ASSEMBLY HIGHER EDUCATION COMMITTEE
STATEMENT TO
SENATE, No. 1149
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 6, 2019
The Assembly Higher Education Committee reports favorably Senate Bill No. 1149 with committee amendments.
As amended, this bill directs the Commissioner of Banking and Insurance to designate a Student Loan Ombudsman within the Department of Banking and Insurance. The bill also provides for the regulation of student loan servicers.
Under the bill, the ombudsman will, at a minimum:
(1) receive, review, and attempt to resolve any complaints from student loan borrowers;
(2) compile and analyze data on student loan borrower complaints;
(3) assist student loan borrowers to understand their rights and responsibilities;
(4) provide information and make recommendations to the public, agencies, legislators, and others regarding the problems and concerns of student loan borrowers;
(5) analyze and monitor the development and implementation of federal, State, and local laws, regulations, and policies relating to student loan borrowers;
(6) review the complete student education loan history for any student loan borrower who has provided written consent for review; and
(7) disseminate information concerning the availability of the Student Loan Ombudsman to assist student loan borrowers and potential student loan borrowers.
No later than October 1, 2020, the commissioner is required to ensure the ombudsman and the Higher Education Student Assistance Authority establish and maintain a student loan borrower education course that will include educational presentations and materials regarding student education loans.
Under the bill, student loan servicers are required to obtain a license from the commissioner before directly or indirectly acting as a student loan servicer. State or federally chartered banks, savings banks, savings and loan associations, and credit unions are exempt from the licensure requirement. Any person seeking to act within the State as a student loan servicer must make a written application to the commissioner utilizing the Nationwide Mortgage Licensing System and Registry accompanied by:
(1) a financial statement prepared by a certified public accountant or a public accountant;
(2) the history of criminal convictions of the applicant or certain other individuals in the case of certain business entities; and
(3) licensure and investigation fees and a fee to be paid to the Nationwide Mortgage Licensing System and Registry.
Upon the filing of an application for an initial license and the payment of the fees for license and investigation, the commissioner will investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The bill provides that licenses expire at the close of business on December 31 of the year of issuance, unless renewed or earlier surrendered, suspended or revoked. The bill establishes procedures for license renewal and surrender.
The bill provides that the commissioner will automatically issue a limited, irrevocable license to any person servicing a student loan under a contract with the United States Department of Education. That person will be exempt from the required application procedures, other than the payment of the required licensure fee and investigation fee, to the extent the person is servicing federal loans. That person will be considered to have met all of the requirements established under the bill in regard to financial condition and responsibility and general fitness as established under the bill for the servicing of federal loans.
The bill requires student loan servicers, and certain other entities exempt from the other requirements of the bill, to maintain student loan records for at least two years following final payment or assignment of the loan. The records are to be provided to the commissioner for inspection upon request.
The bill grants the commissioner the authority to conduct certain investigations and examinations for purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance, in which the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence.
The bill establishes certain actions that a student loan servicer must take upon an inquiry from a student loan borrower in regard to acknowledging and responding to the inquiry. The bill also establishes required procedures to be followed by a student loan servicer in the event of an overpayment on a student loan, or in the event of the sale, assignment, or transfer of a student education loan.
The bill also provides that any person who violates any of the bill’s provision will be liable, in a civil action brought by the commissioner in a court of competent jurisdiction, for a penalty of not more than $10,000 for the first violation and $20,000 for the second and each subsequent violation. In addition, a student loan borrower who suffers any loss of moneys as a result of the use by a student loan servicer of any method, act, or practice declared unlawful under the bill may bring an action in a court of competent jurisdiction. In addition to any other appropriate legal or equitable relief, the court will award the student loan borrower threefold the damages sustained by the borrower, and will also award the borrower reasonable attorneys’ fees, filing fees, and reasonable costs of suit.
The bill requires a student loan servicer licensee to annually file a report with the commissioner providing information on the business conducted as a licensee during the preceding calendar year. A student loan servicer licensee must also submit to the Nationwide Mortgage Licensing System and Registry a student loan servicer call report of condition, in the form and manner, and with any information, at any time as may be required by that entity.
As amended and reported by the committee, this bill is identical to Assembly Bill No. 455, which also was amended and reported by the committee on this same date.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
· direct the Commissioner of Banking and Insurance to designate a Student Loan Ombudsman within the Department of Banking and Insurance. In its original form, the bill created the Office of the Student Loan Ombudsman in the Department of Banking and Insurance and provided for the appointment of the ombudsman by the Governor;
· specify that the ombudsman will receive and review complaints from student loan borrowers and provide that complaints in regard to student loan servicers will be referred to the commissioner;
· provide that an application made to the commissioner for an initial license as a student loan servicer will utilize the Nationwide Mortgage Licensing System and Registry;
· provide that a license will expire at the close of business on December 31 of the year of its issuance, rather than September 30 of the odd-numbered year following its issuance;
· provide that the commissioner will automatically issue a limited, irrevocable license to any person servicing a student loan under a contract with the United States Department of Education;
· require a student loan servicer to keep on file with the commissioner a minimum surety bond of $30,000. The commissioner will determine by regulation who will be eligible to receive protection afforded by the bond and may increase the required bond amount;
· grant the commissioner the authority to conduct certain investigations and examinations for purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance, in which the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence;
· establish procedures to be followed by a student loan servicer upon receipt of an inquiry from a student loan borrower, upon receipt of an overpayment on a student education loan, and in the event of the sale, assignment or other transfer of the servicing of a student education loan that results in a change in the identity of the person to whom payment is made;
· provide that any person who violates any provision of the bill will be liable, in a civil action brought by the commissioner in a court of competent jurisdiction, for a penalty of not more than $10,000 for the first violation and $20,000 for the second and each subsequent violation;
· provide that a student loan borrower who suffers any loss of moneys as a result of the use by a student loan servicer of any method, act, or practice declared unlawful under the bill may bring an action in a court of competent jurisdiction. The court may award threefold the damages sustained by the borrower and will also award fees and filing costs;
· require a student loan servicer licensee to annually file a report with the commissioner providing information on the business conducted as a licensee during the preceding calendar year. The student loan servicer must submit to the Nationwide Mortgage Licensing System and Registry a student loan service call report; and
· provide for an annual assessment on student loan servicers sufficient to cover the annual cost of the bill’s implementation.