Full Text of SB1351 100th General Assembly
SB1351sam001 100TH GENERAL ASSEMBLY | Sen. Daniel Biss Filed: 3/10/2017
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| 1 | | AMENDMENT TO SENATE BILL 1351
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 1351 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Article 1. General Provisions | 5 | | Section 1-1. Short title. This Act may be cited as the | 6 | | Student Loan Servicing Rights Act. | 7 | | Section 1-5. Definitions. As used in this Act: | 8 | | "Applicant" means a person applying for a license pursuant | 9 | | to this Act. | 10 | | "Borrower" or "student loan borrower" means a person who | 11 | | has received or agreed to pay a student loan for his or her own | 12 | | educational expenses. | 13 | | "Cosigner" means a person who has agreed to share | 14 | | responsibility for repaying a student loan with a borrower. | 15 | | "Federal loan borrower eligible for referral to a repayment |
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| 1 | | specialist" means a borrower who possesses any of the following | 2 | | characteristics: | 3 | | (1) requests information related to options to reduce | 4 | | or suspend his or her monthly payment; | 5 | | (2) indicates that he or she is experiencing or | 6 | | anticipates experiencing financial hardship, distress, or | 7 | | difficulty making his or her payments; | 8 | | (3) has missed 2 consecutive monthly payments; | 9 | | (4) is at least 75 days delinquent; | 10 | | (5) is enrolled in a discretionary forbearance for more | 11 | | than 9 of the previous 12 months; | 12 | | (6) has rehabilitated or consolidated one or more loans | 13 | | out of default within the past 12 months; or | 14 | | (7) has not completed a course of study, as reflected | 15 | | in the servicer's records, or the borrower identifies | 16 | | himself or herself as not having completed a program of | 17 | | study. | 18 | | "Federal education loan" means any loan made, guaranteed, | 19 | | or insured under Title IV of the federal Higher Education Act | 20 | | of 1965. | 21 | | "Income-driven payment plan certification" means the | 22 | | documentation related to a federal student loan borrower's | 23 | | income or financial status the borrower must submit to renew an | 24 | | income-driven repayment plan. | 25 | | "Income-driven repayment options" includes the | 26 | | Income-Contingent Repayment Plan, the Income-Based Repayment |
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| 1 | | Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn | 2 | | Plan, the Revised Pay As you Earn Plan, and any other federal | 3 | | student loan repayment plan that is calculated based on a | 4 | | borrower's income. | 5 | | "Licensee" means a person licensed pursuant to this Act. | 6 | | "Other repayment plans" means the Standard Repayment Plan, | 7 | | the Graduated Repayment Plan, the Extended Repayment Plan, or | 8 | | any other federal student loan repayment plan not based on a | 9 | | borrower's income. | 10 | | "Private education loan" has the meaning given to that term | 11 | | in 15 U.S.C. 1650. | 12 | | "Private loan borrower eligible for referral to a repayment | 13 | | specialist" means a borrower who possesses any of the following | 14 | | characteristics: | 15 | | (1) requests information related to options to reduce | 16 | | or suspend his or her monthly payments; or | 17 | | (2) indicates that he or she is experiencing or | 18 | | anticipates experiencing financial hardship, distress, or | 19 | | difficulty making his or her payments. | 20 | | "Request for assistance" means all inquiries, complaints, | 21 | | account disputes, and requests for documentation a servicer | 22 | | receives from borrowers or cosigners. | 23 | | "Requester" means any borrower or cosigner that submits a | 24 | | request for assistance. | 25 | | "Secretary" means the Secretary of Financial and | 26 | | Professional Regulation. |
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| 1 | | "Servicing" means any of the following activities related | 2 | | to a student loan of a borrower or cosigner: | 3 | | (1) receiving any scheduled periodic payments from a | 4 | | borrower or cosigner or any notification that a borrower or | 5 | | cosigner made a scheduled periodic payment; | 6 | | (2) applying payments to the borrower's account | 7 | | pursuant to the terms of the student loan or the contract | 8 | | governing the servicing; | 9 | | (3) during a period when no payment is required on a | 10 | | student loan, performing both of the following: | 11 | | (A) maintaining account records for the student | 12 | | loan; and | 13 | | (B) communicating with the borrower or cosigner | 14 | | regarding the student loan on behalf of the owner of | 15 | | the student loan promissory note; or | 16 | | (4) interacting with a borrower or cosigner related to | 17 | | that borrower's student loan with the goal of helping the | 18 | | borrower avoid default on his or her student loan or | 19 | | facilitating the activities described in paragraph (1) or | 20 | | (2). | 21 | | "Student loan" or "loan" means any federal education loan, | 22 | | private education loan, or other loan primarily for use to | 23 | | finance a postsecondary education and costs of attendance at a | 24 | | postsecondary institution, including, but not limited to, | 25 | | tuition, fees, books and supplies, room and board, | 26 | | transportation, and miscellaneous personal expenses. "Student |
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| 1 | | loan" includes a loan made to refinance a student loan. | 2 | | "Student loan servicer" or "servicer" means any person | 3 | | engaged in the business of servicing student loans. | 4 | | Article 5. Student Loan Bill of Rights | 5 | | Section 5-5. General provisions. | 6 | | (a) A servicer shall not engage in any unfair or deceptive | 7 | | practice toward any borrower or cosigner or misrepresent or | 8 | | omit any material information in connection with the servicing | 9 | | of a student loan, including, but not limited to, | 10 | | misrepresenting the amount, nature, or terms of any fee or | 11 | | payment due or claimed to be due on a student loan, the terms | 12 | | and conditions of the student loan agreement, or the borrower's | 13 | | or cosigner's obligations under the student loan or the terms | 14 | | of any repayment plans.
| 15 | | (b) A servicer shall not misapply payments made by a | 16 | | borrower to the outstanding balance of a student loan.
| 17 | | (c) A servicer shall oversee third parties, including | 18 | | subservicers, debt collectors, independent contractors, | 19 | | subsidiaries, affiliates, and other agents, to ensure that | 20 | | those companies comply with this Article 5.
| 21 | | Section 5-10. Payment processing. | 22 | | (a) A servicer shall credit borrower and cosigner payments | 23 | | promptly and accurately.
