Student Loan Servicer Rules Proposed in New York

Proposal based on legislation enacted this year includes requirements on disclosures of loan repayment options, consumer reporting, and more.

8/14/2019 11:00 AM

Student Loan Servicer Rules Proposed in New York

Proposed regulations to license student loan servicers, implement servicing standards and restrict certain practices are available for comment to The New York Department of Financial Services (NYDFS.)

The proposed regulations stem from state legislation in New York passed in April 2019, reports Ballard Spahr LLP Partner John L. Culhane Jr.

Under the proposal, “every person engaged in the business of servicing student loans owed” would be subject to the licensing requirement.

According to Culhane’s report, proposed student loan servicing standards include:

  • “Rules for crediting payments and applying ‘nonconforming payments,’ which are defined as ‘an overpayment or a partial payment;’”
  • “Requirements regarding consumer reporting and transfers of servicing;”
  • “Required disclosures of loan repayment options and loan forgiveness benefits;”
  • “Making specified account information available free of charge on the servicer’s website;”
  • “For servicers of private student loan, a required disclosure regarding the availability and criteria for a cosigner release” and;
  • “Rules for providing customer service and handling consumer complaints and inquiries.”

The comment period on the proposal is open through Sept. 29, 2019.

 ACA International members may also find helpful compliance tips through the online ACA SearchPoint® library, including the Student Loans tab. Members must be logged in to the ACA website to access the library.

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