Illinois to support new federal student loan regulations


On Monday, the Illinois Department of Financial and Professional Regulation submitted comments to the U.S. Department of Education in support of the proposed new interpretation on federal student loan regulation. The interpretation would mark the start of a new era of cooperation between federal and state student loan regulators, replacing an earlier interpretation that prevented states from protecting their student borrowers.

The IDFPR welcomes the new interpretation and urges the Department of Education to further strengthen it by clarifying the enforceability of state notification and other requirements that protect Illinois student loan borrowers.

The previous interpretation, written in 2018 by then Education Secretary Betsy DeVos, said states cannot enforce their own laws against federal student loan officers. While state regulators and attorneys general disputed these allegations, the actions of the Education Department continued to make it difficult for states to conduct reviews, collect documents, and investigate borrower complaints. in accordance with state laws.

The new interpretation will improve both the liability of service agents and the protection of borrowers. With better cooperation from the Ministry of Education, the IDFPR will continue to use its regulator under the Student Loan Service Fees Act to protect the 1.6 million student loan borrowers. from Illinois.

“I want to thank Secretary Cardona and President Biden for taking this step for student loan borrowers by expressing their commitment to cooperative federalism and recognizing the role that state regulators have long played in protecting their consumers, “said Mario Treto, Jr., acting secretary of the IDFPR. “Illinois offers some of the strongest student loan protections in the country and I will work closely with our state and federal partners to ensure that Illinois borrowers continue to enjoy the protections that the law of the Illinois offers them. “

Nationally, there is currently an estimated $ 1.7 trillion in outstanding student loan debt owed by 43 million borrowers. Illinois residents have 1.6 million borrowers who owe $ 60 billion in federal student loans to the United States government. These federal loans are all managed by private companies that process bills and monthly payments, administer loan repayment and cancellation programs such as Public Service Loan Forgiveness, and are often the only point of contact for borrowers for assistance in managing their loans.

In response to this growing crisis, Illinois and other states across the country have passed laws requiring private service providers to obtain licenses to do business in their jurisdictions and requiring them to follow maintenance rules and protections. specific. In 2019, the Illinois Student Loan Servicing Rights Act came into effect. receive information on appropriate repayment options, including income-based repayment.

In response to the COVID-19 pandemic, borrowers with student loans held by the US government have had their monthly payments and interest automatically deferred. However, the pause in repayment is temporary and is expected to expire on January 31, 2022.

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