the business regulated by this
14Act. The license shall remain in full force and effect until it
15expires without renewal, is surrendered by the licensee, or
16revoked or suspended as hereinafter provided.
 
17    Section 15-20. Application form.
18    (a) Application for a student loan servicer license must be
19made in accordance with Section 15-40 and, if applicable, in
20accordance with requirements of the Nationwide Mortgage
21Licensing System and Registry. The application shall be in
22writing, under oath, and on a form obtained from and prescribed
23by the Secretary, or may be submitted electronically, with
24attestation, to the Nationwide Mortgage Licensing System and
25Registry.

 

 

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1    (b) The application shall contain the name and complete
2business and residential address or addresses of the license
3applicant. If the license applicant is a partnership,
4association, corporation, or other form of business
5organization, the application shall contain the names and
6complete business and residential addresses of each member,
7director, and principal officer thereof. The application shall
8also include a description of the activities of the license
9applicant in such detail and for such periods as the Secretary
10may require, including all of the following:
11        (1) an affirmation of financial solvency noting such
12    capitalization requirements as may be required by the
13    Secretary and access to such credit as may be required by
14    the Secretary;
15        (2) an affirmation that the license applicant or its
16    members, directors, or principals, as may be appropriate,
17    are at least 18 years of age;
18        (3) information as to the character, fitness,
19    financial and business responsibility, background,
20    experience, and criminal record of any (i) person, entity,
21    or ultimate equitable owner that owns or controls, directly
22    or indirectly, 10% or more of any class of stock of the
23    license applicant; (ii) person, entity, or ultimate
24    equitable owner that is not a depository institution, as
25    defined in Section 1007.50 of the Savings Bank Act, that
26    lends, provides, or infuses, directly or indirectly, in any

 

 

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1    way, funds to or into a license applicant in an amount
2    equal to or more than 10% of the license applicant's net
3    worth; (iii) person, entity, or ultimate equitable owner
4    that controls, directly or indirectly, the election of 25%
5    or more of the members of the board of directors of a
6    license applicant; or (iv) person, entity, or ultimate
7    equitable owner that the Secretary finds influences
8    management of the license applicant; the provisions of this
9    subsection shall not apply to a public official serving on
10    the board of directors of a State guaranty agency;
11        (4) upon written request by the licensee and
12    notwithstanding the provisions of paragraphs (1), (2), and
13    (3) of this subsection, the Secretary may permit the
14    licensee to omit all or part of the information required by
15    those paragraphs if, in lieu of the omitted information,
16    the licensee submits an affidavit stating that the
17    information submitted on the licensee's previous renewal
18    application is still true and accurate; the Secretary may
19    adopt rules prescribing the form and content of the
20    affidavit that are necessary to accomplish the purposes of
21    this Section; and
22        (5) such other information as required by rules of the
23    Secretary.
 
24    Section 15-25. Student loan servicer license application
25and issuance.

 

 

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1    (a) Applicants for a license shall apply in a form
2prescribed by the Secretary. Each form shall contain content as
3set forth by rule, regulation, instruction, or procedure of the
4Secretary and may be changed or updated as necessary by the
5Secretary in order to carry out the purposes of this Act.
6    (b) In order to fulfill the purposes of this Act, the
7Secretary is authorized to establish relationships or
8contracts with the Nationwide Mortgage Licensing System and
9Registry or other entities designated by the Nationwide
10Mortgage Licensing System and Registry to collect and maintain
11records and process transaction fees or other fees related to
12licensees or other persons subject to this Act.
13    (c) In connection with an application for licensing, the
14applicant may be required, at a minimum, to furnish to the
15Nationwide Mortgage Licensing System and Registry information
16concerning the applicant's identity, including:
17        (1) fingerprints for submission to the Federal Bureau
18    of Investigation or any governmental agency or entity
19    authorized to receive such information for a State,
20    national, and international criminal history background
21    check; and
22        (2) personal history and experience in a form
23    prescribed by the Nationwide Mortgage Licensing System and
24    Registry, including the submission of authorization for
25    the Nationwide Mortgage Licensing System and Registry and
26    the Secretary to obtain:

 

 

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1            (A) an independent credit report obtained from a
2        consumer reporting agency described in Section 603(p)
3        of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
4        and
5            (B) information related to any administrative,
6        civil, or criminal findings by any governmental
7        jurisdiction.
8    (d) For the purposes of this Section, and in order to
9reduce the points of contact that the Federal Bureau of
10Investigation may have to maintain for purposes of subsection
11(c) of this Section, the Secretary may use the Nationwide
12Mortgage Licensing System and Registry as a channeling agent
13for requesting information from and distributing information
14to the federal Department of Justice or any governmental
15agency.
16    (e) For the purposes of this Section, and in order to
17reduce the points of contact that the Secretary may have to
18maintain for purposes of paragraph (2) of subsection (c) of
19this Section, the Secretary may use the Nationwide Mortgage
20Licensing System and Registry as a channeling agent for
21requesting and distributing information to and from any source
22as directed by the Secretary.
23    (f) The provisions of this Section shall not apply to a
24public official serving on the board of directors of a State
25guaranty agency.
 

