Illinois General Assembly - Full Text of HB1519
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Full Text of HB1519  103rd General Assembly


Rep. Maurice A. West, II

Filed: 3/21/2023





10300HB1519ham001LRB103 24976 RJT 59433 a


2    AMENDMENT NO. ______. Amend House Bill 1519 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Student Loan Servicing Rights Act is
5amended by changing Sections 1-5 and 25-5 and by adding
6Article 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
10to this Act.
11    "Borrower" or "student loan borrower" means a person who
12has received or agreed to pay a student loan for his or her own
13educational expenses.
14    "Cosigner" means a person who has agreed to share
15responsibility for repaying a student loan with a borrower.
16    "Department" means the Department of Financial and



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1Professional Regulation.
2    "Division of Banking" means the Division of Banking of the
3Department of Financial and Professional Regulation.
4    "Federal loan borrower eligible for referral to a
5repayment specialist" means a borrower who possesses any of
6the following characteristics:
7        (1) requests information related to options to reduce
8    or suspend his or her monthly payment;
9        (2) indicates that he or she is experiencing or
10    anticipates experiencing financial hardship, distress, or
11    difficulty making his or her payments;
12        (3) has missed 2 consecutive monthly payments;
13        (4) is at least 75 days delinquent;
14        (5) is enrolled in a discretionary forbearance for
15    more than 9 of the previous 12 months;
16        (6) has rehabilitated or consolidated one or more
17    loans out of default within the past 12 months; or
18        (7) has not completed a course of study, as reflected
19    in the servicer's records, or the borrower identifies
20    himself or herself as not having completed a program of
21    study.
22    "Federal education loan" means any loan made, guaranteed,
23or insured under Title IV of the federal Higher Education Act
24of 1965.
25    "Income-driven payment plan certification" means the
26documentation related to a federal student loan borrower's



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1income or financial status the borrower must submit to renew
2an income-driven repayment plan.
3    "Income-driven repayment options" includes the
4Income-Contingent Repayment Plan, the Income-Based Repayment
5Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
6Plan, the Revised Pay As You Earn Plan, and any other federal
7student loan repayment plan that is calculated based on a
8borrower's income.
9    "Licensee" means a person licensed pursuant to this Act.
10    "Other repayment plans" means the Standard Repayment Plan,
11the Graduated Repayment Plan, the Extended Repayment Plan, or
12any other federal student loan repayment plan not based on a
13borrower's income.
14    "Private loan borrower eligible for referral to a
15repayment specialist" means a borrower who possesses any of
16the following characteristics:
17        (1) requests information related to options to reduce
18    or suspend his or her monthly payments; or
19        (2) indicates that he or she is experiencing or
20    anticipates experiencing financial hardship, distress, or
21    difficulty making his or her payments.
22    "Requester" means any borrower or cosigner that submits a
23request for assistance.
24    "Request for assistance" means all inquiries, complaints,
25account disputes, and requests for documentation a servicer
26receives from borrowers or cosigners.



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1    "Secretary" means the Secretary of Financial and
2Professional Regulation, or his or her designee, including the
3Director of the Division of Banking of the Department of
4Financial and Professional Regulation.
5    "Servicing" means: (1) receiving any scheduled periodic
6payments from a student loan borrower or cosigner pursuant to
7the terms of a student loan; (2) applying the payments of
8principal and interest and such other payments with respect to
9the amounts received from a student loan borrower or cosigner,
10as may be required pursuant to the terms of a student loan; and
11(3) performing other administrative services with respect to a
12student loan.
13    "Student loan" or "loan" means any federal education loan
14or other loan primarily for use to finance a postsecondary
15education and costs of attendance at a postsecondary
16institution, including, but not limited to, tuition, fees,
17books and supplies, room and board, transportation, and
18miscellaneous personal expenses. "Student loan" includes a
19loan made to refinance a student loan.
20    "Student loan" shall not include an extension of credit
21under an open-end consumer credit plan, a reverse mortgage
22transaction, a residential mortgage transaction, or any other
23loan that is secured by real property or a dwelling.
24    "Student loan" shall not include an extension of credit
25made by a postsecondary educational institution to a borrower
26if one of the following apply:



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1        (1) The term of the extension of credit is no longer
2    than the borrower's education program.
3        (2) The remaining, unpaid principal balance of the
4    extension of credit is less than $1,500 at the time of the
5    borrower's graduation or completion of the program.
6        (3) The borrower fails to graduate or successfully
7    complete his or her education program and has a balance
8    due at the time of his or her disenrollment from the
9    postsecondary institution.
10    "Student loan servicer" or "servicer" means any person
11engaged in the business of servicing student loans. "Student
12loan servicer" or "servicer" includes persons or entities
13acting on behalf of the State Treasurer. "Student loan
14servicer" includes an income share agreement provider as set
15forth under Article 7 of this Act.
16    "Student loan servicer" shall not include:
17        (1) a bank, savings bank, savings association, or
18    credit union organized under the laws of the State or any
19    other state or under the laws of the United States;
20        (2) a wholly owned subsidiary of any bank, savings
21    bank, savings association, or credit union organized under
22    the laws of the State or any other state or under the laws
23    of the United States;
24        (3) an operating subsidiary where each owner of the
25    operating subsidiary is wholly owned by the same bank,
26    savings bank, savings association, or credit union



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1    organized under the laws of the State or any other state or
2    under the laws of the United States;
3        (4) the Illinois Student Assistance Commission and its
4    agents when the agents are acting on the Illinois Student
5    Assistance Commission's behalf;
6        (5) a public postsecondary educational institution or
7    a private nonprofit postsecondary educational institution
8    servicing a student loan it extended to the borrower;
9        (6) a licensed debt management service under the Debt
10    Management Service Act, except to the extent that the
11    organization acts as a subcontractor, affiliate, or
12    service provider for an entity that is otherwise subject
13    to licensure under this Act;
14        (7) any collection agency licensed under the
15    Collection Agency Act that is collecting post-default
16    debt;
17        (8) in connection with its responsibilities as a
18    guaranty agency engaged in default aversion, a State or
19    nonprofit private institution or organization having an
20    agreement with the U.S. Secretary of Education under
21    Section 428(b) of the Higher Education Act (20 U.S.C.
22    1078(B));
23        (9) a State institution or a nonprofit private
24    organization designated by a governmental entity to make
25    or service student loans, provided in each case that the
26    institution or organization services fewer than 20,000



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1    student loan accounts of borrowers who reside in Illinois;
2        (10) a law firm or licensed attorney that is
3    collecting post-default debt; or
4        (11) the State Treasurer.
5(Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18;
6101-586, eff. 8-26-19.)
7    (110 ILCS 992/Art. 7 heading new)

9    (110 ILCS 992/7-1 new)
10    Sec. 7-1. Purpose and Construction. This Article shall be
11construed as a consumer protection law for all purposes. This
12Article shall be liberally construed to effectuate its
14    (110 ILCS 992/7-5 new)
15    Sec. 7-5. Definitions. As used in this Article:
16    "Amount financed" means the amounts advanced by the income
17share agreement provider to the consumer or on behalf of the
18consumer or, if the income share agreement provider is a
19merchant financing the sale of goods or services to the
20consumer using an income share agreement, "amount financed"
21means the amount credited by the income share agreement
22provider toward the purchase of such goods and services on
23behalf of the consumer.