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| 1 | | (b) A servicer shall provide borrowers and cosigners no | 2 | | less than 45 days' notice if the servicer changes the address | 3 | | to which the borrower or cosigner needs to send payments.
| 4 | | (c) A servicer shall not charge a penalty to a borrower or | 5 | | cosigner if a student loan payment is received at an address | 6 | | used for payments for a period of 90 days after the change in | 7 | | address.
| 8 | | (d) A servicer shall not misrepresent the delinquent amount | 9 | | of the loan on any call with a borrower or cosigner.
| 10 | | (e) A servicer shall allow a borrower or cosigner to | 11 | | specify instructions as to how an overpayment should be applied | 12 | | to the balance of the loan as consistent with the promissory | 13 | | note.
| 14 | | Section 5-15. Fees. | 15 | | (a) A servicer may only charge late fees that are | 16 | | reasonable and proportional to the cost it incurs related to a | 17 | | late payment.
| 18 | | (b) A servicer shall not charge a borrower or cosigner any | 19 | | fee to modify, defer, forbear, renew, extend, or amend the | 20 | | borrower's or cosigner's loan.
| 21 | | Section 5-20. Billing statements. | 22 | | (a) In any student loan billing statement, a servicer shall | 23 | | not misrepresent the:
| 24 | | (1) amount due;
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| 1 | | (2) fees assessed;
| 2 | | (3) total amount due for each loan;
| 3 | | (4) payment due date;
| 4 | | (5) date to avoid late fees;
| 5 | | (6) accrued interest during the billing cycle;
| 6 | | (7) default payment methodology;
| 7 | | (8) means to provide instructions for a payment; or
| 8 | | (9) procedure regarding escalated requests for | 9 | | assistance.
| 10 | | (b) A servicer shall not misrepresent information | 11 | | regarding the $0 bill and advancement of the due date on any | 12 | | billing statement that reflects $0 owed.
| 13 | | Section 5-25. Payment histories. A servicer shall provide a | 14 | | written payment history to a borrower or cosigner upon request | 15 | | at no cost within 21 calendar days after receiving the request. | 16 | | Section 5-30. Specialized assistance for student loan | 17 | | borrowers. | 18 | | (a) A servicer shall specially designate servicing and | 19 | | collections personnel deemed repayment specialists who have | 20 | | received enhanced training related to repayment options.
| 21 | | (b) A servicer shall refrain from presenting forbearance as | 22 | | the sole or first repayment option to a student loan borrower | 23 | | struggling with repayment unless the servicer has determined | 24 | | that based on the borrower's financial status a short-term |
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| 1 | | forbearance is appropriate.
| 2 | | (c) All inbound and outbound calls from federal loan | 3 | | borrowers eligible for referral to a repayment specialist and | 4 | | private loan borrowers eligible for referral to a repayment | 5 | | specialist shall be routed to a repayment specialist.
| 6 | | (d) During each inbound or outbound communication with an | 7 | | eligible federal loan borrower, a repayment specialist shall | 8 | | first inform a federal loan borrower eligible for referral to a | 9 | | repayment specialist that federal income-driven repayment | 10 | | plans that can reduce the borrower's monthly payment may be | 11 | | available, discuss such plans, and assist the borrower in | 12 | | determining whether a particular repayment plan may be | 13 | | appropriate for the borrower.
| 14 | | (e) A repayment specialist shall assess the long-term and | 15 | | short-term financial situation and needs of a federal loan | 16 | | borrower eligible for referral to a repayment specialist and | 17 | | consider any available specific information from the borrower | 18 | | as necessary to assist the borrower in determining whether a | 19 | | particular income-driven repayment option may be available to | 20 | | the borrower.
| 21 | | (f) In each discussion with a federal loan borrower | 22 | | eligible for referral to a repayment specialist, a repayment | 23 | | specialist shall present and explain the following options, as | 24 | | appropriate:
| 25 | | (1) total and permanent disability discharge, public | 26 | | service loan forgiveness, closed school discharge, and |
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| 1 | | defenses to repayment;
| 2 | | (2) other repayment plans;
| 3 | | (3) deferment; and
| 4 | | (4) forbearance.
| 5 | | (g) A repayment specialist shall assess the long-term and | 6 | | short-term financial situation and needs of a private loan | 7 | | borrower eligible for referral to a repayment specialist in | 8 | | determining whether any private loan repayment options may be | 9 | | appropriate for the borrower.
| 10 | | (h) A servicer shall present and explain all private loan | 11 | | repayment options, including alternative repayment | 12 | | arrangements applicable to private student loan borrowers.
| 13 | | (i) A servicer shall be prohibited from implementing any | 14 | | compensation plan that has the intended or actual effect of | 15 | | incentivizing any repayment specialist to violate this Act or | 16 | | any other measure that encourages undue haste or lack of | 17 | | quality.