 

 

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1    Section 15-30. Averments of licensee. Each application for
2license shall be accompanied by the following averments stating
3that the applicant:
4        (1) will file with the Secretary or Nationwide Mortgage
5    Licensing System and Registry, as applicable, when due, any
6    report or reports that it is required to file under any of
7    the provisions of this Act;
8        (2) has not committed a crime against the law of this
9    State, any other state, or of the United States involving
10    moral turpitude or fraudulent or dishonest dealing, and
11    that no final judgment has been entered against it in a
12    civil action upon grounds of fraud, misrepresentation, or
13    deceit that has not been previously reported to the
14    Secretary;
15        (3) has not engaged in any conduct that would be cause
16    for denial of a license;
17        (4) has not become insolvent;
18        (5) has not submitted an application for a license
19    under this Act that contains a material misstatement;
20        (6) has not demonstrated by course of conduct,
21    negligence or incompetence in performing any act for which
22    it is required to hold a license under this Act;
23        (7) will advise the Secretary in writing or the
24    Nationwide Mortgage Licensing System and Registry, as
25    applicable, of any changes to the information submitted on
26    the most recent application for license or averments of

 

 

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1    record within 30 days of the change; the written notice
2    must be signed in the same form as the application for the
3    license being amended;
4        (8) will comply with the provisions of this Act and
5    with any lawful order, rule, or regulation made or issued
6    under the provisions of this Act;
7        (9) will submit to periodic examination by the
8    Secretary as required by this Act; and
9        (10) will advise the Secretary in writing of judgments
10    entered against and bankruptcy petitions by the license
11    applicant within 5 days after the occurrence.
12    A licensee who fails to fulfill the obligations of an
13averment, fails to comply with averments made, or otherwise
14violates any of the averments made under this Section shall be
15subject to the penalties of this Act.
 
16    Section 15-35. Refusal to issue license. The Secretary
17shall refuse to issue or renew a license if:
18        (1) it is determined that the applicant is not in
19    compliance with any provisions of this Act;
20        (2) there is substantial continuity between the
21    applicant and any violator of this Act; or
22        (3) the Secretary cannot make the findings specified in
23    subsection (a) of Section 15-15 of this Act.
 
24    Section 15-40. License issuance and renewal; fees.

 

 

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1    (a) Licenses shall be renewed every year using the common
2renewal date of the Nationwide Mortgage Licensing System and
3Registry, as adopted by the Secretary. Properly completed
4renewal application forms and filing fees may be received by
5the Secretary 60 days prior to the license expiration date,
6but, to be deemed timely, the completed renewal application
7forms and filing fees must be received by the Secretary no
8later than 30 days prior to the license expiration date.
9    (b) It shall be the responsibility of each licensee to
10accomplish renewal of its license. Failure by a licensee to
11submit a properly completed renewal application form and fees
12in a timely fashion, absent a written extension from the
13Secretary, shall result in the license becoming inactive.
14    (c) No activity regulated by this Act shall be conducted by
15the licensee when a license becomes inactive. An inactive
16license may be reactivated by the Secretary upon payment of the
17renewal fee and payment of a reactivation fee equal to the
18renewal fee.
19    (d) A licensee ceasing an activity or activities regulated
20by this Act and desiring to no longer be licensed shall so
21inform the Secretary in writing and, at the same time, convey
22any license issued and all other symbols or indicia of
23licensure. The licensee shall include a plan for the withdrawal
24from regulated business, including a timetable for the
25disposition of the business, and comply with the surrender
26guidelines or requirements of the Secretary. Upon receipt of

 

 

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1such written notice, the Secretary shall post the cancellation
2or issue a certified statement canceling the license.
3    (e) The expenses of administering this Act, including
4investigations and examinations provided for in this Act, shall
5be borne by and assessed against entities regulated by this
6Act. Subject to the limitations set forth in Section 15-15 of
7this Act, the Secretary shall establish fees by rule in at
8least the following categories:
9        (1) investigation of licensees and license applicant
10    fees;
11        (2) examination fees;
12        (3) contingent fees; and
13        (4) such other categories as may be required to
14    administer this Act.
 
15
ARTICLE 20. SUPERVISION

 
16    Section 20-5. Functions; powers; duties. The functions,
17powers, and duties of the Secretary shall include the
18following:
19        (1) to issue or refuse to issue any license as provided
20    by this Act;
21        (2) to revoke or suspend for cause any license issued
22    under this Act;
23        (3) to keep records of all licenses issued under this
24    Act;

 

 