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2    "Annual percentage rate" or "APR" means the percentage
3rate calculated according to the Federal Reserve Board's
4methodology as set forth under Regulation Z, 12 CFR Part 1026.
5The "annual percentage rate" of an income share agreement is
6the measure of the cost of the income share agreement,
7expressed as a yearly rate, that relates to the amount and
8timing of value received by the consumer to the amount and
9timing of payments made. The "annual percentage rate" is
10determined in accordance with either the actuarial method or
11the United States rule method.
12    "Cash price" means the price that the consumer would pay
13for the goods or services for which the educational income
14share agreement proceeds are advanced in an equivalent cash
15transaction between the consumer and the provider of goods or
16services. The Cash price excludes any amounts paid by the
17consumer as a down payment to the income share agreement
19    "Consumer" means a natural person who enters into an
20Educational Income Share Agreement for educational purposes.
21    "Disposable earnings" means that part of the earnings of
22an individual remaining after the deduction from total
23earnings of amounts required by law to be withheld.
24    "Educational Income Share Agreement" means an income share
25agreement that:
26        (1) is not made, insured, or guaranteed under Title IV



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1    of the Higher Education Act of 1965, 20 U.S.C. 1070 et
2    seq., or another federally subsidized educational finance
3    program; and
4        (2) is extended to a consumer expressly, in whole or
5    in part, for postsecondary educational expenses, tuition,
6    or other obligations of, or pays amounts to, or on behalf
7    of, such individual for costs associated with a
8    postsecondary training program or any other program
9    designed to increase the individual's human capital,
10    employability, or earning potential, and is not limited to
11    programs eligible to participate as programs under Title
12    IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et
13    seq., as well as any personal expenses, such as books,
14    supplies, transportation, and living costs, incurred by
15    the individual while enrolled in such a program and any
16    other costs or expenses included in the definition of a
17    "qualified higher education expense" as specified in 26
18    U.S.C. 529(e)(3)(A), including refinancing of loans or
19    income share agreements used for the purposes described in
20    this paragraph, and regardless of whether the income share
21    agreement is provided by the educational institution that
22    the consumer attends.
23    "Federal poverty guidelines" means the poverty guidelines
24published by the federal Department of Health and Human
25Services under the authority of 42 U.S.C. 9902(2) in the
26Federal Register.



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1    "Garnishment" means any legal or equitable procedure
2through which earnings of an individual are required to be
3withheld for payment of obligations to an income share
4agreement provider as set forth in the Code of Civil
6    "Income share agreement" or "ISA" means an agreement
7between a consumer and an ISA provider under which:
8        (1) the ISA provider credits or advances a sum of
9    money to the consumer or to a third party on the consumer's
10    behalf or, if the ISA provider is a seller of goods or
11    services to the consumer, the ISA provider credits or
12    advances toward the purchase of such goods or services;
13        (2) the consumer is obligated to make periodic
14    payments, if any become due, to the ISA provider
15    calculated, based upon, or determined by the consumer's
16    income;
17        (3) the consumer only incurs an obligation in each
18    payment period if the individual's income in that period
19    is above an income threshold specified in the ISA
20    agreement;
21        (4) there is an ISA duration after which the
22    obligation is complete regardless of how much has been
23    paid, as long as the consumer has paid any prior amounts
24    due; and
25        (5) each of these elements is available at the time of
26    contracting of the income share agreement. For purposes of



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1    this definition, an income share agreement shall be
2    treated as "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 ISA are used
6    for postsecondary educational expenses in a manner
7    consistent with the definition of that term.
8    "Income threshold" means a fixed dollar amount that is the
9minimum income per payment period that an ISA recipient is
10required to earn before the ISA recipient is required to make a
11payment on an income share agreement for such payment period.
12    "Index" means the Consumer Price Index for Urban Wage
13Earners and Clerical Workers: U.S. City Average, All Items,
141967=100, compiled by the Bureau of Labor Statistics, United
15States Department of Labor.
16    "ISA duration" means the maximum time during which a
17consumer could remain obligated on the income share agreement,
18other than periods when an income share agreement provider is
19attempting to collect past-due amounts and absent periods of
20payment relief pauses, forbearance, military service
21suspension, or other suspension of obligations at the request
22of the consumer, regardless of whether the consumer's income
23is greater than the minimum income.
24    "ISA maximum number of payments" means the maximum number
25of ISA payments during ISA payment periods in which the
26consumer's income is equal to or greater than the income



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1threshold that a consumer could be required to make pursuant
2to the terms of the income share agreement. "ISA maximum
3number of payments" does not include periods of payment relief
5    "ISA payment" means a calculated monthly payment in excess
6of $0.00 that counts toward the maximum income-based payments
7under the ISA. An "ISA payment" is required only for income
8earned during an ISA payment period in which the consumer's
9income was equal to or greater than the income threshold.
10    "ISA payment calculation method" means the mechanism,
11formula, percentage, dollar figure, or other means of
12calculating a student's payment obligation, based on the
13student's income, under the terms of the income share
15    "ISA payment cap" means the maximum amount of money a
16consumer must pay to satisfy the terms of an income share
17agreement, which may be expressed as a dollar value, a
18multiple of the amount funded to the student or on the
19student's behalf, or as a maximum effective annual percentage
21    "ISA payment cap" does not include charges related to
22default or other charges and fees that are due under the income
23share agreement.
24    "Income share agreement provider" means:
25        (1) a person that provides money, payments, or credits
26    to or on behalf of a consumer pursuant to the terms of an