| 18 | | (j) The requirements of this Section shall not apply if a | 19 | | repayment specialist has already conversed with a borrower | 20 | | consistent with the requirements of this Section.
| 21 | | Section 5-35. Disclosures related to discharge and | 22 | | cancellation. If a servicer is aware that a student loan | 23 | | borrower attended a school the United States Department of | 24 | | Education has made findings supporting a defense to repayment | 25 | | claim or closed school discharge, or that a borrower may be |
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| 1 | | eligible to have his or her loans forgiven under a total and | 2 | | permanent disability discharge, the servicer's personnel shall | 3 | | disclose information related to the Department of Education's | 4 | | procedure for asserting a defense to repayment claim, closed | 5 | | school discharge, or submitting an application for a total and | 6 | | permanent disability discharge. | 7 | | Section 5-40. Income-driven repayment plan certifications. | 8 | | A servicer shall disclose the date that a borrower's | 9 | | income-driven payment plan certification will expire and the | 10 | | consequences to the borrower for failing to recertify by the | 11 | | date, including the new repayment amount. | 12 | | Section 5-45. Information to be provided to private | 13 | | education loan borrowers. | 14 | | (a) A servicer shall provide on its website a description | 15 | | of any alternative repayment plan offered by the servicer for | 16 | | private education loans.
| 17 | | (b) A servicer shall establish policies and procedures and | 18 | | implement them consistently in order to facilitate evaluation | 19 | | of private student loan alternative repayment arrangement | 20 | | requests, including
providing accurate information regarding | 21 | | any private student loan alternative repayment arrangements | 22 | | that may be available to the borrower through the promissory | 23 | | note or that may have been marketed to the borrower through | 24 | | marketing materials. |
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| 1 | | Private student loan alternative repayment arrangements | 2 | | shall consider the affordability of repayment plans for | 3 | | distressed borrowers as well as investor, guarantor, and | 4 | | insurer guidelines, and previous outcome and performance | 5 | | information.
| 6 | | (c) If a servicer offers private student loan repayment | 7 | | arrangements, the servicer shall consistently present and | 8 | | offer those arrangements to borrowers with similar financial | 9 | | circumstances.
| 10 | | Section 5-50. Cosigner release. A servicer shall provide | 11 | | information on billing statements and its website concerning | 12 | | the availability and criteria for a cosigner release. | 13 | | Section 5-55. Payoff statements. A servicer shall indicate | 14 | | on its billing statements and its website that a borrower may | 15 | | request a payoff statement. The servicer shall provide the | 16 | | payoff statement within 10 days, including information the | 17 | | requester needs to pay off the loan. If a payoff is made, the | 18 | | servicer must send a paid-in-full notice within 30 days. | 19 | | Section 5-60. Requirements related to the transfer of | 20 | | servicing. | 21 | | (a) When acting as the transferor servicer, a servicer | 22 | | shall provide to each borrower subject to the transfer a | 23 | | written notice no less than 15 calendar days before the |
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| 1 | | effective date of the transfer. The transferee servicer and | 2 | | transferor servicer may provide a single notice, in which case | 3 | | the notice shall be provided no less than 15 calendar days | 4 | | before the effective date of the transfer. The notice by the | 5 | | transferor servicer or, if applicable, the combined notice of | 6 | | transfer shall contain the following information:
| 7 | | (1) the effective date of the transfer of servicing;
| 8 | | (2) the name, address, and toll-free telephone number | 9 | | for the transferor servicer's designated point of contact | 10 | | that can be contacted by the borrower to obtain answers to | 11 | | servicing inquiries;
| 12 | | (3) the name, address, and toll-free telephone number | 13 | | for the transferee servicer's designated point of contact | 14 | | that can be contacted by the borrower to obtain answers to | 15 | | servicing inquiries;
| 16 | | (4) the date on which the transferor servicer will | 17 | | cease to accept payments relating to the loan and the date | 18 | | on which the transferee servicer will begin to accept such | 19 | | payments; the dates shall either be the same or consecutive | 20 | | days;
| 21 | | (5) a statement that the transfer of servicing does not | 22 | | affect any term or condition of the loan other than terms | 23 | | directly related to the servicing of a loan;
| 24 | | (6) information on whether the borrower's | 25 | | authorization for recurring electronic fund transfers, if | 26 | | applicable, will be transferred to the transferee |
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| 1 | | servicer; if any such recurring electronic funds transfers | 2 | | cannot be transferred, the transferee servicer shall | 3 | | provide information explaining how the borrower may | 4 | | establish new recurring electronic funds transfers with | 5 | | the transferee servicer; and
| 6 | | (7) a statement of the current loan balance, including | 7 | | the current unpaid amount of principal, interest, and fees.
| 8 | | (b) When acting as the transferee servicer, a servicer | 9 | | shall provide to each borrower subject to the transfer a | 10 | | written notice no more than 15 calendar days after the | 11 | | effective date of the transfer. The transferee servicer and | 12 | | transferor servicer may provide a combined notice of transfer, | 13 | | in which case the notice shall be provided no less than 15 days | 14 | | before the effective date of the transfer. The notice by the | 15 | | transferee servicer or, if applicable, the combined notice of | 16 | | transfer shall contain the following information:
| 17 | | (1) the effective date of the transfer of servicing;
| 18 | | (2) the name, address, and toll-free telephone number | 19 | | for the transferee servicer's designated point of contact | 20 | | that can be contacted by the borrower to obtain answers to | 21 | | servicing inquiries;
| 22 | | (3) the date on which the transferor servicer will | 23 | | cease to accept payments relating to the loan and the date | 24 | | on which the transferee servicer will begin to accept such | 25 | | payments; the dates shall either be the same or consecutive | 26 | | days;
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| 1 | | (4) a statement that the transfer of servicing does not | 2 | | affect any term or condition of the student loan other than | 3 | | terms directly related to the servicing of a loan;
| 4 | | (5) information on whether the borrower's | 5 | | authorization for recurring electronic fund transfers, if | 6 | | applicable, will be transferred to the transferee | 7 | | servicer; if any such recurring electronic funds transfers | 8 | | cannot be transferred, the transferee servicer shall | 9 | | provide information explaining how the borrower may | 10 | | establish new recurring electronic funds transfers with | 11 | | the transferee servicer; and
| 12 | | (6) a statement of the current loan balance, including | 13 | | the current unpaid amount of principal, interest, and fees.