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1        (4) to receive, consider, investigate, and act upon
2    complaints made by any person in connection with any
3    student loan servicing licensee in this State;
4        (5) to prescribe the forms of and receive:
5            (A) applications for licenses; and
6            (B) all reports and all books and records required
7        to be made by any licensee under this Act, including
8        annual audited financial statements and annual reports
9        of student loan activity;
10        (6) to adopt rules necessary and proper for the
11    administration of this Act;
12        (7) to subpoena documents and witnesses and compel
13    their attendance and production, to administer oaths, and
14    to require the production of any books, papers, or other
15    materials relevant to any inquiry authorized by this Act;
16        (8) to issue orders against any person if the Secretary
17    has reasonable cause to believe that an unsafe, unsound, or
18    unlawful practice has occurred, is occurring, or is about
19    to occur; if any person has violated, is violating, or is
20    about to violate any law, rule, or written agreement with
21    the Secretary; or for the purpose of administering the
22    provisions of this Act and any rule adopted in accordance
23    with this Act;
24        (9) to address any inquiries to any licensee, or the
25    officers thereof, in relation to its activities and
26    conditions, or any other matter connected with its affairs,

 

 

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1    and it shall be the duty of any licensee or person so
2    addressed to promptly reply in writing to those inquiries;
3    the Secretary may also require reports from any licensee at
4    any time the Secretary may deem desirable;
5        (10) to examine the books and records of every licensee
6    under this Act;
7        (11) to enforce provisions of this Act;
8        (12) to levy fees, fines, and charges for services
9    performed in administering this Act; the aggregate of all
10    fees collected by the Secretary on and after the effective
11    date of this Act shall be paid promptly after receipt,
12    accompanied by a detailed statement thereof, into the Bank
13    and Trust Company Fund under Section 20-10; the amounts
14    deposited into that Fund shall be used for the ordinary and
15    contingent expenses of the Department; nothing in this Act
16    shall prevent the continuation of the practice of paying
17    expenses involving salaries, retirement, social security,
18    and State-paid insurance of State officers by
19    appropriation from the General Revenue Fund;
20        (13) to appoint examiners, supervisors, experts, and
21    special assistants as needed to effectively and
22    efficiently administer this Act;
23        (14) to conduct hearings for the purpose of:
24            (A) appeals of orders of the Secretary;
25            (B) suspensions or revocations of licenses, or
26        fining of licensees;

 

 

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1            (C) investigating:
2                (i) complaints against licensees; or
3                (ii) annual gross delinquency rates; and
4            (D) carrying out the purposes of this Act;
5        (15) to exercise exclusive visitorial power over a
6    licensee unless otherwise authorized by this Act or as
7    vested in the courts, or upon prior consultation with the
8    Secretary, a foreign student loan servicing regulator with
9    an appropriate supervisory interest in the parent or
10    affiliate of a licensee;
11        (16) to enter into cooperative agreements with state
12    regulatory authorities of other states to provide for
13    examination of corporate offices or branches of those
14    states and to accept reports of such examinations;
15        (17) to assign an examiner or examiners to monitor the
16    affairs of a licensee with whatever frequency the Secretary
17    determines appropriate and to charge the licensee for
18    reasonable and necessary expenses of the Secretary if in
19    the opinion of the Secretary an emergency exists or appears
20    likely to occur;
21        (18) to impose civil penalties of up to $50 per day
22    against a licensee for failing to respond to a regulatory
23    request or reporting requirement; and
24        (19) to enter into agreements in connection with the
25    Nationwide Mortgage Licensing System and Registry.
 

 

 

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1    Section 20-10. Bank and Trust Company Fund. All moneys
2received by the Secretary under this Act in conjunction with
3the provisions relating to student loan servicers shall be paid
4into and all expenses incurred by the Secretary under this Act
5in conjunction with the provisions relating to student loan
6servicers shall be paid from the Bank and Trust Company Fund.
 
7    Section 20-15. Examination; prohibited activities.
8    (a) The business affairs of a licensee under this Act shall
9be examined for compliance with this Act as often as the
10Secretary deems necessary and proper. The Secretary may adopt
11rules with respect to the frequency and manner of examination.
12The Secretary shall appoint a suitable person to perform such
13examination. The Secretary and his or her appointees may
14examine the entire books, records, documents, and operations of
15each licensee and its subsidiary, affiliate, or agent, and may
16examine any of the licensee's or its subsidiary's, affiliate's,
17or agent's officers, directors, employees, and agents under
18oath.
19    (b) The Secretary shall prepare a sufficiently detailed
20report of each licensee's examination, shall issue a copy of
21such report to each licensee's principals, officers, or
22directors, and shall take appropriate steps to ensure
23correction of violations of this Act.
24    (c) Affiliates of a licensee shall be subject to
25examination by the Secretary on the same terms as the licensee,

 

 

