Vote Smart's Synopsis:

Vote to pass a bill that establishes a student loan bill of rights.

Highlights:

• Prohibits a person from engaging in abusive acts or practices when servicing a student loan in this state, including engaging in unfair or deceptive practices toward a borrower or misrepresenting or omitting material information in connection with the servicing of a student loan (Sec. 2).

• Prohibits student loan servicers from (Sec. 2):

• Directly or indirectly employing a scheme, device, or artifice to defraud or mislead a borrower;

• Misapplying payments made by a borrower to the outstanding balance of a student loan;

• Failing to accurately report each borrower’s payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, upon acceptance as a data furnisher by that consumer reporting agency, if the student loan servicer is required to or voluntarily reports to a consumer reporting agency;

• Refusing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower;

• Negligently or intentionally making a false statement or knowingly and willfully omitting a material fact connected to information or reports filed with the department or another governmental agency; and

• Engaging in unfair or deceptive practices toward military borrowers, public servant borrowers, older borrowers or cosigners, and disabled borrowers, or misrepresenting or omitting material information connected to the servicing of student loans owed by military borrowers, public servant borrowers, older borrowers or cosigners, and disabled borrowers.

• Requires student loan servicers to (Sec. 2):

• Post, process, and credit student loan payments in a timely manner;

• Comply with a direction provided by a borrower as to how to allocate an overpayment to a student loan account, a partial payment to a student loan, except as provided in federal law or required by a student loan agreement;

• Determine a fee on a borrower for past due student payments in a way that is reasonable and proportional to the total costs incurred as a result of the late payment by the borrower, and do not exceed 6 percent of any amount past due;

• Oversee its service providers in a diligent manner;

• Process its paperwork in a timely manner that is consistent with existing federal requirements;

• Maintain accurate records about a borrower’s account and retain these records for the life of a student loan unless otherwise prohibited by law;

• Treat a qualified request as if it were a qualified written request;

• Maintain policies and procedures allowing a dissatisfied borrower to escalate the borrower’s concern to a supervisor;

• Protect borrowers from any negative consequences that are directly related to the issue identified in a borrower’s qualified request or qualified written request until the resolution of the request;

• Refrain from furnishing information to a consumer reporting agency regarding a payment that is the subject of a qualified request or a qualified written request, for 60 days;

• Protect borrowers from any negative consequences coming from a sale, assignment, transfer, system conversion, or payment made by the borrower to the original student loan servicer consistent with the original student loan servicer’s policy;

• If the servicer is taking over an old student loan servicer, notify the borrower in writing at least 15 days before the borrower is required to send a payment on the student loan;

• Make sure all necessary information concerning the borrower, the borrower’s account, and the borrower’s student loan, accompanies a loan when it transfers to a new student loan servicer within 45 calendar days of the effective date of the sale, assignment, or transfer;

• Give specialized training to customer service personnel who advises military borrowers, public servant borrowers, older borrowers and cosigners, and disabled borrowers, about student loan repayment benefits and protections;

• Respond within 15 calendar days to communications from the Student Borrower Advocate, or within a shorter reasonable time if requested by the Student Borrower Advocate; and

• Respond to qualified written requests by acknowledging receipt of the request within 10 business days, and provide information relating to the request within 30 business days.

• Requires the commissioner to designate a Student Borrower Advocate within the department to provide timely assistance to any student loan borrower, no later than 180 days after the operative date of this act (Sec. 2).

• Defines “person” as an individual, a corporation, a partnership, a limited liability company, an association, a trust, an unincorporated organization, a government, or a political subdivision of a government, and any other entity (Sec. 2).

• Defines “qualified request” as any inbound telephone call, the subject of which cannot be resolved in a single phone call, made by a borrower to a student loan servicer in which either the borrower requests specific information from the student loan servicer or reports what the borrower believes to be an error regarding the borrower’s account (Sec. 2).

• Defines “servicing” as any of the following activities related to a student loan of a borrower (Sec. 2):

• Performing both of the following:

• Receiving any scheduled periodic payments from a borrower or any notification that a borrower made a scheduled periodic payment; and

• Applying payments to the borrower’s account pursuant to the terms of the student loan or the contract governing the servicing;

• During a period when no payment is required on a student loan, performing both of the following:

• Maintaining account records for the student loan; and

• Communicating with the borrower regarding the student loan on behalf of the owner of the student loan promissory note; and

• Interacting with a borrower related to that borrower’s student loan, with the goal of helping the borrower avoid default on their student loan or facilitating the activities described in the previous sub-highlights.

Full Bill Text