| 14 | | (c) During the 60 calendar day period beginning on the | 15 | | effective date of transfer of the servicing of a loan, a | 16 | | payment timely made to the transferor servicer may not be | 17 | | treated as late for any purpose by the transferee servicer, | 18 | | including the assessment of late fees, accrual of additional | 19 | | interest, and furnishing negative credit information.
| 20 | | (d) To the extent practicable, for at least 120 calendar | 21 | | days beginning on the effective date of transfer of servicing | 22 | | of a loan, when acting as the transferor servicer, a servicer | 23 | | shall promptly transfer payments received to the transferee | 24 | | servicer for application to the borrower's loan account.
| 25 | | (e) Unless a borrower's authorizations for recurring | 26 | | electronic fund transfers are automatically transferred to the |
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| 1 | | transferee servicer, when acting as a transferee servicer, the | 2 | | servicer shall make available to a borrower whose loan | 3 | | servicing is transferred an online process through which | 4 | | borrowers may make a new authorization for recurring electronic | 5 | | fund transfers. A servicer shall also provide a process through | 6 | | which the borrower may make a new authorization for recurring | 7 | | electronic funds transfers by phone or through written | 8 | | approval.
| 9 | | Section 5-65. Requests for assistance, account dispute | 10 | | resolution, and appeals. | 11 | | (a) A servicer shall implement reasonable policies and | 12 | | procedures for accepting, processing, investigating, and | 13 | | responding to requests for assistance in a timely and effective | 14 | | manner, including, but not limited to, the following | 15 | | requirements:
| 16 | | (1) A servicer shall provide readily accessible | 17 | | methods for consumers to submit a request for assistance to | 18 | | the servicer, including such methods as phone, email, and | 19 | | U.S. mail.
| 20 | | (2) A servicer shall post on its website and disclose | 21 | | on its billing statements:
| 22 | | (A) the toll-free telephone number, email address, | 23 | | and mailing address for consumers to submit requests | 24 | | for assistance to the servicer; and
| 25 | | (B) the procedures for a requester to send a |
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| 1 | | written communication to the servicer regarding any | 2 | | request for assistance.
| 3 | | (3) For any request for assistance that includes a | 4 | | request for documentation or information, where a response | 5 | | cannot be immediately provided, a servicer shall provide | 6 | | the requested documentation or information to the | 7 | | requester within 14 calendar days of the request; if a | 8 | | servicer determines in good faith that it is unable to | 9 | | provide the documentation or information within 14 | 10 | | calendar days, then, promptly after making the | 11 | | determination, the servicer shall notify the requester of | 12 | | the expected response period, which must be reasonable for | 13 | | the request for assistance.
| 14 | | (b) A servicer shall implement a process by which a | 15 | | requester can escalate any request for assistance. The process | 16 | | shall allow a requester who has made a request for assistance | 17 | | on the phone and who receives a response during the call to | 18 | | obtain immediate review of the response by an employee of the | 19 | | servicer at a higher supervisory level.
| 20 | | (c) The following requirements shall apply when a requester | 21 | | submits a written or oral request for assistance that contains | 22 | | an account dispute to a servicer:
| 23 | | (1) Within 14 calendar days of its receipt of the | 24 | | written communication or oral request for further | 25 | | escalation, a servicer shall attempt to make contact, | 26 | | including providing the requester with name and contact |
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| 1 | | information of the representative handling the account | 2 | | dispute, by phone or in writing, to the requester and | 3 | | document the attempt in the borrower's account.
| 4 | | (2) A servicer shall complete the following actions | 5 | | within 30 calendar days after its receipt of the written | 6 | | communication or oral request for further escalation, | 7 | | subject to paragraph (3) of this subsection (c):
| 8 | | (A) conduct a thorough investigation of the | 9 | | account dispute;
| 10 | | (B) make all appropriate corrections to the | 11 | | account of the requester, including crediting any late | 12 | | fees assessed and derogatory credit furnishing as the | 13 | | result of any error, and, if any corrections are made, | 14 | | sending the requester a written notification that | 15 | | includes the following information:
| 16 | | (i) an explanation of the correction or | 17 | | corrections to the requester's account that have | 18 | | been made; and
| 19 | | (ii) the toll-free telephone number, email | 20 | | address, and mailing address of the servicer's | 21 | | personnel knowledgeable about the investigation | 22 | | and resolution of the account dispute. | 23 | | (3) If a servicer determines in good faith that it | 24 | | cannot complete a thorough investigation of the account | 25 | | dispute within 30 calendar days after receiving the written | 26 | | communication or oral request for further escalation |
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| 1 | | regarding the account dispute, then, promptly after making | 2 | | such determination, the servicer shall notify the | 3 | | requester of the expected resolution time period, which | 4 | | must be reasonable for the account dispute. A servicer must | 5 | | complete the actions listed in the investigation and | 6 | | resolution of the account dispute within this time period.
