Bill Text: IL SB1524 | 2019-2020 | 101st General Assembly | Chaptered


Bill Title: Creates the Illinois Student Loan Investment Act. Provides for the establishment, operation, and administration of the Student Investment Account by the State Treasurer. Provides that the State Treasurer shall establish fees to cover the costs of administration, recordkeeping, marketing, and investment management related to the Student Investment Account. Provides that the State Treasurer may charge and collect insurance premiums and deduct wages under the Act. Requires the State Treasurer to develop, publish, and implement one or more investment policies covering the investment of moneys under the Act. Provides for the creation and use of specified Funds to be held outside of the State Treasury with the State Treasurer as custodian. Provides for the adoption of rules. Amends the Deposit of State Moneys Act. Allows the State Treasurer to invest or reinvest State money in, among other items or purposes, investments made in accordance with the Student Loan Investment Act. Amends the Student Loan Servicing Rights Act. Provides that the term "student loan servicer" shall not include, among other entities, the State Treasurer and its agents when the agents are acting on the State Treasurer's behalf. Defines terms. Effective immediately.

Spectrum: Partisan Bill (Democrat 37-0)

Status: (Passed) 2019-08-26 - Public Act . . . . . . . . . 101-0586 [SB1524 Detail]

Download: Illinois-2019-SB1524-Chaptered.html



Public Act 101-0586
SB1524 EnrolledLRB101 09686 RJF 54785 b
AN ACT concerning finance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Student Investment Account Act.
Section 5. Findings and purpose. The General Assembly finds
that it is vital for the State to combat the college-debt
crisis and increase access to post-secondary education for all
residents of this State. The purpose of this Act is to assist
qualified residents to attend and pay for post-secondary
education through a system of investment programs, which may
include income-sharing agreements, linked deposits, and
student loans.
Section 10. Definitions. As used in this Act:
"Borrower" means an Illinois resident student who has
received an education loan or an Illinois resident parent who
has received or agreed to pay an education loan, subject to
approval by the State Treasurer.
"Education loan" means a loan made to a borrower in
accordance with this Act to finance an Illinois resident
student's attendance at an institution of higher education.
"Income share agreement" means an agreement between a
participant and an eligible institution of higher education or
an income share agreement provider approved by the State
Treasurer in which the participant agrees to pay a percentage
of the participant's future earnings for a fixed period in
exchange for funds to pay for their post-secondary education.
"Income share agreement provider" means an organization
that allows income share agreement participants to fund their
education by means of an income share agreement.
"Institution of higher education" means a post-secondary
educational institution located in Illinois and approved by the
State Treasurer.
"Participant" means a resident student who enters into an
income share agreement for the purpose of funding the
participant's attendance at an institution of higher
education.
"Student Investment Account" means that portion of the
Treasurer's State Investment Portfolio described in Section
15.
Section 15. Establishment of Student Investment Account.
The State Treasurer may allocate up to 5% of the Treasurer's
State Investment Portfolio to the Student Investment Account.
The 5% cap shall be calculated based on: (1) the balance of the
Treasurer's State Investment Portfolio at the inception of the
State's fiscal year; or (2) the average balance of the
Treasurer's State Investment Portfolio in the immediately
preceding 5 fiscal years, whichever number is greater.
Section 20. Earnings from Student Investment Account.
Earnings on the investments in the Student Investment Account
may be reinvested into the Student Investment Account without
being counted against the 5% cap under Section 15. Net earnings
on investments under this Act that are not reinvested shall be
deposited in the same manner as interest is deposited under
Section 4.1 of the State Finance Act. The General Assembly
shall prioritize any such funds deposited into the General
Revenue Fund towards appropriations to support higher
education in the State of Illinois.
Section 25. Operation of the Student Investment Account.
The State Treasurer may: originate, guarantee, acquire, and
service education loans; facilitate such arrangements between
borrowers and eligible lenders; and perform such other acts as
may be necessary or desirable in connection with the education
loans. The State Treasurer may receive, hold, and invest moneys
paid into the Student Investment Account and take such other
actions as are necessary to operate the Student Investment
Account. The State Treasurer may invest in, and enter into
contracts with, institutions that provide education loans. The
State Treasurer may also: enter into income share agreements
with participants; facilitate such arrangements between
participants and eligible income share agreement providers;
and perform such other acts as may be necessary or desirable in
connection with such income share agreements. The State
Treasurer may also deposit funds with financial institutions
that provide education loans.
