Revision: Dec. 3, 2019, 10:34 a.m.
HB 1500-FN - AS INTRODUCED
2020 SESSION
20-2682
11/06
HOUSE BILL 1500-FN
AN ACT relative to a student loan bill of rights and a student loan ombudsman.
SPONSORS: Rep. Griffith, Hills. 18; Rep. Thompson, Ches. 14; Rep. Cornell, Hills. 18; Rep. Fox, Merr. 23
COMMITTEE: Commerce and Consumer Affairs
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ANALYSIS
This bill requires the commissioner of the banking department to designate a student loan ombudsman within the department. This bill also establishes a student loan servicer license.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
20-2682
11/06
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty
AN ACT relative to a student loan bill of rights and a student loan ombudsman.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Student Loan Ombudsman. Amend RSA 383 by inserting after section 25 the following new subdivision:
Student Loan Ombudsman
383:26 Student Loan Ombudsman.
I. The commissioner shall designate a student loan ombudsman within the department to provide timely assistance to any student loan borrower, as defined in RSA 383-F:1, I, on any student education loan, as defined in RSA 383-F:1, II.
II. The student loan ombudsman, in consultation with the commissioner, shall:
(a) Receive, review, and attempt to resolve any complaints from student loan borrowers including, but not limited to, attempts to resolve such complaints in collaboration with institutions of higher education, student loan servicers, as defined in RSA 383-F:1, IV, and any other participants in student loan lending.
(b) Compile and analyze data on student loan borrower complaints.
(c) Assist student loan borrowers to understand their rights and responsibilities under the terms of student education loans.
(d) Provide information to the public, agencies, legislators, and others regarding the problems and concerns of student loan borrowers, as defined in RSA 383-F:1, III and make recommendations for resolving those problems and concerns.
(e) Analyze and monitor the development and implementation of federal, state, and local laws, regulations, and policies relating to student loan borrowers and recommend any changes deemed necessary.
(f) Review the complete student education loan history for any student loan borrower who has provided written consent for such review.
(g) Disseminate information concerning the availability of the student loan ombudsman to assist student loan borrowers and potential student loan borrowers, as well as public institutions of higher education, student loan servicers, and any other participant in student education loan lending with any student loan servicing concerns.
(h) Take any other actions necessary to fulfill the duties of the student loan ombudsman as set forth in this section.
III. On or before October 1, 2020, the student loan ombudsman, in consultation with the commissioner, shall establish and maintain a student loan borrower education course that shall include educational presentations and materials regarding student education loans. Such program shall include, but not be limited to, key loan terms, documentation requirements, monthly payment obligations, income-based repayment options, loan forgiveness, and disclosure requirements.
IV. On or before January 1, 2021, and annually thereafter, the commissioner shall submit a report to the standing committees of the general court having authority over matters relating to banking and higher education. The commissioner shall report on the implementation of this section; the overall effectiveness of the student loan ombudsman position; and additional steps that need to be taken for the department to gain regulatory control over the licensing and enforcement of student loan servicers.
V. The department shall allocate funds from the total annual licensing fees from all nondepository financial institutions sufficient for the creation and implementation of this section.
2 New Chapter; Student Loan Servicers. Amend RSA by inserting after chapter 383-E the following new chapter:
CHAPTER 383-F
STUDENT LOAN SERVICERS
383-F:1 Definitions. As used in this chapter the following terms shall have the following meanings:
I. "Servicing" means receiving any scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan, applying the payments of principal and interest and such other payments with respect to the amounts received from a student loan borrower, as may be required pursuant to the terms of a student education loan, and performing other administrative services with respect to a student education loan.
II. "Student education loan" means any loan primarily for personal use to finance education or other school-related expenses.
III. "Student loan borrower" means any resident of this state who has received or agreed to pay a student education loan; or any person who shares responsibility with such resident for repaying the student education loan.
IV. "Student loan servicer" means any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower.
383-F:2 Student Loan Servicer License Required.
I. No person shall act as a student loan servicer, directly or indirectly, without first obtaining a license from the commissioner pursuant to RSA 383-F:3, unless such person is exempt from licensure pursuant to paragraph II.
II. The licensure requirements of this chapter shall not apply to any bank, out-of-state bank, credit union, federal credit union, or out-of-state credit union, or any wholly owned subsidiary of any such bank or credit union, or any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.