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1    income share agreement; or
2        (2) any other person engaged in the business of
3    soliciting, making, funding, or extending income share
4    agreements. This subsection does not apply to an entity
5    that either: (A) has no direct interactions with the
6    consumer and is not responsible for making credit
7    decisions regarding the consumer, or (B) is the provider
8    of the educational services to the consumer, even if these
9    entities may qualify under subsection (1), or (C) whose
10    role is solely limited to the marketing or advertising of
11    the income share agreement to the consumer on behalf of a
12    licensed income share agreement provider.
13    An income share agreement provider who is a student loan
14servicer as defined in the Student Loan Servicing Rights Act
15shall also comply with the provisions of this Article 7.
16    "Payment relief pause" means a period of time that is
17requested by the consumer during which the consumer is not
18required to make payments despite the consumer's income
19exceeding the income threshold.
20    "Sales price" means, for an educational income share
21agreement, the sum of the cash price and any other amounts
22financed by the educational income share agreement.
23    (110 ILCS 992/7-10 new)
24    Sec. 7-10. Monthly payment affordability.
25    (a) Maximum ISA income obligation. Each income share



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1agreement shall specify the ISA payment calculation method
2applicable to the income share agreement and shall comply with
3the following:
4        (1) An income share agreement provider shall not enter
5    into an ISA with a consumer if the consumer would be
6    committing more than a total of 20% of the consumer's
7    future income toward the payment of the ISA.
8        (2) An income share agreement provider shall not enter
9    into an educational ISA with a consumer if the consumer
10    would be committing to pay more than 20% of his or her
11    income at any time during the ISA duration, based on
12    information available to the income share agreement
13    provider at the time of the projection, inclusive of any
14    payment obligations that the income share agreement
15    provider knows will arise in the future for other
16    educational ISAs and education loans upon which the
17    consumer is obligated at the time of the projection. The
18    ISA provider must confirm a consumer's educational ISA and
19    education loan liabilities through a verifiable
20    third-party source. At a minimum, the income share
21    agreement provider must confirm such liabilities using
22    information maintained by a nationwide consumer reporting
23    agency, as defined by 15 U.S.C. 1681a(f), and doing so is
24    sufficient for meeting the requirement in this paragraph;
25    however, nothing in this paragraph shall prohibit an
26    income share agreement provider from using other sources



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1    to provide additional verification. For the purposes of
2    calculating the portion of a student's future income that
3    would be consumed by the educational ISA for which the
4    student has applied and other educational ISAs and
5    education loans known at the time, the ISA provider shall
6    calculate the aggregate future burden of all such
7    obligations, including the educational ISA for which the
8    student is applying, at hypothetical future income levels
9    ranging from the income threshold of the ISA for which the
10    student has applied up to $70,000, with such number
11    adjusting for inflation each year, in increments of
12    $10,000. The terms of the educational ISA for which the
13    student has applied cannot cause the student's aggregate
14    future burden to exceed the limit in subsection (b) at any
15    of the income increments stated in this paragraph. For the
16    purpose of calculating the percentage burden of an
17    educational ISA at a given future income level, the ISA
18    provider shall use the ISA payment amount that would be
19    applicable for the ISA at such income level. For the
20    purpose of calculating the percentage burden of an
21    educational loan at a given future income level, the ISA
22    provider shall divide the annual payment obligation by
23    income level using the most affordable payment plan or
24    option which would yield the lowest monthly payments that
25    would be available to the student at such income level
26    under such loan. For students enrolled in a Title IV



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1    program, as part of this analysis the ISA provider shall
2    assume a federal loan balance equal to the larger of (1)
3    the student's existing federal loan balance, and (2) the
4    aggregate maximum amount the student is eligible to borrow
5    under Federal Direct Stafford Loans for his or her status,
6    dependent or independent.
7    (b) Protections during periods of low earnings. The income
8share agreement must state that when a consumer has income
9that is equal to or below the income threshold set forth in the
10income share agreement that the consumer's payment obligation
11is zero dollars. The income threshold at the time of
12origination must be high enough such that the consumer's gross
13income minus any income share agreement obligation must leave
14the consumer with gross income equal to at least 200% of the
15federal poverty guidelines for a single person.
16    (c) Required payment relief pauses. An income share
17agreement must offer at least 3 months of voluntary payment
18relief pauses, so long as a consumer's current income at the
19time of requesting the payment relief pause is equal to or less
20than 400% of the federal poverty guidelines for a single
21individual, for every 30 income-determined payments required
22under the income share agreement.
23    (110 ILCS 992/7-15 new)
24    Sec. 7-15. Maximum effective annual percentage rate. An
25income share agreement must specify that the maximum amount



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1that a consumer could be required to pay under the income share
2agreement will not result in a consumer ever being required to
3pay an effective annual percentage rate that is greater than
436%. If at any time the provider accepts a payment of an amount
5that would cause the limit in this Section to apply, the
6provider shall refund any amounts, within 20 calendar days,
7necessary to ensure that the consumer's payments do not result
8in an effective annual percentage rate that is greater than
9the limit specified in this Section.
10    (110 ILCS 992/7-20 new)
11    Sec. 7-20. Limits on duration of income share agreements.
12    (a) ISA maximum number of payments shall not exceed 180
13monthly payments.
14    (b) The ISA duration shall not exceed 240 months,
15excluding any months in which a consumer has requested and
16received a payment relief pause.
17    (110 ILCS 992/7-25 new)
18    Sec. 7-25. Risk sharing.
19    (a) An income share agreement provider may not contract
20for income share agreement terms that would result in a
21consumer having income that is less than or equal to 300% of
22the federal poverty guidelines for a single person for the ISA
23duration being required to make a stream of ISA payments that
24would yield an effective APR greater than 8%, or the high yield



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1of the 10-year United States Constant Maturity Treasury Notes
2auctioned at the final auction held before the current
3calendar year in which an ISA offering is made plus 7%,
4whichever is greater.
5    (b) An income share agreement provider may not contract
6for income share agreement terms that would result in a
7consumer having income that is less than or equal to 400% of
8the federal poverty guidelines for a single person for the ISA
9duration being required to make a stream of ISA payments that
10would yield an effective APR greater than 12%, or the high
11yield of the 10-year United States Constant Maturity Treasury
12Notes auctioned at the final auction held before the current
13calendar year in which an ISA offering is made plus 11%,
14whichever is greater.
15    (c) An income share agreement provider may not contract
16for income share agreement terms that would result in a
17consumer having income that is less than or equal to 500% of
18the federal poverty guidelines for a single person for the ISA
19duration being required to make a stream of ISA payments that
20would yield an effective APR greater than 15%, or the high
21yield of the 10-year United States Constant Maturity Treasury
22Notes auctioned at the final auction held before the current
23calendar year in which an ISA offering is made plus 14%,
24whichever is greater.
25    (d) An income share agreement provider may not contract
26for income share agreement terms that would result in a