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1but only when reports from or examination of a licensee
2provides for documented evidence of unlawful activity between a
3licensee and affiliate benefiting, affecting, or deriving from
4the activities regulated by this Act.
5    (d) The expenses of any examination of the licensee and
6affiliates shall be borne by the licensee and assessed by the
7Secretary as may be established by rule.
8    (e) Upon completion of the examination, the Secretary shall
9issue a report to the licensee. All confidential supervisory
10information, including the examination report and the work
11papers of the report, shall belong to the Secretary's office
12and may not be disclosed to anyone other than the licensee, law
13enforcement officials or other regulatory agencies that have an
14appropriate regulatory interest as determined by the
15Secretary, or to a party presenting a lawful subpoena to the
16Department. The Secretary may, through the Attorney General,
17immediately appeal to the court of jurisdiction the disclosure
18of such confidential supervisory information and seek a stay of
19the subpoena pending the outcome of the appeal. Reports
20required of licensees by the Secretary under this Act and
21results of examinations performed by the Secretary under this
22Act shall be the property of only the Secretary, but may be
23shared with the licensee. Access under this Act to the books
24and records of each licensee shall be limited to the Secretary
25and his or her agents as provided in this Act and to the
26licensee and its authorized agents and designees. No other

 

 

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1person shall have access to the books and records of a licensee
2under this Act. Any person upon whom a demand for production of
3confidential supervisory information is made, whether by
4subpoena, order, or other judicial or administrative process,
5must withhold production of the confidential supervisory
6information and must notify the Secretary of the demand, at
7which time the Secretary is authorized to intervene for the
8purpose of enforcing the limitations of this Section or seeking
9the withdrawal or termination of the attempt to compel
10production of the confidential supervisory information. The
11Secretary may impose any conditions and limitations on the
12disclosure of confidential supervisory information that are
13necessary to protect the confidentiality of that information.
14Except as authorized by the Secretary, no person obtaining
15access to confidential supervisory information may make a copy
16of the confidential supervisory information. The Secretary may
17condition a decision to disclose confidential supervisory
18information on entry of a protective order by the court or
19administrative tribunal presiding in the particular case or on
20a written agreement of confidentiality. In a case in which a
21protective order or agreement has already been entered between
22parties other than the Secretary, the Secretary may
23nevertheless condition approval for release of confidential
24supervisory information upon the inclusion of additional or
25amended provisions in the protective order. The Secretary may
26authorize a party who obtained the records for use in one case

 

 

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1to provide them to another party in another case, subject to
2any conditions that the Secretary may impose on either or both
3parties. The requester shall promptly notify other parties to a
4case of the release of confidential supervisory information
5obtained and, upon entry of a protective order, shall provide
6copies of confidential supervisory information to the other
7parties.
8    (f) The Secretary and employees of the Department shall be
9subject to the restrictions provided in Section 2.5 of the
10Division of Banking Act, including, without limitation, the
11restrictions on (i) owning shares of stock or holding any other
12equity interest in an entity regulated under this Act or in any
13corporation or company that owns or controls an entity
14regulated under this Act; (ii) being an officer, director,
15employee, or agent of an entity regulated under this Act; and
16(iii) obtaining a loan or accepting a gratuity from an entity
17regulated under this Act.
 
18    Section 20-20. Subpoena power of the Secretary.
19    (a) The Secretary shall have the power to issue and to
20serve subpoenas and subpoenas duces tecum to compel the
21attendance of witnesses and the production of all books,
22accounts, records, and other documents and materials relevant
23to an examination or investigation. The Secretary, or his or
24her duly authorized representative, shall have power to
25administer oaths and affirmations to any person.

 

 

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1    (b) In the event of noncompliance with a subpoena or
2subpoena duces tecum issued or caused to be issued by the
3Secretary, the Secretary may, through the Attorney General,
4petition the circuit court of the county in which the person
5subpoenaed resides or has its principal place of business for
6an order requiring the subpoenaed person to appear and testify
7and to produce such books, accounts, records, and other
8documents as are specified in the subpoena duces tecum. The
9court may grant injunctive relief restraining the person from
10advertising, promoting, soliciting, entering into, offering to
11enter into, continuing, or completing any student loan
12servicing transaction. The court may grant other relief,
13including, but not limited to, the restraint, by injunction or
14appointment of a receiver, of any transfer, pledge, assignment,
15or other disposition of the person's assets or any concealment,
16alteration, destruction, or other disposition of books,
17accounts, records, or other documents and materials as the
18court deems appropriate, until the person has fully complied
19with the subpoena or subpoena duces tecum and the Secretary has
20completed an investigation or examination.
21    (c) If it appears to the Secretary that the compliance with
22a subpoena or subpoena duces tecum issued or caused to be
23issued by the Secretary pursuant to this Section is essential
24to an investigation or examination, the Secretary, in addition
25to the other remedies provided for in this Act, may, through
26the Attorney General, apply for relief to the circuit court of

 

 

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1the county in which the subpoenaed person resides or has its
2principal place of business. The court shall thereupon direct
3the issuance of an order against the subpoenaed person
4requiring sufficient bond conditioned on compliance with the
5subpoena or subpoena duces tecum. The court shall cause to be
6endorsed on the order a suitable amount of bond or payment
7pursuant to which the person named in the order shall be freed,
8having a due regard to the nature of the case.
9    (d) In addition, the Secretary may, through the Attorney
10General, seek a writ of attachment or an equivalent order from
11the circuit court having jurisdiction over the person who has
12refused to obey a subpoena, who has refused to give testimony,
13or who has refused to produce the matters described in the
14subpoena duces tecum.
 