| 7 | | (4) If a servicer determines as a result of its | 8 | | investigation that the requested changes to a requester's | 9 | | dispute will not be made, the servicer shall provide the | 10 | | requester with a written notification that includes the | 11 | | following information:
| 12 | | (A) a description of its determination and an | 13 | | explanation of the reasons for that determination;
| 14 | | (B) the toll-free telephone number, email address, | 15 | | and mailing address of the servicer's personnel | 16 | | knowledgeable about the investigation and resolution | 17 | | of the account dispute;
| 18 | | (C) instructions about how the requester can | 19 | | appeal the servicer's determination in accordance with | 20 | | paragraph (5) of this subsection (c); and
| 21 | | (D) information regarding the method by which a | 22 | | borrower may request copies of documents a servicer | 23 | | relied on to make a determination that no changes to a | 24 | | requester's account will be made.
| 25 | | (5) After the requester receives a determination | 26 | | regarding an account dispute in accordance with paragraph |
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| 1 | | (4) of this subsection (c), the servicer shall allow a | 2 | | process by which the requester can appeal, in writing, the | 3 | | determination. The appeals process shall include:
| 4 | | (A) a written acknowledgment notifying the | 5 | | requester that the servicer has commenced the appeals | 6 | | process; the acknowledgment shall be sent within 14 | 7 | | calendar days after receiving a written request for | 8 | | appeal from the requester;
| 9 | | (B) an independent reassessment of the servicer's | 10 | | determination regarding the account dispute, performed | 11 | | by another employee of the servicer at an equal or | 12 | | higher supervisory level than the employee or | 13 | | employees involved in the initial account dispute | 14 | | determination;
| 15 | | (C) investigation and resolution of appeals within | 16 | | 30 calendar days after the servicer's commencement of | 17 | | the appeals process; and
| 18 | | (D) notification sent to the requester, in | 19 | | writing, documenting the outcome of the appeal, | 20 | | including any reason for denial.
| 21 | | (d) While a requester has a pending account dispute, | 22 | | including any applicable appeal, a servicer shall take | 23 | | reasonable steps to:
| 24 | | (1) prevent negative credit reporting with respect to | 25 | | the borrower's or cosigner's account while the dispute is | 26 | | under review; and
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| 1 | | (2) suspend all collection activities on the account | 2 | | while the account dispute is being researched or resolved, | 3 | | if the account dispute is related to the delinquency.
| 4 | | Article 10. Student Loan Ombudsman | 5 | | Section 10-5. Student Loan Ombudsman. | 6 | | (a) The position of Student Loan Ombudsman is created | 7 | | within the Office of the Attorney General to provide timely | 8 | | assistance to student loan borrowers.
| 9 | | (b) The Student Loan Ombudsman, in consultation with the | 10 | | Secretary, shall:
| 11 | | (1) receive, review, and attempt to resolve any | 12 | | complaints from student loan borrowers, including, but not | 13 | | limited to, attempts to resolve complaints in | 14 | | collaboration with institutions of higher education, | 15 | | student loan servicers, and any other participants in | 16 | | student loan lending;
| 17 | | (2) compile and analyze data on student loan borrower | 18 | | complaints;
| 19 | | (3) assist student loan borrowers to understand their | 20 | | rights and responsibilities under the terms of student | 21 | | education loans;
| 22 | | (4) provide information to the public, agencies, | 23 | | legislators, and others regarding the problems and | 24 | | concerns of student loan borrowers and make |
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| 1 | | recommendations for resolving those problems and concerns;
| 2 | | (5) analyze and monitor the development and | 3 | | implementation of federal, State, and local laws, | 4 | | regulations, and policies relating to student loan | 5 | | borrowers and recommend any changes the Student Loan | 6 | | Ombudsman deems necessary;
| 7 | | (6) review the complete student education loan history | 8 | | for any student loan borrower who has provided written | 9 | | consent for such review;
| 10 | | (7) disseminate information concerning the | 11 | | availability of the Student Loan Ombudsman to assist | 12 | | student loan borrowers and potential student loan | 13 | | borrowers, as well as public institutions of higher | 14 | | education, student loan servicers, and any other | 15 | | participant in student education loan lending, with any | 16 | | student loan servicing concerns; and
| 17 | | (8) take any other actions necessary to fulfill the | 18 | | duties of the Student Loan Ombudsman as set forth in this | 19 | | subsection.
| 20 | | Article 15. Licensing | 21 | | Section 15-5. Applicability. | 22 | | (a) No person shall act as a student loan servicer, | 23 | | directly or indirectly, without first obtaining a license from | 24 | | the Secretary under subsection (b) of Section 15-10 unless the |
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| 1 | | person is exempt from licensure pursuant to subsection (b) of | 2 | | this Section.
| 3 | | (b) This Act does not apply to any of the following:
| 4 | | (1) a bank, out-of-state bank, Illinois credit union, | 5 | | federal credit union, or out-of-state credit union;
| 6 | | (2) a wholly owned subsidiary of any such bank or | 7 | | credit union; or
| 8 | | (3) an operating subsidiary where each owner of the | 9 | | operating subsidiary is wholly owned by the same bank or | 10 | | credit union.