10300HB1519ham001- 19 -LRB103 24976 RJT 59433 a

1consumer having income that is less than or equal to 600% of
2the federal poverty guidelines for a single person for the ISA
3duration being required to make a stream of ISA payments that
4would yield an effective APR greater than 18%, or the high
5yield of the 10-year United States Constant Maturity Treasury
6Notes auctioned at the final auction held before the current
7calendar year in which an ISA offering is made plus 17%,
8whichever is greater.
9    (e) For the purposes of determining the various tiers set
10forth in this Section, an income share agreement provider
11shall calculate the effective APR by determining the various
12federal poverty guidelines tiers at the time the consumer's
13income share agreement is originated and assuming such amounts
14are fixed through the ISA duration.
15    (f) For the purposes of determining ISA duration in this
16Section: in the case of an educational ISA, an income share
17agreement provider shall assume the ISA duration started after
18a period equal to the expected length of the program for which
19a consumer is enrolling; or in the case of a non-educational
20ISA, an income share agreement provider shall assume the ISA
21duration started immediately.
22    (110 ILCS 992/7-30 new)
23    Sec. 7-30. Limits on covered income. An income share
24agreement must specify the definition of income to be used for
25the purposes of calculating a consumer's payment obligation



10300HB1519ham001- 20 -LRB103 24976 RJT 59433 a

1under the income share agreement. No income share agreement
2shall include any of the following in its definition of
4        (1) The income of the consumer's spouse, party to a
5    civil union under the Illinois Religious Freedom and Civil
6    Union Act, children or dependents.
7        (2) Any amount paid by the consumer under Title II or
8    XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42
9    U.S.C. 1381 et seq.; or under a State program funded by
10    Title IV of the Social Security Act, 42 U.S.C. 601 et seq.
11        (3) Individual retirement account distributions.
12        (4) Pensions and annuities.
13        (5) Social security benefits.
14        (6) Other sources of federal or State aid provided to
15    individuals through any of the following:
16            (A) unemployment programs;
17            (B) disaster relief programs;
18            (C) Medicare or Medicaid benefits;
19            (D) benefits received through the Supplemental
20        Nutrition Assistance Program; (E)economic impact
21        payments;
22            (E) the earned income tax credit or child tax
23        credit;
24            (F) other income excluded from the definition of
25        taxable income set forth by the Internal Revenue
26        Service; or



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1            (G) passive income that is not derived as a result
2        of a consumer's active participation in any trade or
3        business.
4    (110 ILCS 992/7-35 new)
5    Sec. 7-35. Fees permitted. In addition to the ISA
6obligation permitted by this Act, an income share agreement
7provider may contract for and receive the following additional
9        (1) government fees and taxes;
10        (2) a fee, which shall not exceed the sum of $25, for
11    failure to provide documentation to the income share
12    agreement provider for the confirmation and reconciliation
13    of the consumer's income;
14        (3) a fee for processing any forms to confirm the
15    consumer's income with the United States Internal Revenue
16    Service or a State department of revenue or taxation on a
17    dollar-for-dollar, pass-through basis of the expenses
18    incurred by the income share agreement provider;
19        (4) a late payment fee in an amount of $20 or 5% of the
20    late payment, whichever is greater, for any payment that
21    is more than 15 days past due; no late payment fee may be
22    charged more than once per late payment;
23        (5) an amount not exceeding $25, plus any actual
24    expenses incurred in connection with a check or draft that
25    is not honored because of insufficient or uncollected



10300HB1519ham001- 22 -LRB103 24976 RJT 59433 a

1    funds or because no such account exists;
2        (6) other fees authorized by the Secretary. In
3    determining whether to authorize a charge, the Secretary
4    shall consider whether the charge benefits the consumer
5    and is reasonable;
6        (7) before or after default in payment of a scheduled
7    payment of an income share agreement, the parties to the
8    income share agreement may agree in writing to a deferral
9    of all or part of one or more unpaid payments and the
10    income share agreement provider may make, at the time of
11    deferral and receive at that time or at any time
12    thereafter, a deferral charge not exceeding an amount
13    equal to 10% of the missed payment. Provided this
14    subsection shall not apply to voluntary payment relief
15    pauses.
16    (110 ILCS 992/7-40 new)
17    Sec. 7-40. Restriction on security interest. Under no
18circumstances shall an income share agreement provider take a
19security interest in any collateral in connection with an
20income share agreement.
21    (110 ILCS 992/7-45 new)
22    Sec. 7-45. Discharge of obligations.
23    (a) All further obligations under an income share
24agreement, shall terminate if the consumer is deemed totally



10300HB1519ham001- 23 -LRB103 24976 RJT 59433 a

1and permanently disabled by the applicable governmental
3    (b) All further obligations under the income share
4agreement, except those accruing before the consumer's death,
5shall terminate upon the death of the consumer.
6    (110 ILCS 992/7-50 new)
7    Sec. 7-50. Prohibition on co-signers. No income share
8agreement shall include or permit the use of a co-signer in
9connection with any obligation related to an income share
11    (110 ILCS 992/7-55 new)
12    Sec. 7-55. Limitation on acceleration.
13    (a) Income share agreement providers may not attempt to
14accelerate or otherwise liquidate a future payment stream
15under an income share agreement.
16    (b) Notwithstanding subsection (a), nothing in this
17Section shall prevent an income share agreement provider from
18collecting or pursuing any other remedy available to the
19income share agreement provider for the collection of amounts
20that were due from the consumer under an income share
21agreement that were not paid or properly remitted to the
22income share agreement provider. Nothing in this Section shall
23prevent an income share agreement provider from calculating a
24projected future income for a consumer and calculating a



10300HB1519ham001- 24 -LRB103 24976 RJT 59433 a

1consumer's payment obligation using that projection if the
2consumer does not provide contractually obligated
3documentation of income.
4    (c) Notwithstanding subsection (a), an income share
5agreement may contain a provision that allows a consumer to
6terminate his or her income share agreement before the events
7terminating further obligations under the income share
8agreement. The early termination mechanisms, such as total
9caps on payments due to the income share agreement provider or
10other rights to partially or fully terminate further
11obligations under the income share agreement, must be optional
12to the consumer and within the consumer's control. In such
13circumstances, such mechanisms will not be deemed a form of
14acceleration, early termination penalty, or prepayment
16    (110 ILCS 992/7-60 new)
17    Sec. 7-60. No assignment of wages.
18    (a) An income share agreement provider may not take an
19assignment of earnings of the consumer for payment or as
20security for payment of a debt arising out of an income share
21agreement. An assignment of earnings in violation of this
22Section is unenforceable by the assignee of the earnings and
23revocable by the consumer. This Section does not prohibit a
24consumer from authorizing deductions from his or her earnings
25in favor of a licensee if the authorization complies with the