Section 30. Administration of the Student Investment
Account. The State Treasurer may enter into such contracts and
guarantee agreements as are necessary to operate the Student
Investment Account with eligible lenders, financial
institutions, institutions of higher education, income share
agreement providers, individuals, corporations, and qualified
income share agreement or loan origination and servicing
organizations and with any governmental entity, including the
Illinois Student Assistance Commission, and with any agency or
instrumentality of the United States. The State Treasurer is
authorized to establish specific criteria governing the
eligibility of entities to participate in its programs, the
making of income share agreements or education loans,
provisions for default, the establishment of default reserve
funds, the purchase of default insurance, the provision of
prudent debt service reserves, and the furnishing by
participating entities of such additional guarantees of the
income share agreements or education loans as the State
Treasurer shall determine.
Section 35. Fees. The State Treasurer shall establish fees
to cover the costs of administration, recordkeeping,
marketing, and investment management related to the Student
Investment Account. The State Treasurer may pay eligible
lenders, income share agreement providers, financial
institutions, institutions of higher education, individuals,
corporations, qualified income share agreement or loan
origination and servicing organizations, governmental
entities, and any agencies or instrumentalities of the United
States an administrative fee in connection with services
provided pursuant to the Student Investment Account in such
amounts, at such times, and in such manner as may be prescribed
by the State Treasurer.
Section 40. Insurance. The State Treasurer or his or her
designee may charge and collect premiums for insurance on
income share agreements or education loans and other related
charges and pay such insurance premiums or a portion thereof
and other charges as are prudent.
Section 45. Wage deductions. The State Treasurer may deduct
from the salary, wages, commissions, and bonuses of any
employee in this State and, to the extent permitted by the laws
of the United States and individual states in which an employee
might reside, any employee outside the State of Illinois by
serving a notice of administrative wage garnishment on an
employer, in accordance with rules adopted by the State
Treasurer, for the recovery of an education loan debt or income
share agreement owned or serviced by the State Treasurer. Levy
must not be made until the State Treasurer has caused a demand
to be made on the employee, in a manner consistent with rules
adopted by the State Treasurer, such that the employee is
provided an opportunity to contest the existence or amount of
the income share agreement or education loan obligation.
Section 50. Investment policy. The State Treasurer shall
develop, publish, and implement one or more investment policies
covering the investment of moneys in accordance with this Act.
Section 55. Student Investment Account Administrative
Fund. The Student Investment Account Administrative Fund is
created as a non-appropriated separate and apart trust fund in
the State Treasury. Moneys in the Student Investment Account
Administrative Fund may be used by the State Treasurer to pay
expenses related to all aspects of operation and administration
of the Student Investment Account. The State Treasurer may
deposit a portion of the earnings of the investments in the
Student Investment Account and a portion of any administrative
fees, and the proceeds thereof, collected pursuant to Section
35 into the Student Investment Account Administrative Fund.
Section 60. Student Investment Account Loss Reserve Fund.
The Student Investment Account Loss Reserve Fund may be created
as a non-appropriated separate and apart trust fund in the
State Treasury. Moneys in the Student Investment Account Loss
Reserve Fund may be used by the State Treasurer to establish
loss reserve funds. The State Treasurer may deposit a portion
of the earnings of the investments in the Student Investment
Account and a portion of any administrative fees, and the
proceeds thereof, collected pursuant to Section 35 into the
Student Investment Account Loss Reserve Fund.
Section 65. Student Investment Account Assistance Fund.
The Student Investment Account Assistance Fund may be created
as a non-appropriated separate and apart trust fund in the
State Treasury. Moneys in the Student Investment Account
Assistance Fund may be used by the State Treasurer to provide
assistance to qualifying borrowers or income share agreement
participants. The State Treasurer may deposit a portion of the
earnings of the investments in the Student Investment Account
and a portion of any administrative fees, and the proceeds
thereof, collected pursuant to Section 35 into the Student
Investment Account Assistance Fund.
