New Act Provides Students Debt Protections while Imposing New Requirements on Postsecondary Institutions

On May 27, 2022, Governor Pritzker signed the Student Debt Assistance Act (the “Act”) into law as Public Act 102-0998. The Act, which took effect immediately, prohibits all public and private institutions of higher education from conditioning the release of a student’s unofficial or official transcript on the payment of “debt” owed to the institution.

For purposes of the Act, “debt” is defined broadly to include “any money, obligation, claim, or sum due or owing or alleged to be due or owing from a student to an institution of higher education.” Only the nonpayment of fees charged for the actual cost of providing an unofficial or official transcript may be considered when refusing to release a transcript. Importantly, the protections afforded students requesting an unofficial transcript from those that request an official transcript for employment are similar and should be given substantially similar treatment.

With respect to unofficial transcripts, an institution of higher education may not:

• Refuse to provide an unofficial transcript to a current or former student on the grounds that the student owes a debt;
• Condition the provision of an unofficial transcript on the payment of a debt, other than the actual cost of providing the transcript; or
• Charge a higher fee for obtaining an unofficial transcript or provide less favorable treatment of a request for an unofficial transcript because a current or former student owes a debt.

Similarly, with respect to official transcripts requested for employment, an institution of higher education may not:

• Refuse to provide an official transcript of a current or former student to a current or potential employer because the student owes a debt to the institution;
• Condition the provision of an official transcript to a current or potential employer on the payment of a debt, other than the actual cost of providing the transcript; or
• Charge a higher fee for transferring an official transcript to a current or potential employer, or otherwise provide less favorable treatment a request for such transfer, because the current or former student owes a debt.

Moreover, the Act requires that every institution of higher education adopt a policy establishing a financial or physical hardship withdrawal process for students by the upcoming academic year to limit the financial detriment to students who have taken out student debt but whose circumstances require them to withdraw before attaining a degree. Under the Act, such circumstances include:

• Serious injury or illness;
• Chronic illness;
• A medical issue of a family member, the result of which the student becomes a part-time or full-time caretaker of that family member;
• A mental health condition;
• A sudden or consistent lack of transportation; or
• A significant cost of living increase.

The hardship withdrawal policy must also address how the institution of higher education intends to assist students in reenrolling when circumstances allow. To ensure transparency, the policy will need to be both publicized on an institution’s website and provided to students during student orientation.

Finally, the Act prohibits an institution of higher education that refers amounts owed by a student to a debt collection agency from reporting the debt to credit reporting agencies, unless allowed by federal law.

For any questions relating to Public Act 102-0998 or other legislation, please contact your Robbins Schwartz attorneys.