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1Illinois Wage Assignment Act.
2    (b) A sale of unpaid earnings made in consideration of the
3payment of money to or for the account of the seller of the
4earnings is deemed to be a loan to the seller secured by an
5assignment of earnings.
6    (110 ILCS 992/7-65 new)
7    Sec. 7-65. Limitations on garnishment. Before entry of
8judgment in an action against a consumer for a payment arising
9from an income share agreement, a licensee may not attach
10unpaid earnings of the consumer by garnishment or like
12    (110 ILCS 992/7-70 new)
13    Sec. 7-70. Use of multiple agreements. An income share
14agreement provider shall not use multiple agreements with
15respect to a single income share agreement with intent to
16violate any limitations of this Act.
17    (110 ILCS 992/7-75 new)
18    Sec. 7-75. Required disclosures.
19    (a) An income share agreement provider shall disclose the
20following information to each consumer, clearly and
21conspicuously, in a form that the consumer can keep at the time
22the transaction is consummated:
23        (1) The date of the income share agreement.



10300HB1519ham001- 26 -LRB103 24976 RJT 59433 a

1        (2) The dollar amount of the amount financed.
2        (3) The sales price of the transaction if different
3    from the amount financed;
4        (4) The ISA payment calculation method. Any
5    percentages used in the ISA payment calculation method
6    shall be rounded to the nearest one-hundredth of 1% if the
7    percentage is not a whole number.
8        (5) The maximum number of payments expressed as a
9    whole number.
10        (6) The maximum duration expressed as a whole number
11    of the period of time.
12        (7) The income threshold expressed as a dollar amount
13    and a statement that payments will only be required during
14    periods when the consumer's income is equal to or exceeds
15    the income threshold.
16        (8) An itemization of the amount financed; if the ISA
17    provider is a seller of goods or services, then the amount
18    of any down payment and any additional fees or costs shall
19    be itemized.
20        (9) The definition of income to be used for the
21    purposes of calculating the consumer's obligations under
22    the income share agreement.
23        (10) A description of the terms under which the
24    obligations of the consumer under the income share
25    agreement will be extinguished before the full ISA
26    duration.



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1        (11) A payment schedule that shows the date on which
2    the first payment will be due and reflecting each date
3    thereafter during the ISA duration that a payment may be
4    due.
5        (12) An itemization of any permissible fees associated
6    with the ISA.
7        (13) A description of the methods used by the ISA
8    provider to engage in a process of reconciliation and
9    verification to determine if the consumer's payments are
10    more than, equal to, or less than the payments owed by the
11    consumer under his or her income share agreement; this
12    description shall include the following:
13            (i) a description of the frequency or triggers for
14        the commencement of the income verification process;
15            (ii) a description of the requirements and timing
16        of the process in which the consumer must participate
17        in order for the ISA provider to verify the consumer's
18        income; and
19            (iii) a description of any records or forms,
20        including tax records, that the consumer may be
21        required to execute or submit.
22        (14) The name and address of the ISA provider.
23        (15) A table displaying the dollar amounts of each
24    payment, the number of payments, the effective annual
25    percentage rate, and the total of all payments that a
26    consumer would be required to pay under the income share



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1    agreement at a range of annual income levels based on the
2    ISA duration. The comparison table shall include a
3    statement that "This comparison table is for illustrative
4    purposes only and may not reflect the amounts that you are
5    likely to pay under this income share agreement. This
6    table assumes you have the same income over the entire
7    term of your income share agreement. It does not take into
8    account changes in income. Your income will likely change
9    over time. This table does not represent the income or
10    range of incomes that you are likely to earn in the
11    future.". In computing the APR, the ISA provider shall use
12    the amount financed and may assume that the income share
13    agreement will be disbursed in the amount and with the
14    disbursement schedule that it reasonably expects to follow
15    for such income share agreement and that payments would
16    commence on the date set forth in the income share
17    agreement. The income used in this disclosure shall
18    include, at minimum, the obligations at the following
19    incomes:
20            (i) no income;
21            (ii) income equal to the annual equivalent of the
22        income threshold;
23            (iii) various income scenarios with at least
24        calculations at annual incomes of $40,000, $60,000,
25        $80,000, $100,000, $125,000, $150,000, $175,000, and
26        $200,000; and



10300HB1519ham001- 29 -LRB103 24976 RJT 59433 a

1            (iv) if known by the ISA provider, the consumer's
2        current income.
3        (16) A statement that the income share agreement is
4    not a fixed payment installment loan and that the amount
5    the consumer will be required to pay under the income
6    share agreement:
7            (i) may be more or less than the amount financed by
8        the ISA provider; and
9            (ii) will vary in proportion with the consumer's
10        income.
11    (b) The disclosures required by this Section shall be
12grouped together and segregated from all other information.
13    (c) The disclosures required by this Section may be
14provided to a consumer in electronic form, subject to
15compliance with the consumer's consent and other applicable
16provisions of the Electronic Signatures in Global and National
17Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
19    (d) If model documents are established pursuant to any
20federal law covering income share agreements, compliance with
21those forms shall be considered compliance with this Act with
22respect to the disclosure requirements contained in this Act.
23    (110 ILCS 992/7-80 new)
24    Sec. 7-80. Early completion. An income share agreement
25shall specify the terms and conditions by which the consumer



10300HB1519ham001- 30 -LRB103 24976 RJT 59433 a

1may extinguish his or her obligations under the income share
2agreement before the end of the income share agreement's
3duration. An income share agreement may include any method to
4determine the early completion payment; however, a consumer
5may always cancel an income share agreement by making
6aggregate payments, excluding payments to fees, equal to the
7ISA payment cap. The consumer is entitled to this early
8completion regardless of whether the consumer makes this early
9completion payment by making regularly scheduled payments or
10by making a single lump sum payment in the amount of the early
11completion payment.
12    (110 ILCS 992/7-85 new)
13    Sec. 7-85. Assumption of increase in future income.
14    (a) If a consumer fails to provide income documentation as
15reasonably required by an income share agreement, an income
16share agreement provider may assign an amount of income to the
17consumer and compute the consumer's monthly payment amount by
18any of the following methods, to the extent disclosed in the
19income share agreement:
20        (1) assigning an income amount obtained from a
21    reasonably reliable third party or a credit reporting
22    agency;
23        (2) if the consumer previously provided income
24    documentation or has had an income assigned in the prior
25    12-month period that has increased by an amount not to