15    Section 20-25. Report required of licensee. In addition to
16any reports required under this Act, every licensee shall file
17any other report the Secretary requests.
 
18    Section 20-30. Suspension; revocation of licenses; fines.
19    (a) Upon written notice to a licensee, the Secretary may
20suspend or revoke any license issued pursuant to this Act if,
21in the notice, he or she makes a finding of one or more of the
22following:
23        (1) that through separate acts or an act or a course of
24    conduct, the licensee has violated any provisions of this

 

 

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1    Act, any rule adopted by the Secretary, or any other law,
2    rule, or regulation of this State or the United States;
3        (2) that any fact or condition exists that, if it had
4    existed at the time of the original application for the
5    license, would have warranted the Secretary in refusing
6    originally to issue the license; or
7        (3) that if a licensee is other than an individual, any
8    ultimate equitable owner, officer, director, or member of
9    the licensed partnership, association, corporation, or
10    other entity has acted or failed to act in a way that would
11    be cause for suspending or revoking a license to that party
12    as an individual.
13    (b) No license shall be suspended or revoked, except as
14provided in this Section, nor shall any licensee be fined
15without notice of his or her right to a hearing as provided in
16Section 20-65 of this Act.
17    (c) The Secretary, on good cause shown that an emergency
18exists, may suspend any license for a period not exceeding 180
19days, pending investigation.
20    (d) The provisions of subsection (d) of Section 15-40 of
21this Act shall not affect a licensee's civil or criminal
22liability for acts committed prior to surrender of a license.
23    (e) No revocation, suspension, or surrender of any license
24shall impair or affect the obligation of any pre-existing
25lawful contract between the licensee and any person.
26    (f) Every license issued under this Act shall remain in

 

 

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1force and effect until the license expires without renewal, is
2surrendered, is revoked, or is suspended in accordance with the
3provisions of this Act, but the Secretary shall have authority
4to reinstate a suspended license or to issue a new license to a
5licensee whose license has been revoked if no fact or condition
6then exists which would have warranted the Secretary in
7refusing originally to issue that license under this Act.
8    (g) Whenever the Secretary revokes or suspends a license
9issued pursuant to this Act or fines a licensee under this Act,
10he or she shall execute a written order to that effect. The
11Secretary shall post notice of the order on an agency Internet
12site maintained by the Secretary or on the Nationwide Mortgage
13Licensing System and Registry and shall serve a copy of the
14order upon the licensee. Any such order may be reviewed in the
15manner provided by Section 20-65 of this Act.
16    (h) If the Secretary finds any person in violation of the
17grounds set forth in subsection (i), he or she may enter an
18order imposing one or more of the following penalties:
19        (1) revocation of license;
20        (2) suspension of a license subject to reinstatement
21    upon satisfying all reasonable conditions the Secretary
22    may specify;
23        (3) placement of the licensee or applicant on probation
24    for a period of time and subject to all reasonable
25    conditions as the Secretary may specify;
26        (4) issuance of a reprimand;

 

 

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1        (5) imposition of a fine not to exceed $25,000 for each
2    count of separate offense; except that a fine may be
3    imposed not to exceed $75,000 for each separate count of
4    offense of paragraph (2) of subsection (i) of this Section;
5    or
6        (6) denial of a license.
7    (i) The following acts shall constitute grounds for which
8the disciplinary actions specified in subsection (h) may be
9taken:
10        (1) being convicted or found guilty, regardless of
11    pendency of an appeal, of a crime in any jurisdiction that
12    involves fraud, dishonest dealing, or any other act of
13    moral turpitude;
14        (2) fraud, misrepresentation, deceit, or negligence in
15    any student loan transaction;
16        (3) a material or intentional misstatement of fact on
17    an initial or renewal application;
18        (4) insolvency or filing under any provision of the
19    federal Bankruptcy Code as a debtor;
20        (5) failure to account or deliver to any person any
21    property, such as any money, fund, deposit, check, draft,
22    or other document or thing of value, that has come into his
23    or her hands and that is not his or her property or that he
24    or she is not in law or equity entitled to retain, under
25    the circumstances and at the time which has been agreed
26    upon or is required by law or, in the absence of a fixed

 

 

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1    time, upon demand of the person entitled to such accounting
2    and delivery;
3        (6) failure to disburse funds in accordance with
4    agreements;
5        (7) having a license, or the equivalent, to practice
6    any profession or occupation revoked, suspended, or
7    otherwise acted against, including the denial of licensure
8    by a licensing authority of this State or another state,
9    territory, or country for fraud, dishonest dealing, or any
10    other act of moral turpitude;
11        (8) failure to comply with an order of the Secretary or
12    rule made or issued under the provisions of this Act;
13        (9) engaging in activities regulated by this Act
14    without a current, active license unless specifically
15    exempted by this Act;
16        (10) failure to pay in a timely manner any fee, charge,
17    or fine under this Act;
18        (11) failure to maintain, preserve, and keep available
19    for examination all books, accounts, or other documents
20    required by the provisions of this Act and the rules of the
21    Secretary;
22        (12) refusing, obstructing, evading, or unreasonably
23    delaying an investigation, information request, or
24    examination authorized under this Act, or refusing,
25    obstructing, evading, or unreasonably delaying compliance
26    with the Secretary's subpoena or subpoena duces tecum; and

