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State legislators clamp down on student loan defaulters

Illinois Rep. Jim DurkR-Western Springs. (AP File Photo/Seth Perlman)

Illinois Rep. Jim Durkin, R-Western Springs. (AP File Photo/Seth Perlman)

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Updated: July 3, 2012 11:25AM

SPRINGFIELD-The Illinois House voted Saturday to arm a state agency with new powers to garnishee wages for student loan defaulters despite worries the move will drive more Illinoisans into bankruptcy or foreclosure.

By a 63-44 vote, the House sent Gov. Pat Quinn a measure sponsored by Rep. Jim Durkin (R-Western Springs) and sought by the Illinois Student Assistance Commission that would target debtors who are behind in student loan repayments.

“At the end of the day, if we don’t allow ISAC to collect this money, they’ll go out of the business of providing student loans in the future,” Durkin said.

The agency is now permitted under federal law to garnishee wages for those who default on federal loans. But the Illinois Student Assistance Commission lacks authority to do the same for state-backed student loans.

Those state loans typically are issued by the agency to students who have maxed out on federal loans for the year or during their lifetime, and a majority of that lending involves students at the University of Chicago.

Now, about $30 million in state-backed loans are delinquent more than 90 days. While garnisheeing isn’t an option, the agency can sue in a bid to get those unpaid loans dealt with, but it has not done so.

Critics of Durkin’s legislation complained that it would grant the state agency extraordinary powers to “go to the front of the line” ahead of other creditors in the event of default.

Others argued it would carry a profound impact on Illinoisans who have student debt and low-paying jobs or no jobs at all and are struggling to get by in a bad economy.

“Right now, there’s record student debt. It’s the next bubble,” said Rep. Jack Franks (D-Marengo), who voted against the measure. “What this will do is kick people when they’re down. It’ll force more bankruptcies. It’ll spike foreclosures. It’ll hurt our economy.”

But supporters belittled those concerns.

“This is breathtaking here,” said Rep. Dennis Reboletti (R-Elmhurst), who voted for the bill. “‘Oh, I’ve got my student loans and my degree but I can’t pay, so too bad. So I’ll ask Reboletti’s constituents to pay for it.’ This sense of entitlement that exists has to stop. Go pay your debts off.”

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