SB 3106

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Full Text of SB3106
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	SB3106 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3106
Introduced 1/29/2026, by Sen. Michael W. Halpin
SYNOPSIS AS INTRODUCED:
110 ILCS 983/5
110 ILCS 983/10
Amends the Know Before You Owe Private Education Loan Act. Provides that the annual report to the Department of Financial and Professional Regulation and the Student Loan Ombudsman shall include the total number and dollar amount (instead of the volume) of private education loans made annually by a private educational lender, the total number and dollar amount (instead of the volume) of private education loans made annually at institutions of higher education, the total number and dollar amount of private education loans made annually with a cosigner, and the default rate for the private education loans reported by the private educational lender pursuant to specified provisions for the previous reporting period. Effective immediately.
LRB104 17947 LNS 31384 b
A BILL FOR
		SB3106		LRB104 17947 LNS 31384 b
1    AN ACT concerning education.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Know Before You Owe Private Education Loan
5Act is amended by changing Sections 5 and 10 as follows:
6    (110 ILCS 983/5)
7    Sec. 5. Definitions. As used in this Act:
8    "Annual percentage rate" means the percentage rate
9calculated according to the Federal Reserve Board's
10methodology as set forth under Regulation Z, 12 CFR Part 1026.
11    "Cosigner" means any individual who is liable for the
12obligation of another without compensation, regardless of how
13the individual is designated in the contract or instrument
14with respect to that obligation, including an obligation under
15a private education loan extended to consolidate a borrower's
16preexisting student loans. The term includes any individual
17whose signature is requested, as a condition, to grant credit
18or to forbear on collection. The term does not include a spouse
19of an individual if the spouse's signature is needed solely to
20perfect the security interest in a loan.
21    "Default amount" means the loan amount of each outstanding 
22loan at the time the loan is declared in default.
23    "Default rate" means the default amount required to be 
		SB3106	- 2 -	LRB104 17947 LNS 31384 b
1reported during a reporting period divided by the loan amount 
2of all outstanding loans required to be reported at the 
3beginning of the reporting period.
4    "Educational expense" means any expense, in whole or in
5part, expressly used to finance postsecondary education,
6regardless of whether the debt incurred by a student to pay
7that expense is owed to the provider of postsecondary
8education whose school, program, or facility the student
9attends.
10    "Income share agreement" means an agreement under which a
11borrower commits to pay a percentage of his or her future
12income in exchange for money, payments, or credits applied to
13or on behalf of a borrower. An income share agreement
14constitutes a loan and debt within the meaning of this Act.
15    "Income share agreement provider" means:
16        (1) a person that provides money, payments, or credits
17    to or on behalf of a borrower pursuant to the terms of an
18    income share agreement; or
19        (2) any other person engaged in the business of
20    soliciting, making, funding, or extending income share
21    agreements.
22    "Institution of higher education" includes, but is not
23limited to, institutions falling under the Private Business
24and Vocational Schools Act of 2012, the Private College Act,
25and public institutions of higher education as defined in
26Section 1 of the Board of Higher Education Act. "Institution
		SB3106	- 3 -	LRB104 17947 LNS 31384 b
1of higher education" also includes a person engaged in the
2business of providing postsecondary education, via
3correspondence, online, or in this State, to a person located
4in this State, regardless of whether the person has obtained
5authorization from the Illinois Board of Higher Education to
6operate in this State or is accredited.
7    "Loan amount" means the total outstanding balance on each 
8loan owed by a borrower to a lender at any given time.
9    "Private educational lender" and "private education loan"
10have the meanings ascribed to the terms in Section 140 of the
11Truth in Lending Act (15 U.S.C. 1650). In addition, "private
12educational lender" includes an income share agreement
13provider and a student financing company and "private
14education loan" includes an income share agreement and student
15financing.
16    "Student financing company" means a person engaged in the
17business of securing, making, or extending student financing.
18"Student financing company" does not include the following
19persons, only to the extent that State regulation is preempted
20by federal law:
21        (1) a federally chartered bank, savings bank, savings
22    and loan association, or credit union;
23        (2) a wholly owned subsidiary of a federally chartered
24    bank or credit union; and
25        (3) an operating subsidiary where each owner of the
26    operating subsidiary is wholly owned by the same federally
		SB3106	- 4 -	LRB104 17947 LNS 31384 b
1    chartered bank or credit union.
2    "Student financing" means an extension of credit that:
3        (1) is not made, insured, or guaranteed under Title IV
4    of the Higher Education Act of 1965 (20 U.S.C. 1070 et
5    seq.);
6        (2) is extended to a consumer expressly, in whole or
7    in part, for postsecondary educational expenses,
8    regardless of whether the extension of credit is provided
9    by the institution of higher education that the student
10    attends;
11        (3) does not include a private education loan;
12        (4) does not include an income share agreement; and
13        (5) does not include a loan that is secured by real
14    property or a dwelling.