10300HB1519ham001- 31 -LRB103 24976 RJT 59433 a

1    exceed 10%, but such increase may not be applied more than
2    once per 12-month period;
3        (3) contacting the consumer's employer, or any person
4    or entity reasonably believed to represent the consumer's
5    employer, to obtain, verify, or update the consumer's
6    income information;
7        (4) contacting the Department of Revenue or the
8    Internal Revenue Service to obtain the most recent
9    information available about the student's income; or
10        (5) for income share agreement providers providing
11    educational income share agreements, assigning a
12    reasonable qualified income based on the incomes of:
13            (A) the nearest reasonably relevant quantile of
14        income for individuals working in the profession for
15        which the consumer's educational program was intended
16        to prepare the participant, as determined by
17        information published by the Bureau of Labor
18        Statistics or other reasonably reliable publicly
19        available data sources; or
20            (B) the nearest reasonably relevant quantile of
21        income of consumers who attended the same or a
22        reasonably comparable covered educational program or
23        course of study, as determined by information
24        published by the Bureau of Labor Statistics or other
25        reasonably reliable publicly available data sources.
26    (b) If an income share agreement provider assigns an



10300HB1519ham001- 32 -LRB103 24976 RJT 59433 a

1income to a consumer's income share agreement, then it shall
2notify the consumer in the monthly billing statement, and in
3each billing statement thereafter while the assigned income
4remains applicable to the consumer's income share agreement,
5that income has been assigned and of the consumer's rights
6under this Section.
7    (c) If the consumer does provide income information as
8reasonably required by the income share agreement within one
9year of the date on which the income share agreement provider
10notified the consumer that assigned income will be applied to
11the income share agreement, then, within 15 days after the
12income share agreement provider's receipt of such information,
13the income share agreement provider shall update each prior
14instance in which assigned income was applied using the income
15information provided by the consumer; if the consumer provides
16income information more than one year after the income share
17agreement provider first assigned income to the consumer's
18income share agreement, then the income share agreement
19provider may, but is not obligated to, update each prior
20instance in which assigned income was applied using the income
21information provided by the consumer.
22    (d) An income share agreement provider that assigns income
23to an income share agreement shall retain all applicable
24records relating to the method and data sources used to make
25such estimation for 3 years after the end of that income share



10300HB1519ham001- 33 -LRB103 24976 RJT 59433 a

1    (110 ILCS 992/7-90 new)
2    Sec. 7-90. Receipts; statements of account; evidence of
4    (a) The income share agreement provider shall deliver or
5mail to the consumer, without request, a written receipt for
6each payment made pursuant to an income share agreement. A
7periodic statement showing a payment received by mail complies
8with this subsection.
9    (b) Upon written request of a consumer, the income share
10agreement provider shall provide a written statement of the
11dates and amounts of payments made within the 12 months
12preceding the month in which the request is received. The
13statement shall be provided without charge once during each
14year of the term of the obligation. If additional statements
15are requested, the income share agreement provider may charge
16an amount not to exceed $5.00 for each additional statement.
17    (c) After a consumer has fulfilled all obligations with
18respect to an income share agreement, the income share
19agreement provider, upon request of the consumer, shall
20deliver or mail to the consumer written evidence acknowledging
21termination of all obligations with respect to the income
22share agreement.
23    (110 ILCS 992/7-95 new)
24    Sec. 7-95. Adjustment of dollar amounts.



10300HB1519ham001- 34 -LRB103 24976 RJT 59433 a

1    (a) From time to time the dollar amounts in this Act
2designated as subject to change shall change, as provided in
3this Section, according to and to the extent of changes in the
5    (b) The index for December of the year preceding the year
6in which this Act becomes effective is the reference base
8    (c) The designated dollar amounts shall change on July 1
9of each even-numbered year if the percentage of change,
10calculated to the nearest whole percentage point, between the
11index and the end of the preceding year and the reference base
12index is 10% or more, but:
13        (1) the portion of the percentage change in the index
14    in excess of a multiple of 10% shall be disregarded and the
15    dollar amounts shall change only in multiples of 10% of
16    the amounts provided in this Act on the date of enactment;
17    and
18        (2) the dollar amounts shall not change if the amounts
19    required by this Section are those currently in effect
20    pursuant to this Act as a result of earlier application of
21    this Section.
22    (d) If the index is revised, the percentage of change
23pursuant to this Section shall be calculated on the basis of
24the revised index. If a revision of the index changes the
25reference base index, a revised reference base index shall be
26determined by multiplying the reference base index then



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1applicable by the rebasing factor furnished by the Bureau of
2Labor Statistics. If the index is superseded, the index
3referred to in this Section is the one represented by the
4Bureau of Labor Statistics as reflecting most accurately
5changes in the purchasing power of the dollar for consumers.
6    (e) The Department shall adopt a rule setting forth, on or
7before April 30 of each year in which dollar amounts are to
8change, the changes in dollar amounts required by this
9Section. As soon as practical after the changes occur, the
10Department shall adopt a rule setting forth the changes in the
11index required by subsection (d), including, if applicable,
12the numerical equivalent of the reference base index under a
13revised reference base index and the designation or title of
14any index superseding the index.
15    (f) A person does not violate this Act with respect to a
16transaction otherwise complying with this Act if he or she
17relies on dollar amounts either determined according to
18subsection (c) or appearing in the last rule of the Department
19announcing the then-current dollar amounts.
20    (110 ILCS 992/7-100 new)
21    Sec. 7-100. Construction against implicit authority. This
22Act is a general Act intended as a unified coverage of its
23subject matter; no part of this Act shall be construed to be
24impliedly repealed by subsequent legislation if that
25construction can reasonably be avoided.