| 11 | | Section 15-10. Applications. | 12 | | (a) Any person seeking to act within this State as a | 13 | | student loan servicer shall make a written application to the | 14 | | Secretary for an initial license in the form the Secretary | 15 | | prescribes. The application shall be accompanied by:
| 16 | | (1) a financial statement prepared by a certified | 17 | | public accountant or a public accountant, the accuracy of | 18 | | which is sworn to under oath before a notary public by the | 19 | | proprietor, a general partner, or a corporate officer or a | 20 | | member duly authorized to execute the documents;
| 21 | | (2) the history of criminal convictions of the: (i) | 22 | | applicant; (ii) partners, if the applicant is a | 23 | | partnership; (iii) members, if the applicant is a limited | 24 | | liability company or association; or (iv) officers, | 25 | | directors, and principal employees, if the applicant is a |
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| 1 | | corporation, and sufficient information pertaining to the | 2 | | history of criminal convictions of the applicant, | 3 | | partners, members, officers, directors, or principal | 4 | | employees as the Secretary deems necessary to make the | 5 | | findings under subsection (c) of this Section; | 6 | | (3) a nonrefundable license fee of $1,000; and
| 7 | | (4) a nonrefundable investigation fee of $800. | 8 | | The Secretary may conduct a State and national criminal | 9 | | history records check of the applicant and of each partner, | 10 | | member, officer, director, and principal employee of the | 11 | | applicant.
| 12 | | (b) Upon the filing of an application for an initial | 13 | | license and the payment of the fees for licensure and | 14 | | investigation, the Secretary shall investigate the financial | 15 | | condition and responsibility, financial and business | 16 | | experience, character, and general fitness of the applicant. | 17 | | The Secretary may issue a license if the Secretary finds that:
| 18 | | (1) the applicant's financial condition is sound;
| 19 | | (2) the applicant's business will be conducted | 20 | | honestly, fairly, equitably, carefully, and efficiently | 21 | | within the purposes and intent of this Act and in a manner | 22 | | commanding the confidence and trust of the community;
| 23 | | (3)(A) if the applicant is an individual, the | 24 | | individual is in all respects properly qualified and of | 25 | | good character; | 26 | | (B) if the applicant is a partnership, each partner is |
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| 1 | | in all respects properly qualified and of good character; | 2 | | (C) if the applicant is a corporation or association, | 3 | | the president, chairperson of the executive committee, | 4 | | senior officer responsible for the corporation's business, | 5 | | and chief financial officer or any other person who | 6 | | performs similar functions as determined by the Secretary, | 7 | | each director, each trustee, and each shareholder owning | 8 | | 10% or more of each class of the securities of the | 9 | | corporation is in all respects properly qualified and of | 10 | | good character; or | 11 | | (D) if the applicant is a limited liability company, | 12 | | each member is in all respects properly qualified and of | 13 | | good character; | 14 | | (4) no person on behalf of the applicant knowingly has | 15 | | made any incorrect statement of a material fact in the | 16 | | application or in any report or statement made pursuant to | 17 | | this Act;
| 18 | | (5) no person on behalf of the applicant knowingly has | 19 | | omitted to state any material fact necessary to give the | 20 | | Secretary any information lawfully required by the | 21 | | Secretary;
| 22 | | (6) the applicant has paid the investigation fee and | 23 | | the license fee required under subsection (a); and
| 24 | | (7) the applicant has met any other similar | 25 | | requirements as determined by the Secretary.
| 26 | | (c) A license issued pursuant to subsection (b) of this |
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| 1 | | Section shall expire at the close of business on September 30 | 2 | | of the odd-numbered year following its issuance, unless renewed | 3 | | or earlier surrendered, suspended, or revoked pursuant to | 4 | | Section 20-5 of this Act. No later than 15 days after a | 5 | | licensee ceases to engage in the business of student loan | 6 | | servicing in this State for any reason, including a business | 7 | | decision to terminate operations in this State, license | 8 | | revocation, bankruptcy, or voluntary dissolution, the licensee | 9 | | shall provide written notice of surrender to the Secretary and | 10 | | shall surrender to the Secretary its license for each location | 11 | | in which the licensee has ceased to engage in business. The | 12 | | written notice of surrender shall identify the location where | 13 | | the records of the licensee will be stored and the name, | 14 | | address, and telephone number of an individual authorized to | 15 | | provide access to the records. The surrender of a license does | 16 | | not reduce or eliminate the licensee's civil or criminal | 17 | | liability arising from acts or omissions occurring prior to the | 18 | | surrender of the license, including any administrative actions | 19 | | undertaken by the Secretary to revoke or suspend a license, | 20 | | assess a civil penalty, order restitution, or exercise any | 21 | | other authority provided to the Secretary.
| 22 | | (d) A license may be renewed for the ensuing 24-month | 23 | | period upon the filing of an application containing all | 24 | | required documents and fees as provided in subsection (b) of | 25 | | this Section. The renewal application shall be filed on or | 26 | | before September 1 of the year in which the license expires. |
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| 1 | | Any renewal application filed with the Secretary after | 2 | | September 1 shall be accompanied by a $100 late fee and any | 3 | | such filing shall be deemed to be timely and sufficient. If an | 4 | | application for a renewal license has been filed with the | 5 | | Secretary on or before the date the license expires, the | 6 | | license sought to be renewed shall continue in full force and | 7 | | effect until the issuance by the Secretary of the renewal | 8 | | license applied for or until the Secretary has notified the | 9 | | licensee in writing of the Secretary's refusal to issue the | 10 | | renewal license together with the grounds upon which the | 11 | | refusal is based. The Secretary may refuse to issue a renewal | 12 | | license on any ground on which the Secretary might refuse to | 13 | | issue an initial license.
