The bill is an expansion of the Student Loan Servicers Act in Colorado and would significantly modify student loan collections for licensed servicers in the state. Editor’s note: This article is available for members only.
Colorado State Sens. Faith Winter and Julie Gonzales are sponsoring a bill in the 2021 Legislative Session that would create requirements for student loan servicers and collection agencies working on private student loans.
According to the bill text, the Colorado Student Loan Equity Act would expand the existing Colorado Student Loan Servicers Act, which applies only to persons who service student loans, by adding a section covering private lenders, creditors and collection agencies in connection with those student education loans that are not made, insured or guaranteed under federal law and that are used for postsecondary education.
ACA International continues to seek member input on the bill and is looking to identify members that have creditor clients working in the private student loan space in Colorado. Contact Andrew Madden, ACA’s vice president of state unit and government affairs, at [email protected] for more information and to share your input.
The bill would also:
- Require lenders to grant a release to cosigners if certain conditions are met, including 12 months of consecutive, on-time payments, and to ensure that cosigners have access to all documentation and records related to the loan they have cosigned;
- Expand disability discharge requirements so that a borrower or cosigner may be released from repayment obligations if permanently disabled;
- Prohibit “robo-signing” of documents used in collection lawsuits and require specific evidence of loan origination and chain of ownership of the debt before a loan creditor or collection agency may commence legal proceedings;
- Prohibit auto-defaults, in which a loan is declared immediately due and payable upon the death or bankruptcy of a cosigner even when there has been no default in payments; and
- Provide legal recourse for borrowers who are harmed by predatory acts and practices of a lender, creditor or collection agency. A violation of the new part of the bill is defined as a deceptive trade practice under the
“Colorado Consumer Protection Act.”
ACA continues to monitor about 350 state bills that would impact the accounts receivable management (ARM) industry if enacted, and members can hear updates on state and federal legislation on the weekly ACA Huddle sponsored by Connect International, Solutions by Text and Pay N Seconds.
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