D.C. Enacts Student Loan Servicer Licensing Requirement
5/5/2017 12:12 PM
The District of Columbia’s new law will require student loan servicers to obtain a license to offer this service.
The District of Columbia (Washington, D.C.) has enacted the “Student Loan Ombudsman Establishment and Servicing Regulation Act of 2016.”
Under the new act (D.C. Act 21-571), student loan servicers located within or outside the District that are responsible for servicing student education loans from Washington, D.C. residents must be licensed as a student loan servicer.
The law became effective Feb. 18, 2017. The act directs the Commissioner of the Department of Insurance and Securities Regulation to issue rules to implement the law’s ombudsman and licensing provisions within 180 days of the Feb. 18 effective date (by Aug. 17, 2017). “Student loan servicing” is broadly defined in the act as “the process of collecting payments and interest and performing other administrative tasks associated with maintaining a student education loan.”
The term “student loan servicing” includes:
(A) Receiving any scheduled periodic payments from a student loan borrower or notification of payments;
(B) Applying payments to the student loan borrower's account pursuant to the terms of the student education loan or contract governing the servicing;
(C) Maintaining account records for the student education loan during a period when no payment is required on the loan; and
(D) Communicating with the student loan borrower regarding the student education loan; and having other interactions to assist a student loan borrower, including activities to help prevent default on obligations arising from a student education loan.
“Student education loan” means a loan obtained for personal use to finance education or other school-related expenses “Student loan borrower” means a resident of Washington, D.C. who has received or agreed to pay a student education loan, or a person who shares legal responsibility with such a resident for the repayment of a student education loan.
Servicers of student loans as described above should take the necessary steps to obtain the license once the commissioner has implemented the requirements. Debt collectors that are unsure of whether the requirements apply to their specific collection activities should review the law and consult with an attorney or the D.C. Department of Insurance and Securities Regulation. For more information, members can review the text of the bill here.
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