15(Source: P.A. 102-583, eff. 8-26-21; 103-748, eff. 8-2-24.)
16    (110 ILCS 983/10)
17    Sec. 10. Institutional certification required.
18    (a) In general. Except as provided in subsection (b) of
19this Section, before a private educational lender may disburse
20any funds with respect to a private education loan described
21in this Act, the private educational lender shall obtain from
22the relevant institution of higher education where such loan
23is to be used on the behalf of the borrower, such institution's
24certification of:
25        (1) the enrollment status of the borrower;
		SB3106	- 5 -	LRB104 17947 LNS 31384 b
1        (2) the borrower's cost of attendance at the
2    institution as determined by the institution under Title
3    IV, Part F, of the Higher Education Act of 1965 as amended;
4    and
5        (3) the difference between:
6            (A) such cost of attendance; and
7            (B) the borrower's estimated financial assistance,
8        including such assistance received under Title IV of
9        the Higher Education Act of 1965 (20 U.S.C. 1070 et
10        seq.) and other financial assistance known to the
11        institution, as applicable.
12    (b) Notwithstanding subsection (a), a private educational
13lender may disburse funds with respect to a private education
14loan described in this subsection without obtaining the
15institution's certification if the institution fails to
16provide the certification within 15 business days of the
17private educational lender's request for the certification if
18the private educational lender has received:
19        (1) notification of the institution's refusal to
20    certify the request; or
21        (2) notification that the institution has received the
22    request for certification and will need additional time to
23    comply with the certification request.
24    (c) Loans disbursed without certification. If a private
25educational lender disburses funds without obtaining the
26certification as described in subsection (b), the private
		SB3106	- 6 -	LRB104 17947 LNS 31384 b
1educational lender shall report the disbursement of the funds
2in a manner determined by the Student Loan Ombudsman.
3    (d) Notification of loans disbursed without certification.
4On or before the date a private educational lender issues any
5funds with respect to a private education loan described in
6this Section, the private educational lender shall notify the
7relevant institution of higher education, in writing, of the
8amount of the extension of credit and the borrower on whose
9behalf credit is extended.
10    (e) Annual report. A private educational lender that
11disburses funds with respect to a private education loan
12described in this Section shall prepare and submit an annual
13report to the Department of Financial and Professional
14Regulation and the Student Loan Ombudsman containing the
15required information about private education loans to be
16determined by the Student Loan Ombudsman. Such a report shall
17include, at a minimum, the following information about private
18education loans described in this Section, including any
19private education loans disbursed without certification:
20        (1) [(A)] a list of all institutions of higher education
21    at which a private educational lender disburses funds with
22    respect to a private education loan described in this
23    Section;
24        (2) [(B)] the total number and dollar amount [volume] of
25    private education loans described in this Section made
26    annually by a private educational lender;
		SB3106	- 7 -	LRB104 17947 LNS 31384 b
1        (3) [(C)] the total number and dollar amount [volume] of
2    private education loans described in this Section made
3    annually at each school identified under paragraph (1)
4    [(A)];
5        (4) the total number and dollar amount of private 
6    education loans made annually with a cosigner;
7        (5) [(D)] the historical lifetime default rate for
8    borrowers obtaining a private education loan described in
9    this Section from the private educational lender; [and]
10        (6) the default rate for the private education loans 
11    reported by the private educational lender pursuant to 
12    paragraph (3) for the previous reporting period under this 
13    Act;
14        (7) the default rate for the private education loans 
15    reported by the private educational lender pursuant to 
16    paragraph (4) for the previous reporting period under this 
17    Act; and
18        (8) [(E)] a copy of each model or template promissory
19    note, agreement, contract or other instrument used by a
20    private educational lender during the previous year to
21    substantiate that a private education loan described in
22    this Section has been extended to the borrower or that a
23    borrower owes a debt to the private educational lender.
24        (f) Annual report exemption. A private educational
25    lender that funds 10 or fewer new private education loans
26    in a calendar year shall be exempt from submitting the
		SB3106	- 8 -	LRB104 17947 LNS 31384 b
1    annual report for that year. Any lender claiming this
2    exemption shall submit a statement to the Department of
3    Financial and Professional Regulation and the Student Loan
4    Ombudsman certifying the number of private education loans
5    made in that calendar year.
6(Source: P.A. 102-583, eff. 8-26-21.)
7    Section 99. Effective date. This Act takes effect upon
8becoming law.