| 14 | | (e) If the Secretary determines that a check filed with the | 15 | | Secretary to pay a license or renewal fee has been dishonored, | 16 | | the Secretary shall automatically suspend the license or the | 17 | | renewal license that has been issued but is not yet effective. | 18 | | The Secretary shall give the licensee notice of the automatic | 19 | | suspension pending proceedings for revocation or refusal to | 20 | | renew and an opportunity for a hearing on such actions in | 21 | | accordance with the Illinois Administrative Procedure Act and | 22 | | the rules of the Secretary.
| 23 | | (f) The applicant or licensee shall notify the Secretary, | 24 | | in writing, of any change in the information provided in its | 25 | | initial application for a license or its most recent renewal | 26 | | application for licensure, as applicable, not later than 10 |
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| 1 | | business days after the occurrence of the event that results in | 2 | | the information becoming inaccurate.
| 3 | | (g) The Secretary may deem an application for a license | 4 | | abandoned if the applicant fails to respond to any request for | 5 | | information required under this Act or any rules adopted | 6 | | pursuant to this Act. The Secretary shall notify the applicant, | 7 | | in writing, that if the applicant fails to submit the | 8 | | information no later than 60 days after the date on which the | 9 | | request for information was made, the application is deemed | 10 | | abandoned. An application filing fee paid before the date an | 11 | | application is deemed abandoned pursuant to this subsection | 12 | | shall not be refunded. Abandonment of an application pursuant | 13 | | to this subsection shall not preclude the applicant from | 14 | | submitting a new application for a license under this Section.
| 15 | | Section 15-15. Business name. No person licensed to act | 16 | | within this State as a student loan servicer shall do so under | 17 | | any other name or at any other place of business than that | 18 | | named in the license. Any change of location of a place of | 19 | | business of a licensee shall require prior written notice to | 20 | | the Secretary. No more than one place of business shall be | 21 | | maintained under the same license, but the Secretary may issue | 22 | | more than one license to the same licensee upon compliance with | 23 | | the provisions of this Act as to each new licensee. A license | 24 | | is not transferable or assignable. |
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| 1 | | Section 15-20. Recordkeeping. | 2 | | (a) Each student loan servicer licensee and persons exempt | 3 | | from licensure pursuant to subsection (b) of Section 15-5 of | 4 | | this Act shall maintain adequate records of each student | 5 | | education loan transaction for no less than 2 years following | 6 | | the final payment on the student education loan or the | 7 | | assignment of the student education loan, whichever occurs | 8 | | first, or a longer period if required by any other provision of | 9 | | law.
| 10 | | (b) If requested by the Secretary, each student loan | 11 | | servicer shall make the records available or send the records | 12 | | to the Secretary by registered or certified mail, return | 13 | | receipt requested, or by any express delivery carrier that | 14 | | provides a dated delivery receipt, no later than 5 business | 15 | | days after requested by the Secretary to do so. Upon request, | 16 | | the Secretary may grant a licensee additional time to make the | 17 | | records available or send the records to the Secretary.
| 18 | | Article 20. Enforcement | 19 | | Section 20-5. Administration and enforcement. | 20 | | (a) The Secretary shall have the authority to conduct | 21 | | investigations and examinations as follows:
| 22 | | (1) For purposes of initial licensing, license | 23 | | renewal, license suspension, license revocation or | 24 | | termination, or general or specific inquiry or |
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| 1 | | investigation to determine compliance with this Act, the | 2 | | Secretary may access, receive, and use any books, accounts, | 3 | | records, files, documents, information, or evidence, | 4 | | including, but not limited to: (A) criminal, civil, and | 5 | | administrative history information; (B) personal history | 6 | | and experience information, including independent credit | 7 | | reports obtained from a consumer reporting agency | 8 | | described in Section 603(p) of the federal Fair Credit | 9 | | Reporting Act, 15 U.S.C. 1681a; and (C) any other | 10 | | documents, information, or evidence the Secretary deems | 11 | | relevant to the inquiry or investigation regardless of the | 12 | | location, possession, control, or custody of the | 13 | | documents, information, or evidence.
| 14 | | (2) For the purposes of investigating violations or | 15 | | complaints arising under this Act or for the purposes of | 16 | | examination, the Secretary may review, investigate, or | 17 | | examine any student loan servicer licensee or person | 18 | | subject to this Act as often as necessary in order to carry | 19 | | out the purposes of this Act. The Secretary may direct, | 20 | | subpoena, or order the attendance of and examine under oath | 21 | | any person whose testimony may be required about the | 22 | | student education loan or the business or subject matter of | 23 | | any examination or investigation, and may direct, | 24 | | subpoena, or order that person to produce books, accounts, | 25 | | records, files, and any other documents the Secretary deems | 26 | | relevant to the inquiry.