 

 

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1        (13) failure to comply with or a violation of any
2    provision of this Act.
3    (j) A licensee shall be subject to the disciplinary actions
4specified in this Act for violations of subsection (i) by any
5officer, director, shareholder, joint venture, partner,
6ultimate equitable owner, or employee of the licensee.
7    (k) A licensee shall be subject to suspension or revocation
8for unauthorized employee actions only if there is a pattern of
9repeated violations by employees or the licensee has knowledge
10of the violations or there is substantial harm to a consumer.
11    (l) Procedures for surrender of a license include the
12following:
13        (1) The Secretary may, after 10 days' notice by
14    certified mail to the licensee at the address set forth on
15    the license, stating the contemplated action and in general
16    the grounds for the contemplated action and the date, time,
17    and place of a hearing thereon, and after providing the
18    licensee with a reasonable opportunity to be heard prior to
19    such action, fine such licensee an amount not exceeding
20    $25,000 per violation, or revoke or suspend any license
21    issued under this Act if he or she finds that:
22            (i) the licensee has failed to comply with any
23        provision of this Act or any order, decision, finding,
24        rule, regulation, or direction of the Secretary
25        lawfully made pursuant to the authority of this Act; or
26            (ii) any fact or condition exists that, if it had

 

 

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1        existed at the time of the original application for the
2        license, clearly would have warranted the Secretary in
3        refusing to issue the license.
4        (2) Any licensee may submit an application to surrender
5    a license, but, upon the Secretary approving the surrender,
6    it shall not affect the licensee's civil or criminal
7    liability for acts committed prior to surrender or entitle
8    the licensee to a return of any part of the license fee.
 
9    Section 20-35. Investigation of complaints. The Secretary
10shall at all times maintain staff and facilities adequate to
11receive, record, and investigate complaints and inquiries made
12by any person concerning this Act and any licensees under this
13Act. Each licensee shall open its books, records, documents,
14and offices wherever situated to the Secretary or his or her
15appointees as needed to facilitate such investigations.
 
16    Section 20-40. Additional investigation and examination
17authority. In addition to any authority allowed under this Act,
18the Secretary shall have the authority to conduct
19investigations and examinations as follows:
20        (1) For purposes of initial licensing, license
21    renewal, license suspension, license conditioning, license
22    revocation or termination, or general or specific inquiry
23    or investigation to determine compliance with this Act, the
24    Secretary shall have the authority to access, receive, and

 

 

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1    use any books, accounts, records, files, documents,
2    information, or evidence, including, but not limited to,
3    the following:
4            (A) criminal, civil, and administrative history
5        information, including nonconviction data as specified
6        in the Criminal Code of 2012;
7            (B) personal history and experience information,
8        including independent credit reports obtained from a
9        consumer reporting agency described in Section 603(p)
10        of the federal Fair Credit Reporting Act; and
11            (C) any other documents, information, or evidence
12        the Secretary deems relevant to the inquiry or
13        investigation, regardless of the location, possession,
14        control, or custody of the documents, information, or
15        evidence.
16        (2) For the purposes of investigating violations or
17    complaints arising under this Act or for the purposes of
18    examination, the Secretary may review, investigate, or
19    examine any licensee, individual, or person subject to this
20    Act as often as necessary in order to carry out the
21    purposes of this Act. The Secretary may direct, subpoena,
22    or order the attendance of and examine under oath all
23    persons whose testimony may be required about the loans or
24    the business or subject matter of any such examination or
25    investigation, and may direct, subpoena, or order the
26    person to produce books, accounts, records, files, and any

 

 

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1    other documents the Secretary deems relevant to the
2    inquiry.
3        (3) Each licensee, individual, or person subject to
4    this Act shall make available to the Secretary upon request
5    the books and records relating to the operations of the
6    licensee, individual, or person subject to this Act. The
7    Secretary shall have access to those books and records and
8    interview the officers, principals, employees, independent
9    contractors, agents, and customers of the licensee,
10    individual, or person subject to this Act concerning their
11    business.
12        (4) Each licensee, individual, or person subject to
13    this Act shall make or compile reports or prepare other
14    information as directed by the Secretary in order to carry
15    out the purposes of this Section, including, but not
16    limited to:
17            (A) accounting compilations;
18            (B) information lists and data concerning loan
19        transactions in a format prescribed by the Secretary;
20        or
21            (C) other information deemed necessary to carry
22        out the purposes of this Section.
23        (5) In making any examination or investigation
24    authorized by this Act, the Secretary may control access to
25    any documents and records of the licensee or person under
26    examination or investigation. The Secretary may take

 

 