Section 70. Rules. The State Treasurer may adopt rules he
or she deems necessary or desirable to implement and administer
this Act.
Section 900. The Deposit of State Moneys Act is amended by
changing Section 22.5 as follows:
(15 ILCS 520/22.5) (from Ch. 130, par. 41a)
(For force and effect of certain provisions, see Section 90
of P.A. 94-79)
Sec. 22.5. Permitted investments. The State Treasurer may,
with the approval of the Governor, invest and reinvest any
State money in the treasury which is not needed for current
expenditures due or about to become due, in obligations of the
United States government or its agencies or of National
Mortgage Associations established by or under the National
Housing Act, 12 1201 U.S.C. 1701 et seq., or in mortgage
participation certificates representing undivided interests in
specified, first-lien conventional residential Illinois
mortgages that are underwritten, insured, guaranteed, or
purchased by the Federal Home Loan Mortgage Corporation or in
Affordable Housing Program Trust Fund Bonds or Notes as defined
in and issued pursuant to the Illinois Housing Development Act.
All such obligations shall be considered as cash and may be
delivered over as cash by a State Treasurer to his successor.
The State Treasurer may, with the approval of the Governor,
purchase any state bonds with any money in the State Treasury
that has been set aside and held for the payment of the
principal of and interest on the bonds. The bonds shall be
considered as cash and may be delivered over as cash by the
State Treasurer to his successor.
The State Treasurer may, with the approval of the Governor,
invest or reinvest any State money in the treasury that is not
needed for current expenditure due or about to become due, or
any money in the State Treasury that has been set aside and
held for the payment of the principal of and the interest on
any State bonds, in shares, withdrawable accounts, and
investment certificates of savings and building and loan
associations, incorporated under the laws of this State or any
other state or under the laws of the United States; provided,
however, that investments may be made only in those savings and
loan or building and loan associations the shares and
withdrawable accounts or other forms of investment securities
of which are insured by the Federal Deposit Insurance
Corporation.
The State Treasurer may not invest State money in any
savings and loan or building and loan association unless a
commitment by the savings and loan (or building and loan)
association, executed by the president or chief executive
officer of that association, is submitted in the following
form:
The .................. Savings and Loan (or Building
and Loan) Association pledges not to reject arbitrarily
mortgage loans for residential properties within any
specific part of the community served by the savings and
loan (or building and loan) association because of the
location of the property. The savings and loan (or building
and loan) association also pledges to make loans available
on low and moderate income residential property throughout
the community within the limits of its legal restrictions
and prudent financial practices.
The State Treasurer may, with the approval of the Governor,
invest or reinvest, at a price not to exceed par, any State
money in the treasury that is not needed for current
expenditures due or about to become due, or any money in the
State Treasury that has been set aside and held for the payment
of the principal of and interest on any State bonds, in bonds
issued by counties or municipal corporations of the State of
Illinois.
The State Treasurer may, with the approval of the Governor,
invest or reinvest any State money in the Treasury which is not
needed for current expenditure, due or about to become due, or
any money in the State Treasury which has been set aside and
held for the payment of the principal of and the interest on
any State bonds, in participations in loans, the principal of
which participation is fully guaranteed by an agency or
instrumentality of the United States government; provided,
however, that such loan participations are represented by
certificates issued only by banks which are incorporated under
the laws of this State or any other state or under the laws of
the United States, and such banks, but not the loan
participation certificates, are insured by the Federal Deposit
Insurance Corporation.
