SB 132

Abstract

Over the past decade, an increasing number of states have passed legislation establishing a Student Loan Borrower Bill of Rights. At least 18 states have passed such legislation. Of these 18 states, 12 states have a Student Loan Ombudsperson and 13 have a licensing program, with another two states having a registration program instead of a licensing program. This Act is a Substitute for Senate Bill No. 132. Like Senate Bill No. 132, this Act enacts a Student Loan Borrower Bill of Rights for this State that does all of the following: (1) Requires student loan servicers to engage in certain practices related to communications with student loan borrowers and cosigners of student education loans and handling of transactions by student loan borrowers and cosigners of student education loans. (2) Prohibits student loan servicers from engaging in certain practices including unfair or deceptive practices or abusive practices. (3) Requires student loan servicers to retain records related to student loan transactions for 7 years and to yearly report non-identifying information about student education loans serviced in this State, including default and delinquency rates, to the Student Loan Ombudsperson. (4) Establishes the Office of the Student Loan Ombudsperson which shall, among other duties, receive, investigate, and attempt to resolve complaints from student loan borrowers. This Act differs from Senate Bill No. 132 as follows: (1) Makes a technical correction to correct an incorrect internal reference. (2) Excludes the State government from the definition of “student loan servicer”. (3) Makes clear the intent to exclude certain types of student loan servicers from the scope of this Act, as these student loan servicers are already regulated by state and federal regulators. (4) Removes an unnecessary “that”. (5) Adds “if applicable” to make clear the student loan servicer’s obligation to provide cosigner information applies only if applicable. (6) Moves from § 2504J of this Act certain requirements of student loan servicers related to cosigners and cosigner release to a new § 2511J of this Act containing protections related to cosigners and borrowers. (7) Specifies that a student loan servicer is only required to provide a written payment history to a student loan borrower or cosigner once each year. (8) Requires a student loan servicer to service a student education loan in conformity with § 2511J of this Act and to file a notice with the Student Loan Ombudsperson every 3 years, or on servicing the student loan servicer’s first student education loan in this State, that includes an address, email address, and phone number for the student loan servicer and an attestation that the student loan servicer understands the student loan servicer’s duties under this Act. (9) Clarifies that the Student Loan Ombudsperson (“Ombudsperson”) has certain powers, not that the Ombudsperson is required to exercise those powers in all cases. (10) Clarifies that the Consumer Protection Unit of the Department of Justice and other appropriate agencies are to have access to information available to the Ombudsperson to the extent necessary for investigation purposes. (11) Permits the Ombudsperson to meet regularly with a member of the Consumer Protection Unit to coordinate efforts. (12) Permits the Student Loan Ombudsperson to access, receive, and use any documents, information, or evidence the Ombudsperson deems relevant to the inquiry or investigation, including any documents, information, or evidence in the possession of a student loan servicer. (13) Replaces language related to whom the Student Loan Ombudsperson’s annual report is due with standard report language developed for the Delaware Legislative Drafting Manual and adds the Attorney General as a recipient of the report. (14) Delays the effective date of the Act until January 1, 2025.