383-F:3 Student Loan Servicers; Application; License.
I. Any person seeking to act within this state as a student loan servicer shall make a written application to the commissioner for an initial license in such form as the commissioner prescribes. Such application shall be accompanied by the following:
(a) A financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner, or a corporate officer or a member duly authorized to execute such documents.
(b) The history of criminal convictions of the applicant; partners, if the applicant is a partnership; members, if the applicant is a limited liability company or association; or officers, directors, and principal employees, if the applicant is a corporation, as well as sufficient information pertaining to the history of criminal convictions of such applicant, partners, members, officers, directors or principal employees as the commissioner deems necessary to make the findings under paragraph II.
(c) A nonrefundable license fee of $1,000 dollars.
(d) A nonrefundable investigation fee of $800 dollars.
II. Upon the filing of an application for an initial license and the payment of the fees for license and investigation, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner may issue a license if the commissioner finds that:
(a) The applicant's financial condition is sound.
(b) The applicant's business will be conducted honestly, fairly, equitably, carefully, and efficiently within the purposes and intent of this chapter and in a manner commanding the confidence and trust of the community.
(c) If the applicant is an individual, such individual is in all respects properly qualified and of good character.
(d) If the applicant is a partnership, each partner is in all respects properly qualified and of good character.
(e) If the applicant is a corporation or association, the president, chairperson of the executive committee, senior officer responsible for the corporation's business and chief financial officer or any other person who performs similar functions as determined by the commissioner, each director, each trustee and each shareholder owning 10 percent or more of each class of the securities of such corporation is in all respects properly qualified and of good character.
(f) If the applicant is a limited liability company, each member is in all respects properly qualified and of good character.
(g) No person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to this chapter.
(h) No person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner.
(i) The applicant has paid the investigation fee and the license fee required pursuant to paragraph I.
(j) The applicant has met any other similar requirements as determined by the commissioner.
III. A license issued pursuant to this section shall expire at the close of business on September 30 of the odd-numbered year following its issuance, unless renewed or earlier surrendered, suspended, or revoked. Not later than 15 days after a licensee ceases to engage in the business of student loan servicing in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy, or voluntary dissolution, such licensee shall provide written notice of surrender to the commissioner and shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business. The written notice of surrender shall identify the location where the records of the licensee will be stored and the name, address, and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution, or exercise any other authority provided to the commissioner.
IV. A license may be renewed for the ensuing 24 month period upon the filing of an application containing all required documents and fees as provided in paragraph II. Such renewal application shall be filed on or before September 1 of the year in which the license expires. Any renewal application filed with the commissioner after September 1 shall be accompanied by a $100 late fee. If an application for a renewal license has been filed with the commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license on any ground on which the commissioner might refuse to issue an initial license.
V. If the commissioner determines that a check filed with the commissioner to pay a license or renewal fee has been dishonored, the commissioner shall automatically suspend the license or the renewal license that has been issued but is not yet effective.
VI. The applicant or licensee shall notify the commissioner, in writing, of any change in the information provided in its initial application for a license or its most recent renewal application for such license, as applicable, not later than 10 business days after the occurrence of the event that results in such information becoming inaccurate.
VII. The commissioner may deem an application for a license abandoned if the applicant fails to respond to any request for additional information. The commissioner shall notify the applicant, in writing, that if the applicant fails to submit such information not later than 60 days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this paragraph shall not be refunded. Abandonment of an application pursuant to this paragraph shall not preclude the applicant from submitting a new application for a license.
383-F:4 Student Loan Servicers; Change of Information. No person licensed to act within this state as a student loan servicer shall do so under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon application. A license shall not be transferable or assignable.
383-F:5 Recordkeeping.
I. Each student loan servicer licensee shall maintain adequate records of each student education loan transaction for not less than 2 years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by the commissioner or any other provision of law.
II. If requested by the commissioner, each student loan servicer shall make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than 5 business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send the records to the commissioner.
383-F:6 Prohibitions. No student loan servicer shall:
I. Directly or indirectly employ any scheme, device, or artifice to defraud or mislead student loan borrowers.
II. Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student loan, including, but not limited to, misrepresenting the amount, nature, or terms of any fee or payment due or claimed to be due on a student loan, the terms and conditions of the loan agreement, or the borrower's obligations under the loan.