Whenever the total amount of vouchers presented to the
Comptroller under Section 9 of the State Comptroller Act
exceeds the funds available in the General Revenue Fund by
$1,000,000,000 or more, then the State Treasurer may invest any
State money in the Treasury, other than money in the General
Revenue Fund, Health Insurance Reserve Fund, Attorney General
Court Ordered and Voluntary Compliance Payment Projects Fund,
Attorney General Whistleblower Reward and Protection Fund, and
Attorney General's State Projects and Court Ordered
Distribution Fund, which is not needed for current
expenditures, due or about to become due, or any money in the
State Treasury which has been set aside and held for the
payment of the principal of and the interest on any State bonds
with the Office of the Comptroller in order to enable the
Comptroller to pay outstanding vouchers. At any time, and from
time to time outstanding, such investment shall not be greater
than $2,000,000,000. Such investment shall be deposited into
the General Revenue Fund or Health Insurance Reserve Fund as
determined by the Comptroller. Such investment shall be repaid
by the Comptroller with an interest rate tied to the London
Interbank Offered Rate (LIBOR) or the Federal Funds Rate or an
equivalent market established variable rate, but in no case
shall such interest rate exceed the lesser of the penalty rate
established under the State Prompt Payment Act or the timely
pay interest rate under Section 368a of the Illinois Insurance
Code. The State Treasurer and the Comptroller shall enter into
an intergovernmental agreement to establish procedures for
such investments, which market established variable rate to
which the interest rate for the investments should be tied, and
other terms which the State Treasurer and Comptroller
reasonably believe to be mutually beneficial concerning these
investments by the State Treasurer. The State Treasurer and
Comptroller shall also enter into a written agreement for each
such investment that specifies the period of the investment,
the payment interval, the interest rate to be paid, the funds
in the Treasury from which the Treasurer will draw the
investment, and other terms upon which the State Treasurer and
Comptroller mutually agree. Such investment agreements shall
be public records and the State Treasurer shall post the terms
of all such investment agreements on the State Treasurer's
official website. In compliance with the intergovernmental
agreement, the Comptroller shall order and the State Treasurer
shall transfer amounts sufficient for the payment of principal
and interest invested by the State Treasurer with the Office of
the Comptroller under this paragraph from the General Revenue
Fund or the Health Insurance Reserve Fund to the respective
funds in the Treasury from which the State Treasurer drew the
investment. Public Act 100-1107 This amendatory Act of the
100th General Assembly shall constitute an irrevocable and
continuing authority for all amounts necessary for the payment
of principal and interest on the investments made with the
Office of the Comptroller by the State Treasurer under this
paragraph, and the irrevocable and continuing authority for and
direction to the Comptroller and Treasurer to make the
necessary transfers.
The State Treasurer may, with the approval of the Governor,
invest or reinvest any State money in the Treasury that is not
needed for current expenditure, due or about to become due, or
any money in the State Treasury that has been set aside and
held for the payment of the principal of and the interest on
any State bonds, in any of the following:
(1) Bonds, notes, certificates of indebtedness,
Treasury bills, or other securities now or hereafter issued
that are guaranteed by the full faith and credit of the
United States of America as to principal and interest.
(2) Bonds, notes, debentures, or other similar
obligations of the United States of America, its agencies,
and instrumentalities.
(2.5) Bonds, notes, debentures, or other similar
obligations of a foreign government, other than the
Republic of the Sudan, that are guaranteed by the full
faith and credit of that government as to principal and
interest, but only if the foreign government has not
defaulted and has met its payment obligations in a timely
manner on all similar obligations for a period of at least
25 years immediately before the time of acquiring those
obligations.
(3) Interest-bearing savings accounts,
interest-bearing certificates of deposit, interest-bearing
time deposits, or any other investments constituting
direct obligations of any bank as defined by the Illinois
Banking Act.
(4) Interest-bearing accounts, certificates of
deposit, or any other investments constituting direct
obligations of any savings and loan associations
incorporated under the laws of this State or any other
state or under the laws of the United States.
(5) Dividend-bearing share accounts, share certificate
accounts, or class of share accounts of a credit union
chartered under the laws of this State or the laws of the
United States; provided, however, the principal office of
the credit union must be located within the State of
Illinois.
(6) Bankers' acceptances of banks whose senior
obligations are rated in the top 2 rating categories by 2
national rating agencies and maintain that rating during
the term of the investment.
(7) Short-term obligations of either corporations or
limited liability companies organized in the United States
with assets exceeding $500,000,000 if (i) the obligations
are rated at the time of purchase at one of the 3 highest
classifications established by at least 2 standard rating
services and mature not later than 270 days from the date
of purchase, (ii) the purchases do not exceed 10% of the
corporation's or the limited liability company's
outstanding obligations, (iii) no more than one-third of
the public agency's funds are invested in short-term
obligations of either corporations or limited liability
companies, and (iv) the corporation or the limited
liability company has not been placed on the list of
restricted companies by the Illinois Investment Policy
Board under Section 1-110.16 of the Illinois Pension Code.