10300HB1519ham001- 36 -LRB103 24976 RJT 59433 a

1    (110 ILCS 992/7-105 new)
2    Sec. 7-105. Application of other Acts. Income share
3agreements and income share agreement providers are subject to
4other Articles of this Act, the Know Before You Owe Private
5Education Loan Act, and the Predatory Loan Prevention Act and
6shall comply with their requirements and any rules adopted by
7the Department of Financial and Professional Regulation
8pursuant to those Acts. Nothing herein is intended to imply
9that an education ISA: (i) is not a credit transaction or (ii)
10that, upon an obligation accruing, does not create a debt.
11    (110 ILCS 992/25-5)
12    Sec. 25-5. Enforcement; Consumer Fraud and Deceptive
13Business Practices Act. The Attorney General may enforce a
14violation of Article 5 or 7 of this Act as an unlawful practice
15under the Consumer Fraud and Deceptive Business Practices Act.
16(Source: P.A. 100-540, eff. 12-31-18.)
17    Section 10. The Consumer Installment Loan Act is amended
18by changing Section 1 as follows:
19    (205 ILCS 670/1)  (from Ch. 17, par. 5401)
20    Sec. 1. License required to engage in business. No person,
21partnership, association, limited liability company, or
22corporation shall engage in the business of making loans of



10300HB1519ham001- 37 -LRB103 24976 RJT 59433 a

1money and charge, contract for, or receive on any such loan a
2greater annual percentage rate than 9% except as authorized by
3this Act after first obtaining a license from the Director of
4Financial Institutions (hereinafter called the Director). No
5licensee, or employee or affiliate thereof, that is licensed
6under the Payday Loan Reform Act shall obtain a license under
7this Act except that a licensee under the Payday Loan Reform
8Act may obtain a license under this Act for the exclusive
9purpose and use of making title-secured loans, as defined in
10subsection (a) of Section 15 of this Act and governed by Title
1138, Section 110.300 of the Illinois Administrative Code. For
12the purpose of this Section, "affiliate" means any person or
13entity that directly or indirectly controls, is controlled by,
14or shares control with another person or entity. A person or
15entity has control over another if the person or entity has an
16ownership interest of 25% or more in the other. A person or
17entity licensed as an Income Share Agreement provider is
18exempt from the requirements of this Act to the extent of their
19operation as an Income Share Agreement under Article 7 of the
20Student Loan Servicing Rights Act. In addition, Educational
21Income Share Agreements as provided under Article 7 of the
22Student Loan Servicing Rights Act are not subject to the
23requirements of this Act.
24    In this Act, "Director" means the Director of Financial
25Institutions of the Department of Financial and Professional



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1(Source: P.A. 101-658, eff. 3-23-21.)
2    Section 15. The Interest Act is amended by changing
3Section 4 as follows:
4    (815 ILCS 205/4)  (from Ch. 17, par. 6404)
5    Sec. 4. General interest rate.
6    (1) Except as otherwise provided in Section 4.05, in all
7written contracts it shall be lawful for the parties to
8stipulate or agree that an annual percentage rate of 9%, or any
9less sum, shall be taken and paid upon every $100 of money
10loaned or in any manner due and owing from any person to any
11other person or corporation in this state, and after that rate
12for a greater or less sum, or for a longer or shorter time,
13except as herein provided.
14    The maximum rate of interest that may lawfully be
15contracted for is determined by the law applicable thereto at
16the time the contract is made. Any provision in any contract,
17whether made before or after July 1, 1969, which provides for
18or purports to authorize, contingent upon a change in the
19Illinois law after the contract is made, any rate of interest
20greater than the maximum lawful rate at the time the contract
21is made, is void.
22    It is lawful for a state bank or a branch of an
23out-of-state bank, as those terms are defined in Section 2 of
24the Illinois Banking Act, to receive or to contract to receive



10300HB1519ham001- 39 -LRB103 24976 RJT 59433 a

1and collect interest and charges at any rate or rates agreed
2upon by the bank or branch and the borrower. It is lawful for a
3savings bank chartered under the Savings Bank Act or a savings
4association chartered under the Illinois Savings and Loan Act
5of 1985 to receive or contract to receive and collect interest
6and charges at any rate agreed upon by the savings bank or
7savings association and the borrower.
8    It is lawful to receive or to contract to receive and
9collect interest and charges as authorized by this Act and as
10authorized by the Consumer Installment Loan Act, the Payday
11Loan Reform Act, the Retail Installment Sales Act, the
12Illinois Financial Services Development Act, the Motor Vehicle
13Retail Installment Sales Act, or the Consumer Legal Funding
14Act, or the Student Loan Servicing Rights Act. It is lawful to
15charge, contract for, and receive any rate or amount of
16interest or compensation, except as otherwise provided in the
17Predatory Loan Prevention Act, with respect to the following
19        (a) Any loan made to a corporation;
20        (b) Advances of money, repayable on demand, to an
21    amount not less than $5,000, which are made upon warehouse
22    receipts, bills of lading, certificates of stock,
23    certificates of deposit, bills of exchange, bonds or other
24    negotiable instruments pledged as collateral security for
25    such repayment, if evidenced by a writing;
26        (c) Any credit transaction between a merchandise



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1    wholesaler and retailer; any business loan to a business
2    association or copartnership or to a person owning and
3    operating a business as sole proprietor or to any persons
4    owning and operating a business as joint venturers, joint
5    tenants or tenants in common, or to any limited
6    partnership, or to any trustee owning and operating a
7    business or whose beneficiaries own and operate a
8    business, except that any loan which is secured (1) by an
9    assignment of an individual obligor's salary, wages,
10    commissions or other compensation for services, or (2) by
11    his household furniture or other goods used for his
12    personal, family or household purposes shall be deemed not
13    to be a loan within the meaning of this subsection; and
14    provided further that a loan which otherwise qualifies as
15    a business loan within the meaning of this subsection
16    shall not be deemed as not so qualifying because of the
17    inclusion, with other security consisting of business
18    assets of any such obligor, of real estate occupied by an
19    individual obligor solely as his residence. The term
20    "business" shall be deemed to mean a commercial,
21    agricultural or industrial enterprise which is carried on
22    for the purpose of investment or profit, but shall not be
23    deemed to mean the ownership or maintenance of real estate
24    occupied by an individual obligor solely as his residence;
25        (d) Any loan made in accordance with the provisions of
26    Subchapter I of Chapter 13 of Title 12 of the United States



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1    Code, which is designated as "Housing Renovation and
2    Modernization";
3        (e) Any mortgage loan insured or upon which a
4    commitment to insure has been issued under the provisions
5    of the National Housing Act, Chapter 13 of Title 12 of the
6    United States Code;
7        (f) Any mortgage loan guaranteed or upon which a
8    commitment to guaranty has been issued under the
9    provisions of the Veterans' Benefits Act, Subchapter II of
10    Chapter 37 of Title 38 of the United States Code;
11        (g) Interest charged by a broker or dealer registered
12    under the Securities Exchange Act of 1934, as amended, or
13    registered under the Illinois Securities Law of 1953,
14    approved July 13, 1953, as now or hereafter amended, on a
15    debit balance in an account for a customer if such debit
16    balance is payable at will without penalty and is secured
17    by securities as defined in Uniform Commercial
18    Code-Investment Securities;
19        (h) Any loan made by a participating bank as part of
20    any loan guarantee program which provides for loans and
21    for the refinancing of such loans to medical students,
22    interns and residents and which are guaranteed by the
23    American Medical Association Education and Research
24    Foundation;
25        (i) Any loan made, guaranteed, or insured in
26    accordance with the provisions of the Housing Act of 1949,



