An Act To Establish a Student Loan Bill of Rights To License and Regulate Student Loan Servicers
Sec. 1. 9-A MRSA art. 14 is enacted to read:
STUDENT LOAN BILL OF RIGHTS
§ 14-101. Short title
This Article may be known and cited as "the Student Loan Bill of Rights."
§ 14-102. Applicability
This Article applies to a person who acts as a student loan servicer in this State, except that this Article does not apply to a supervised financial organization or a financial institution holding company as defined in Title 9-B, section 1011, subsection 1, to a mutual holding company as defined in Title 9-B, section 1052, subsection 2 or to a wholly owned subsidiary of a supervised financial organization, financial institution holding company or mutual holding company.
§ 14-103. Definitions
As used in this Article, unless the context otherwise indicates, the following terms have the following meanings.
§ 14-104. Student loan ombudsman
The superintendent shall, using licensing and investigation fees collected pursuant to section 14-107, support, maintain and designate a student loan ombudsman within the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection to provide timely assistance to student loan borrowers.
The student loan ombudsman, in consultation with the superintendent, shall:
§ 14-105. Annual report
The superintendent shall submit a report by January 1st of each year to the joint standing committees of the Legislature having jurisdiction over education and cultural affairs and insurance and financial services matters. The report must include:
§ 14-106. Assistance by exempt organization; report
An exempt organization that is requested by the student loan ombudsman to provide assistance pursuant to section 14-104, subsection 8 shall provide, in a timely manner, the information requested by the ombudsman necessary to investigate and resolve a student loan borrower complaint, including the steps taken by the exempt organization to resolve the complaint, or, on its own, shall resolve, in a timely manner, the complaint and provide the ombudsman with documentation regarding the resolution. Annually, an exempt organization that is involved in the resolution of a complaint pursuant to this section shall report to the ombudsman the number of complaints received and the number of complaints resolved by the exempt organization. For purposes of this section, "exempt organization" means the Finance Authority of Maine and financial institutions exempt from this Article pursuant to section 14-107, subsection 1.
§ 14-107. Licensing of student loan servicers
A person may not act as a student loan servicer, directly or indirectly, without first obtaining a license from the superintendent pursuant to this section, unless that person is exempt from licensure pursuant to subsection 1.
(1) The applicant;
(2) Partners, if the applicant is a partnership;
(3) Members, if the applicant is a limited liability company or association; and
(4) Officers, directors and principal employees, if the applicant is a corporation.
The information submitted pursuant to this paragraph must be sufficient, as determined by the superintendent, to make the findings under subsection 3;
(1) An individual, the individual is in all respects properly qualified and of good character;
(2) A partnership, each partner is in all respects properly qualified and of good character;
(3) A corporation, the president, chair 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 superintendent, each director, each trustee and each shareholder owning 10% or more of each class of the securities of the corporation is in all respects properly qualified and of good character; or
(4) A limited liability company or association, each member is in all respects properly qualified and of good character;
Upon request by the superintendent, a student loan servicer shall make such records available or shall send such records to the superintendent 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 superintendent to do so. The superintendent may grant a licensee additional time to make such records available or to send the records to the superintendent.
An abatement of the license fee may not be made if the license is surrendered, revoked or suspended.
§ 14-108. Student loan servicers
(1) Ask the student loan borrower how the borrower prefers the student loan servicer to apply a nonconforming payment;
(2) Note how the student loan borrower prefers the student loan servicer to apply a nonconforming payment;
(3) Apply the nonconforming payment in the manner preferred by the student loan borrower; and
(4) Until the student loan borrower indicates otherwise, apply any future nonconforming payments in the same manner preferred by the borrower as noted pursuant to subparagraph (2).
(1) As a condition of the sale, assignment or transfer, the student loan servicer shall require the new student loan servicer to honor all benefits originally represented as available to the student loan borrower during the repayment of the student education loan and preserve the availability of such benefits, including any benefits for which the student loan borrower has not yet qualified;
(2) Within 45 days after the sale, assignment or transfer, the student loan servicer shall transfer to the new student loan servicer all information regarding the student loan borrower, the account of the student loan borrower and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower; and
(3) The sale, assignment or transfer of the servicing of the student education loan must be completed at least 7 days before the next payment on the loan is due.
(1) Any actual damages sustained by the borrower as result of the failure;
(2) A monetary award equal to 3 times the total amount the student loan servicer collected from the borrower;
(3) Punitive damages as the court may allow; and
(4) In the case of any successful action by the borrower to enforce the liability set out in this subsection, the costs of the action, together with reasonable attorney's fees as determined by the court.
§ 14-109. Superintendent powers and duties
(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;
(2) 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;
(3) Use, hire, contract for or employ public or privately available analytical systems, methods or software to examine or investigate the licensee or person subject to this Article;
(4) Accept and rely on examination or investigation reports made by other government officials, within or without this State; and
(5) Accept audit reports made by an independent certified public accountant for the licensee or person subject to this Article 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 a report of examination, report of investigation or other writing of the superintendent.
§ 14-110. Compliance with federal law
A student loan servicer shall comply with all applicable federal laws and regulations relating to student education loan servicing, including, but not limited to, the federal Truth in Lending Act, 15 United States Code, Sections 1601 to 1667f (2010), as amended, and the regulations adopted pursuant to that Act. In addition to any other remedies provided by law, a violation of that Act or regulations adopted pursuant to that Act is a violation of this section and a basis upon which the superintendent may take enforcement action pursuant to this Article.
Sec. 2. Effective date. This Act takes effect January 1, 2020.
This bill does the following.
1. It creates a position of student loan ombudsman under the Superintendent of Consumer Credit Protection within the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection. The student loan ombudsman's duties include: receiving, reviewing and, if possible, resolving complaints from student loan borrowers; compiling and analyzing student loan borrower data; assisting student loan borrowers to understand their rights and responsibilities; providing information to the public, agencies and Legislators regarding concerns of student loan borrowers and making recommendations to resolve them; analyzing and monitoring the development and implementation of other legislation and policies that affect student loan borrowers and recommending necessary changes; reviewing student education loan history for borrowers who consent; disseminating information about the ombudsman's availability to assist others; seek the assistance of financial institutions or the Finance Authority of Maine in the resolution of student loan borrower complaints; and other necessary actions.
2. It requires the superintendent to submit an annual report by January 1st of each year in regard to the effectiveness of the student loan ombudsman and to recommend additional steps necessary to gain regulatory control over licensing and enforcement with respect to student loan servicers.
3. It establishes a licensing procedure for student loan servicers, which includes an investigation of an applicant, along with a license fee and an investigation fee and requires the costs of the investigation to be paid by the licensee or person being investigated.
4. It identifies prohibited acts for student loan servicers, including employing any scheme, device or artifice to defraud or mislead student loan borrowers.
5. It identifies duties of the superintendent in regard to investigations and examinations of student loan servicers.
6. It exempts from the student loan servicer requirements imposed by this legislation most financial institutions licensed by the State, including licensed banks and credit unions, supervised financial organizations, Maine financial institutions and mutual holding companies whose home state is Maine and the Finance Authority of Maine. Those exempt organizations are required to work with the student loan ombudsman to resolve student loan borrower complaints and provide information as requested by the ombudsman.
7. It requires student loan servicers to comply with all applicable federal laws and regulations related to student education loan servicing.
8. It requires the superintendent to adopt routine technical rules necessary to carry out the provisions in this bill.