(7.5) Obligations of either corporations or limited
liability companies organized in the United States, that
have a significant presence in this State, with assets
exceeding $500,000,000 if: (i) the obligations are rated at
the time of purchase at one of the 3 highest
classifications established by at least 2 standard rating
services and mature more than 270 days, but less than 5
years, from the date of purchase; (ii) the purchases do not
exceed 10% of the corporation's or the limited liability
company's outstanding obligations; (iii) no more than 5% of
the public agency's funds are invested in such obligations
of corporations or limited liability companies; and (iv)
the corporation or the limited liability company has not
been placed on the list of restricted companies by the
Illinois Investment Policy Board under Section 1-110.16 of
the Illinois Pension Code. The authorization of the
Treasurer to invest in new obligations under this paragraph
shall expire on June 30, 2019.
(8) Money market mutual funds registered under the
Investment Company Act of 1940, provided that the portfolio
of the money market mutual fund is limited to obligations
described in this Section and to agreements to repurchase
such obligations.
(9) The Public Treasurers' Investment Pool created
under Section 17 of the State Treasurer Act or in a fund
managed, operated, and administered by a bank.
(10) Repurchase agreements of government securities
having the meaning set out in the Government Securities Act
of 1986, as now or hereafter amended or succeeded, subject
to the provisions of that Act and the regulations issued
thereunder.
(11) Investments made in accordance with the
Technology Development Act.
(12) Investments made in accordance with the Student
Investment Account Act.
For purposes of this Section, "agencies" of the United
States Government includes:
(i) the federal land banks, federal intermediate
credit banks, banks for cooperatives, federal farm credit
banks, or any other entity authorized to issue debt
obligations under the Farm Credit Act of 1971 (12 U.S.C.
2001 et seq.) and Acts amendatory thereto;
(ii) the federal home loan banks and the federal home
loan mortgage corporation;
(iii) the Commodity Credit Corporation; and
(iv) any other agency created by Act of Congress.
The Treasurer may, with the approval of the Governor, lend
any securities acquired under this Act. However, securities may
be lent under this Section only in accordance with Federal
Financial Institution Examination Council guidelines and only
if the securities are collateralized at a level sufficient to
assure the safety of the securities, taking into account market
value fluctuation. The securities may be collateralized by cash
or collateral acceptable under Sections 11 and 11.1.
(Source: P.A. 99-856, eff. 8-19-16; 100-1107, eff. 8-27-18;
revised 9-27-18.)
Section 905. The Student Loan Servicing Rights Act is
amended by changing Section 1-5 as follows:
(110 ILCS 992/1-5)
Sec. 1-5. Definitions. As used in this Act:
"Applicant" means a person applying for a license pursuant
to this Act.
"Borrower" or "student loan borrower" means a person who
has received or agreed to pay a student loan for his or her own
educational expenses.
"Cosigner" means a person who has agreed to share
responsibility for repaying a student loan with a borrower.
"Department" means the Department of Financial and
Professional Regulation.
"Division of Banking" means the Division of Banking of the
Department of Financial and Professional Regulation.
"Federal loan borrower eligible for referral to a repayment
specialist" means a borrower who possesses any of the following
characteristics:
(1) requests information related to options to reduce
or suspend his or her monthly payment;
(2) indicates that he or she is experiencing or
anticipates experiencing financial hardship, distress, or
difficulty making his or her payments;
(3) has missed 2 consecutive monthly payments;
(4) is at least 75 days delinquent;
(5) is enrolled in a discretionary forbearance for more
than 9 of the previous 12 months;
(6) has rehabilitated or consolidated one or more loans
out of default within the past 12 months; or
(7) has not completed a course of study, as reflected
in the servicer's records, or the borrower identifies
himself or herself as not having completed a program of
study.
"Federal education loan" means any loan made, guaranteed,
or insured under Title IV of the federal Higher Education Act
of 1965.
"Income-driven payment plan certification" means the
documentation related to a federal student loan borrower's
income or financial status the borrower must submit to renew an
income-driven repayment plan.