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1    possession of the documents and records or place a person
2    in exclusive charge of the documents and records in the
3    place where they are usually kept. During the period of
4    control, no person shall remove or attempt to remove any of
5    the documents or records, except pursuant to a court order
6    or with the consent of the Secretary. Unless the Secretary
7    has reasonable grounds to believe the documents or records
8    of the licensee have been, or are at risk of being altered
9    or destroyed for purposes of concealing a violation of this
10    Act, the licensee or owner of the documents and records
11    shall have access to the documents or records as necessary
12    to conduct its ordinary business affairs.
13        (6) In order to carry out the purposes of this Section,
14    the Secretary may:
15            (A) retain attorneys, accountants, or other
16        professionals and specialists as examiners, auditors,
17        or investigators to conduct or assist in the conduct of
18        examinations or investigations;
19            (B) enter into agreements or relationships with
20        other government officials or regulatory associations
21        in order to improve efficiencies and reduce regulatory
22        burden by sharing resources, standardized or uniform
23        methods or procedures, and documents, records,
24        information, or evidence obtained under this Section;
25            (C) use, hire, contract, or employ public or
26        privately available analytical systems, methods, or

 

 

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1        software to examine or investigate the licensee,
2        individual, or person subject to this Act;
3            (D) accept and rely on examination or
4        investigation reports made by other government
5        officials, within or outside this State; or
6            (E) accept audit reports made by an independent
7        certified public accountant for the licensee,
8        individual, or person subject to this Act in the course
9        of that part of the examination covering the same
10        general subject matter as the audit and may incorporate
11        the audit report in the report of the examination,
12        report of investigation, or other writing of the
13        Secretary.
14        (7) The authority of this Section shall remain in
15    effect, whether such a licensee, individual, or person
16    subject to this Act acts or claims to act under any
17    licensing or registration law of this State or claims to
18    act without the authority.
19        (8) No licensee, individual, or person subject to
20    investigation or examination under this Section may
21    knowingly withhold, abstract, remove, mutilate, destroy,
22    or secrete any books, records, computer records, or other
23    information.
 
24    Section 20-45. Confidential information. In hearings
25conducted under this Act, information presented into evidence

 

 

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1that was acquired by the licensee when serving any individual
2in connection with a student loan, including all financial
3information of the individual, shall be deemed strictly
4confidential and shall be made available only as part of the
5record of a hearing under this Act or otherwise (i) when the
6record is required, in its entirety, for purposes of judicial
7review or (ii) upon the express written consent of the
8individual served, or in the case of his or her death or
9disability, the consent of his or her personal representative.
 
10    Section 20-50. Confidentiality.
11    (a) In order to promote more effective regulation and
12reduce regulatory burden through supervisory information
13sharing, except as otherwise provided in federal Public Law
14110-289, Section 1512, the requirements under any federal law
15or State law regarding the privacy or confidentiality of any
16information or material provided to the Nationwide Mortgage
17Licensing System and Registry, and any privilege arising under
18federal or State law, including the rules of any federal or
19State court, with respect to such information or material,
20shall continue to apply to information or material after the
21information or material has been disclosed to the Nationwide
22Mortgage Licensing System and Registry. The information and
23material may be shared with all State and federal regulatory
24officials with student loan industry oversight authority
25without the loss of privilege or the loss of confidentiality

 

 

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1protections provided by federal law or State law.
2    (b) In order to promote more effective regulation and
3reduce regulatory burden through supervisory information
4sharing, the Secretary is authorized to enter agreements or
5sharing arrangements with other governmental agencies, the
6Conference of State Bank Supervisors or other associations
7representing governmental agencies as established by rule,
8regulation, or order of the Secretary. The sharing of
9confidential supervisory information or any information or
10material described in subsection (a) of this Section pursuant
11to an agreement or sharing arrangement shall not result in the
12loss of privilege or the loss of confidentiality protections
13provided by federal law or State law.
14    (c) In order to promote more effective regulation and
15reduce regulatory burden through supervisory information
16sharing, information or material that is subject to a privilege
17or confidentiality under subsection (a) of this Section shall
18not be subject to the following:
19        (1) disclosure under any State law governing the
20    disclosure to the public of information held by an officer
21    or an agency of the State; or
22        (2) subpoena or discovery, or admission into evidence,
23    in any private civil action or administrative process,
24    unless with respect to any privilege held by the Nationwide
25    Mortgage Licensing System and Registry with respect to the
26    information or material, the person to whom such

 

 

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1    information or material pertains waives, in whole or in
2    part, in the discretion of that person, that privilege.
3    (d) In order to promote more effective regulation and
4reduce regulatory burden through supervisory information
5sharing, any other law relating to the disclosure of
6confidential supervisory information or any information or
7material described in subsection (a) of this Section that is
8inconsistent with subsection (a) of this Section shall be
9superseded by the requirements of this Section to the extent
10the other law provides less confidentiality or a weaker
11privilege.
 
