Let's say you've got a student loan and you get laid off your job. Your loan servicer suggests something called "forebearance" — the chance to delay payments for a year or two. Sounds tempting, but it ends up costing you more money.
That's one of the many tricky facts loan servicers will have to disclose in Illinois, where lawmakers yesterday approved stringent regulations on student loan service companies.
Student loan servicers will have to give borrowers a full range of repayment options and an honest accounting of the cost of each choice. Servicers will have to get licensed by the state, and borrowers will have access to a new ombudsman's office if they have complaints.
State Rep. Will Guzzardi (D-Chicago) sponsored the legislation, and — like Daniel Biss (D-Evanston), who sponsored the Senate version — has skin in the game.
"I'm 30 years old. I've got tens of thousands of dollars of student debt yet to pay off, so this bill's personal for me," Guzzardi says.
Gov. Bruce Rauner previously vetoed the bill, saying it interfered with federal responsibilities. But 32 Republicans in the House joined Democrats in voting to override the governor's veto, 63-
"I think it demonstrates that a lot of my Republican colleagues are tired of the Governor trying to force them to put his priorities ahead of their constituencies' priorities,” Guzzardi says. “They're saying, ‘Enough of that. I'm going to vote with what my constituents need.’ "
The law takes effect at the end of 2018.