"Income-driven repayment options" includes the
Income-Contingent Repayment Plan, the Income-Based Repayment
Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
Plan, the Revised Pay As You Earn Plan, and any other federal
student loan repayment plan that is calculated based on a
borrower's income.
"Licensee" means a person licensed pursuant to this Act.
"Other repayment plans" means the Standard Repayment Plan,
the Graduated Repayment Plan, the Extended Repayment Plan, or
any other federal student loan repayment plan not based on a
borrower's income.
"Private loan borrower eligible for referral to a repayment
specialist" means a borrower who possesses any of the following
characteristics:
(1) requests information related to options to reduce
or suspend his or her monthly payments; or
(2) indicates that he or she is experiencing or
anticipates experiencing financial hardship, distress, or
difficulty making his or her payments.
"Requester" means any borrower or cosigner that submits a
request for assistance.
"Request for assistance" means all inquiries, complaints,
account disputes, and requests for documentation a servicer
receives from borrowers or cosigners.
"Secretary" means the Secretary of Financial and
Professional Regulation, or his or her designee, including the
Director of the Division of Banking of the Department of
Financial and Professional Regulation.
"Servicing" means: (1) receiving any scheduled periodic
payments from a student loan borrower or cosigner pursuant to
the terms of a student loan; (2) applying the payments of
principal and interest and such other payments with respect to
the amounts received from a student loan borrower or cosigner,
as may be required pursuant to the terms of a student loan; and
(3) performing other administrative services with respect to a
student loan.
"Student loan" or "loan" means any federal education loan
or other loan primarily for use to finance a postsecondary
education and costs of attendance at a postsecondary
institution, including, but not limited to, tuition, fees,
books and supplies, room and board, transportation, and
miscellaneous personal expenses. "Student loan" includes a
loan made to refinance a student loan.
"Student loan" shall not include an extension of credit
under an open-end consumer credit plan, a reverse mortgage
transaction, a residential mortgage transaction, or any other
loan that is secured by real property or a dwelling.
"Student loan" shall not include an extension of credit
made by a postsecondary educational institution to a borrower
if one of the following apply:
(1) The term of the extension of credit is no longer
than the borrower's education program.
(2) The remaining, unpaid principal balance of the
extension of credit is less than $1,500 at the time of the
borrower's graduation or completion of the program.
(3) The borrower fails to graduate or successfully
complete his or her education program and has a balance due
at the time of his or her disenrollment from the
postsecondary institution.
"Student loan servicer" or "servicer" means any person
engaged in the business of servicing student loans. "Student
loan servicer" or "servicer" includes persons or entities
acting on behalf of the State Treasurer.
"Student loan servicer" shall not include:
(1) a bank, savings bank, savings association, or
credit union organized under the laws of the State or any
other state or under the laws of the United States;
(2) a wholly owned subsidiary of any bank, savings
bank, savings association, or credit union organized under
the laws of the State or any other state or under the laws
of the United States;
(3) an operating subsidiary where each owner of the
operating subsidiary is wholly owned by the same bank,
savings bank, savings association, or credit union
organized under the laws of the State or any other state or
under the laws of the United States;
(4) the Illinois Student Assistance Commission and its
agents when the agents are acting on the Illinois Student
Assistance Commission's behalf;
(5) a public postsecondary educational institution or
a private nonprofit postsecondary educational institution
servicing a student loan it extended to the borrower;
(6) a licensed debt management service under the Debt
Management Service Act, except to the extent that the
organization acts as a subcontractor, affiliate, or
service provider for an entity that is otherwise subject to
licensure under this Act;
(7) any collection agency licensed under the
Collection Agency Act that is collecting post-default
debt;
(8) in connection with its responsibilities as a
guaranty agency engaged in default aversion, a State or
nonprofit private institution or organization having an
agreement with the U.S. Secretary of Education under
Section 428(b) of the Higher Education Act (20 U.S.C.
1078(B));
(9) a State institution or a nonprofit private
organization designated by a governmental entity to make or
service student loans, provided in each case that the
institution or organization services fewer than 20,000
student loan accounts of borrowers who reside in Illinois;
or
(10) a law firm or licensed attorney that is collecting
post-default debt; or .
(11) the State Treasurer.
(Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18.)
Section 999. Effective date. This Act takes effect upon
becoming law.
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