10300HB1519ham001- 42 -LRB103 24976 RJT 59433 a

1    Subchapter III of Chapter 8A of Title 42 of the United
2    States Code and the Consolidated Farm and Rural
3    Development Act, Subchapters I, II, and III of Chapter 50
4    of Title 7 of the United States Code;
5        (j) Any loan by an employee pension benefit plan, as
6    defined in Section 3 (2) of the Employee Retirement Income
7    Security Act of 1974 (29 U.S.C.A. Sec. 1002), to an
8    individual participating in such plan, provided that such
9    loan satisfies the prohibited transaction exemption
10    requirements of Section 408 (b) (1) (29 U.S.C.A. Sec. 1108
11    (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975 (d)
12    (1)) of the Employee Retirement Income Security Act of
13    1974;
14        (k) Written contracts, agreements or bonds for deed
15    providing for installment purchase of real estate,
16    including a manufactured home as defined in subdivision
17    (53) of Section 9-102 of the Uniform Commercial Code that
18    is real property as defined in the Conveyance and
19    Encumbrance of Manufactured Homes as Real Property and
20    Severance Act;
21        (l) Loans secured by a mortgage on real estate,
22    including a manufactured home as defined in subdivision
23    (53) of Section 9-102 of the Uniform Commercial Code that
24    is real property as defined in the Conveyance and
25    Encumbrance of Manufactured Homes as Real Property and
26    Severance Act;



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1        (m) Loans made by a sole proprietorship, partnership,
2    or corporation to an employee or to a person who has been
3    offered employment by such sole proprietorship,
4    partnership, or corporation made for the sole purpose of
5    transferring an employee or person who has been offered
6    employment to another office maintained and operated by
7    the same sole proprietorship, partnership, or corporation;
8        (n) Loans to or for the benefit of students made by an
9    institution of higher education.
10    (2) Except for loans described in subparagraph (a), (c),
11(d), (e), (f) or (i) of subsection (1) of this Section, and
12except to the extent permitted by the applicable statute for
13loans made pursuant to Section 4a or pursuant to the Consumer
14Installment Loan Act:
15        (a) Whenever the rate of interest exceeds an annual
16    percentage rate of 8% on any written contract, agreement
17    or bond for deed providing for the installment purchase of
18    residential real estate, or on any loan secured by a
19    mortgage on residential real estate, it shall be unlawful
20    to provide for a prepayment penalty or other charge for
21    prepayment.
22        (b) No agreement, note or other instrument evidencing
23    a loan secured by a mortgage on residential real estate,
24    or written contract, agreement or bond for deed providing
25    for the installment purchase of residential real estate,
26    may provide for any change in the contract rate of



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1    interest during the term thereof. However, if the Congress
2    of the United States or any federal agency authorizes any
3    class of lender to enter, within limitations, into
4    mortgage contracts or written contracts, agreements or
5    bonds for deed in which the rate of interest may be changed
6    during the term of the contract, any person, firm,
7    corporation or other entity not otherwise prohibited from
8    entering into mortgage contracts or written contracts,
9    agreements or bonds for deed in Illinois may enter into
10    mortgage contracts or written contracts, agreements or
11    bonds for deed in which the rate of interest may be changed
12    during the term of the contract, within the same
13    limitations.
14    (3) In any contract or loan which is secured by a mortgage,
15deed of trust, or conveyance in the nature of a mortgage, on
16residential real estate, the interest which is computed,
17calculated, charged, or collected pursuant to such contract or
18loan, or pursuant to any regulation or rule promulgated
19pursuant to this Act, may not be computed, calculated, charged
20or collected for any period of time occurring after the date on
21which the total indebtedness, with the exception of late
22payment penalties, is paid in full.
23    (4) For purposes of this Section, a prepayment shall mean
24the payment of the total indebtedness, with the exception of
25late payment penalties if incurred or charged, on any date
26before the date specified in the contract or loan agreement on



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1which the total indebtedness shall be paid in full, or before
2the date on which all payments, if timely made, shall have been
3made. In the event of a prepayment of the indebtedness which is
4made on a date after the date on which interest on the
5indebtedness was last computed, calculated, charged, or
6collected but before the next date on which interest on the
7indebtedness was to be calculated, computed, charged, or
8collected, the lender may calculate, charge and collect
9interest on the indebtedness for the period which elapsed
10between the date on which the prepayment is made and the date
11on which interest on the indebtedness was last computed,
12calculated, charged or collected at a rate equal to 1/360 of
13the annual rate for each day which so elapsed, which rate shall
14be applied to the indebtedness outstanding as of the date of
15prepayment. The lender shall refund to the borrower any
16interest charged or collected which exceeds that which the
17lender may charge or collect pursuant to the preceding
18sentence. The provisions of this amendatory Act of 1985 shall
19apply only to contracts or loans entered into on or after the
20effective date of this amendatory Act, but shall not apply to
21contracts or loans entered into on or after that date that are
22subject to Section 4a of this Act, the Consumer Installment
23Loan Act, the Payday Loan Reform Act, the Predatory Loan
24Prevention Act, or the Retail Installment Sales Act, or that
25provide for the refund of precomputed interest on prepayment
26in the manner provided by such Act.



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1    (5) For purposes of items (a) and (c) of subsection (1) of
2this Section, a rate or amount of interest may be lawfully
3computed when applying the ratio of the annual interest rate
4over a year based on 360 days. The provisions of this
5amendatory Act of the 96th General Assembly are declarative of
6existing law.
7    (6) For purposes of this Section, "real estate" and "real
8property" include a manufactured home, as defined in
9subdivision (53) of Section 9-102 of the Uniform Commercial
10Code that is real property as defined in the Conveyance and
11Encumbrance of Manufactured Homes as Real Property and
12Severance Act.
13(Source: P.A. 101-658, eff. 3-23-21; 102-987, eff. 5-27-22.)
14    Section 97. Severability. The provisions of this Act are
15severable under Section 1.31 of the Statute on Statutes.
16    Section 99. Effective date. This Act takes effect upon
17becoming law.".