III. Obtain property by fraud or misrepresentation.
IV. Knowingly misapply or recklessly apply student loan payments to the outstanding balance of a student loan.
V. Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a borrower's creditworthiness.
VI. Fail to report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the loan servicer regularly reports information to a credit bureau.
VII. Refuse to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided the loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower.
VIII. Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the commissioner or another governmental agency.
383-F:7 Investigations. The commissioner may conduct investigations and examinations as follows:
I. For purposes of initial licensing, license renewal, license suspension, license revocation, or termination, the commissioner may access, receive, and use any books, accounts, records, files, documents, information, or evidence including, but not limited to, criminal, civil, and administrative history information; personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in the Fair Credit Reporting Act, 15 U.S.C. section 1681a; and any other documents, information, or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence.
II. For the purposes of investigating violations or complaints arising under this chapter or for the purposes of examination, the commissioner may review, investigate, or examine any student loan servicer licensee as often as necessary in order to carry out the purposes of this chapter. The commissioner may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the student education loan or the business or subject matter of any such examination or investigation, and may direct, subpoena, or order such person to produce books, accounts, records, files, and any other documents the commissioner deems relevant to the inquiry.
III. In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the student loan servicer licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the student loan servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this chapter, the student loan servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
IV. In order to carry out the purposes of this section, the commissioner may:
(a) Retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations.
(b) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this section.
(c) Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the student loan servicer licensee or person subject to this chapter.
(d) Accept and rely on examination or investigation reports made by other government officials, within or without this state.
(e) Accept audit reports made by an independent certified public accountant for the student loan servicer licensee or person subject to this chapter in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation, or other writing of the commissioner.
V. No student loan servicer licensee or person subject to investigation or examination under this section shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records or other information.
383-F:8 Suspension, Revocation, and Denial. The commissioner may suspend, revoke, or refuse to renew any license issued under this chapter if the commissioner finds that:
I. The licensee has violated any provision of this chapter or any rule or order lawfully made pursuant to this chapter.
II. Any fact or condition exists which, if it had existed at the time of the original application for the license, would have warranted a denial of such license. No abatement of the license fee shall be made if the license is surrendered, revoked, or suspended prior to the expiration of the period for which it was issued.
383-F:9 Compliance with Federal Law. A student loan servicer shall comply with all applicable federal laws and regulations relating to student loan servicing, including, but not limited to, the Truth-in-Lending Act, 15 U.S.C. section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this chapter and a basis upon which the commissioner may take enforcement action under this chapter.
383-F:10 Rulemaking. The commissioner shall adopt rules pursuant to RSA 541-A to implement the provisions of this chapter.
3 Effective Date. This act shall take effect 60 days after its passage.
20-2682
11/15/19
HB 1500-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to a student loan bill of rights and a student loan ombudsman.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | $0 | $86,000+ | $90,000+ | $96,000+ |
Funding Source: | [ ] General [ ] Education [ ] Highway [ X ] Other - Assessment of licensed and chartered entities | |||
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METHODOLOGY:
This bill requires the Commissioner of the Banking Department to designate a student loan ombudsman within the Department and establishes a student loan servicer license. The Banking Department assumes the Student Loan Ombudsman will be a full time position. The Department does not have statutory authority to contract with an outside party to provide these services. The Department states it would need to create a new Student Loan Ombudsman position at labor grade 25 consistent with the State job classification system. The Department provided the following cost estimate for the new position:
Student Loan Ombudsman | FY 2021 | FY 2022 | FY 2023 |
Salary , Labor Grade 25 | $47,132 | $53,010 | $55,377 |
Benefits | $28,473 | $30,658 | $32,207 |
Other Expenses: Equipment, Office Space, General Supplies etc. | $10,226 | $5,800 | $8,000 |
Total Cost | $85,831 | $89,468 | $95,584 |
The Banking Department is self-funded. The Department's costs and expenses, including personnel, are paid by fees, fines, and assessments of licensed and chartered entities.
Regarding establishment of the student loan servicer license, any fiscal impact on the Department's revenue and expenditures is indeterminable at this time because the number of possible licenses is not known.
AGENCIES CONTACTED:
Banking Department