Illinois House Bill 2850, introduced on March 7, 2025, aims to amend the Student Loan Servicing Rights Act by establishing regulations for educational income share agreements (ISAs). This legislation seeks to address the growing concerns surrounding the affordability and transparency of ISAs, which are alternative financing options for students that allow them to pay for education in exchange for a percentage of their future income.

Key provisions of the bill include setting maximum annual percentage rates, limiting the duration of income share agreements, and establishing guidelines for monthly payment affordability. Additionally, the bill proposes restrictions on security interests, prohibits cosigners, and limits wage assignments and garnishments. It also mandates clear disclosures to borrowers and allows for the early completion of agreements without penalties.

The bill has sparked discussions among lawmakers, particularly regarding its potential impact on student borrowers and the financial industry. Supporters argue that it will provide much-needed protections for students, ensuring that ISAs are fair and manageable. However, some critics express concerns about the feasibility of enforcing these regulations and the potential unintended consequences for educational financing.

The Attorney General will have the authority to enforce violations of the new provisions as unlawful practices under the Consumer Fraud and Deceptive Business Practices Act, which adds a layer of accountability for lenders. This aspect of the bill has been highlighted as a significant step towards consumer protection in the realm of educational financing.

As the bill progresses through the legislative process, its implications could reshape how educational financing is approached in Illinois, potentially influencing similar legislation in other states. The next steps will involve further committee reviews and discussions, as lawmakers weigh the benefits and challenges of implementing these new regulations.