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| 1 | | (b) In making any examination or investigation authorized | 2 | | by this Section, the Secretary may control access to any | 3 | | documents and records of the student loan servicer licensee or | 4 | | person under examination or investigation. The Secretary may | 5 | | take possession of the documents and records or place a person | 6 | | in exclusive charge of the documents and records in the place | 7 | | where they are usually kept. During the period of control, no | 8 | | person shall remove or attempt to remove any of the documents | 9 | | and records, except pursuant to a court order or with the | 10 | | consent of the Secretary. Unless the Secretary has reasonable | 11 | | grounds to believe the documents or records of the student loan | 12 | | servicer licensee or person have been or are at risk of being | 13 | | altered or destroyed for purposes of concealing a violation of | 14 | | this Act, the student loan servicer licensee or owner of the | 15 | | documents and records shall have access to the documents or | 16 | | records as necessary to conduct its ordinary business affairs.
| 17 | | (c) In order to carry out the purposes of this Section, the | 18 | | Secretary may:
| 19 | | (1) retain accountants or other professionals and | 20 | | specialists as examiners, auditors, or investigators to | 21 | | conduct or assist in the conduct of examinations or | 22 | | investigations;
| 23 | | (2) enter into agreements or relationships with other | 24 | | government officials or regulatory associations in order | 25 | | to improve efficiencies and reduce regulatory burden by | 26 | | sharing resources, standardized or uniform methods or |
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| 1 | | procedures, and documents, records, information, or | 2 | | evidence obtained under this Section;
| 3 | | (3) use, hire, contract, or employ publicly or | 4 | | privately available analytical systems, methods, or | 5 | | software to examine or investigate the student loan | 6 | | servicer licensee or person subject to this Act;
| 7 | | (4) accept and rely on examination or investigation | 8 | | reports made by other government officials, within or | 9 | | without this State;
| 10 | | (5) accept audit reports made by an independent | 11 | | certified public accountant for the student loan servicer | 12 | | licensee or person subject to this Act in the course of | 13 | | that part of the examination covering the same general | 14 | | subject matter as the audit and may incorporate the audit | 15 | | report in the report of examination, report of | 16 | | investigation, or other writing of the Secretary; and
| 17 | | (6) adopt rules necessary to implement this Act.
| 18 | | (d) The authority of this Section shall remain in effect, | 19 | | whether the student loan servicer licensee or person subject to | 20 | | this Act acts or claims to act under any licensing or | 21 | | registration law of this State, or claims to act without such | 22 | | authority.
| 23 | | (e) No student loan servicer licensee or person subject to | 24 | | investigation or examination under this Section may knowingly | 25 | | withhold, abstract, remove, mutilate, destroy, or secrete any | 26 | | books, records, computer records, or other information.
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| 1 | | (f) The Secretary may suspend, revoke, or refuse to renew | 2 | | any license issued under the provisions of this Act if the | 3 | | Secretary finds that (1) the licensee has violated any | 4 | | provision of this Act or any rule or order lawfully made | 5 | | pursuant to and within the authority of this Act, (2) any fact | 6 | | or condition exists that, if it had existed at the time of the | 7 | | original application for the license, clearly would have | 8 | | warranted a denial of the license, or (3) the licensee engaged | 9 | | in dishonest activities or made any misrepresentation. No | 10 | | abatement of the license fee shall be made if the license is | 11 | | surrendered, revoked, or suspended prior to the expiration of | 12 | | the period for which it was issued.
| 13 | | Section 20-10. Enforcement; Consumer Fraud and Deceptive | 14 | | Business Practices Act. In addition to any other penalties | 15 | | specified in this Act, violation of this Act constitutes an | 16 | | unlawful practice under the Consumer Fraud and Deceptive | 17 | | Business Practices Act. | 18 | | Article 90. Amendatory Provisions | 19 | | Section 90-1. The Consumer Fraud and Deceptive Business | 20 | | Practices Act is amended by changing Section 2Z as follows:
| 21 | | (815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
| 22 | | Sec. 2Z. Violations of other Acts. Any person who knowingly |
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| 1 | | violates
the Automotive Repair Act, the Automotive Collision | 2 | | Repair Act,
the Home Repair and Remodeling Act,
the Dance | 3 | | Studio Act,
the Physical Fitness Services Act,
the Hearing | 4 | | Instrument Consumer Protection Act,
the Illinois Union Label | 5 | | Act,
the Job Referral and Job Listing Services Consumer | 6 | | Protection Act,
the Travel Promotion Consumer Protection Act,
| 7 | | the Credit Services Organizations Act,
the Automatic Telephone | 8 | | Dialers Act,
the Pay-Per-Call Services Consumer Protection | 9 | | Act,
the Telephone Solicitations Act,
the Illinois Funeral or | 10 | | Burial Funds Act,
the Cemetery Oversight Act, the Cemetery Care | 11 | | Act,
the Safe and Hygienic Bed Act,
the Pre-Need Cemetery Sales | 12 | | Act,
the High Risk Home Loan Act, the Payday Loan Reform Act, | 13 | | the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section | 14 | | 3-10 of the
Cigarette Tax Act, subsection
(a) or (b) of Section | 15 | | 3-10 of the Cigarette Use Tax Act, the Electronic
Mail Act, the | 16 | | Internet Caller Identification Act, paragraph (6)
of
| 17 | | subsection (k) of Section 6-305 of the Illinois Vehicle Code, | 18 | | Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150, | 19 | | or 18d-153 of the Illinois Vehicle Code, Article 3 of the | 20 | | Residential Real Property Disclosure Act, the Automatic | 21 | | Contract Renewal Act, the Reverse Mortgage Act, Section 25 of | 22 | | the Youth Mental Health Protection Act, or the Personal | 23 | | Information Protection Act , or the Student Loan Servicing | 24 | | Rights Act commits an unlawful practice within the meaning of | 25 | | this Act.
| 26 | | (Source: P.A. 99-331, eff. 1-1-16; 99-411, eff. 1-1-16; 99-642, |
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| 1 | | eff. 7-28-16.) | 2 | | Article 99. Severability; Effective Date | 3 | | Section 99-1. Severability. The provisions of this Act are | 4 | | severable under Section 1.31 of the Statute on Statutes.
| 5 | | Section 99-99. Effective date. This Act takes effect upon | 6 | | becoming law.".
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