12    Section 20-55. Reports of violations. Any person licensed
13under this Act or any other person may report to the Secretary
14any information to show that a person subject to this Act is or
15may be in violation of this Act. A licensee who files a report
16with the Department that another licensee is engaged in one or
17more violations pursuant to this Act shall not be the subject
18of disciplinary action by the Department, unless the Department
19determines, by a preponderance of the evidence available to the
20Department, that the reporting person knowingly and willingly
21participated in the violation that was reported.
 
22    Section 20-60. Rules and regulations of the Secretary.
23    (a) In addition to such powers as may be prescribed by this
24Act, the Secretary is hereby authorized and empowered to adopt

 

 

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1rules consistent with the purposes of this Act, including, but
2not limited to:
3        (1) rules in connection with the activities of
4    licensees as may be necessary and appropriate for the
5    protection of consumers in this State;
6        (2) rules as may be necessary and appropriate to define
7    improper or fraudulent business practices in connection
8    with the activities of licensees in servicing student
9    loans;
10        (3) rules that define the terms used in this Act and as
11    may be necessary and appropriate to interpret and implement
12    the provisions of this Act; and
13        (4) rules as may be necessary for the enforcement of
14    this Act.
15    (b) The Secretary is hereby authorized and empowered to
16make specific rulings, demands, and findings that he or she
17deems necessary for the proper conduct of the student loan
18servicing industry.
19    (c) A person or entity may make a written application to
20the Department for a written interpretation of this Act. The
21Department may then, in its sole discretion, choose to issue a
22written interpretation. To be valid, a written interpretation
23must be signed by the Secretary, or his or her designee, and
24the Department's General Counsel. A written interpretation
25expires 2 years after the date that it was issued.
26    (d) No provision in this Act that imposes liability or

 

 

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1establishes violations shall apply to any act taken by a person
2or entity in conformity with a written interpretation of this
3Act that is in effect at the time the act is taken,
4notwithstanding whether the written interpretation is later
5amended, rescinded, or determined by judicial or other
6authority to be invalid for any reason.
 
7    Section 20-65. Appeal and review.
8    (a) Any person or entity affected by a decision of the
9Secretary under any provision of this Act may obtain review of
10that decision within the Department.
11    (b) The Secretary may, in accordance with the Illinois
12Administrative Procedure Act, adopt rules to provide for review
13within the Department of his or her decisions affecting the
14rights of entities under this Act. The review shall provide
15for, at a minimum:
16        (1) appointment of a hearing officer other than a
17    regular employee of the Department;
18        (2) appropriate procedural rules, specific deadlines
19    for filings, and standards of evidence and of proof; and
20        (3) provision for apportioning costs among parties to
21    the appeal.
22    (c) All final agency determinations of appeals to decisions
23of the Secretary may be reviewed in accordance with and under
24the provisions of the Administrative Review Law. Appeals from
25all final orders and judgments entered by a court in review of

 

 

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1any final administrative decision of the Secretary or of any
2final agency review of a decision of the Secretary may be taken
3as in other civil cases.
 
4    Section 20-70. Violations of this Act; Secretary's orders.
5If the Secretary finds, as the result of examination,
6investigation, or review of reports submitted by a licensee,
7that the business and affairs of a licensee are not being
8conducted in accordance with this Act, the Secretary shall
9notify the licensee of the correction necessary. If a licensee
10fails to correct such violations, the Secretary shall issue an
11order requiring immediate correction and compliance with this
12Act, specifying a reasonable date for performance.
13    The Secretary may adopt rules to provide for an orderly and
14timely appeal of all orders within the Department. The rules
15may include provision for assessment of fees and costs.
 
16    Section 20-75. Collection of compensation. Unless exempt
17from licensure under this Act, no person engaged in or offering
18to engage in any act or service for which a license under this
19Act is required may bring or maintain any action in any court
20of this State to collect compensation for the performance of
21the licensable services without alleging and proving that he or
22she was the holder of a valid student loan servicing license
23under this Act at all times during the performance of those
24services.
 

 

 

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1    Section 20-80. Licensure fees.
2    (a) The fees for licensure shall be a $1,000 application
3fee and an additional $800 fee for investigation performed in
4conjunction with Section 15-5. The fees are nonrefundable.
5    (b) The fee for an application renewal shall be $1,000. The
6fee is nonrefundable.
 
7    Section 20-85. Injunction. The Secretary, through the
8Attorney General, may maintain an action in the name of the
9people of the State of Illinois and may apply for an injunction
10in the circuit court to enjoin a person from engaging in
11unlicensed student loan servicing activity.
 
12
ARTICLE 25. CONSUMER FRAUD AND DECEPTIVE BUSINESS
13
PRACTICES ACT

 
14    Section 25-5. Enforcement; Consumer Fraud and Deceptive
15Business Practices Act. The Attorney General may enforce a
16violation of Article 5 of this Act as an unlawful practice
17under the Consumer Fraud and Deceptive Business Practices Act.
 
18
ARTICLE 99. SEVERABILITY; EFFECTIVE DATE

 
19    Section 99-1. Severability. The provisions of this Act are
20severable under Section 1.31 of the Statute on Statutes.
 

 

 

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1    Section 99-99. Effective date. This Act takes effect
2December 31, 2018.