New Proposed Regulations for Student Loan Servicers Announced
August 5th, 2019
This week the Department of Financial Services (DFS) proposed new regulations to govern student loan servicers. The proposed regulation is subject to a 60-day comment period following publication in the State Register on July 31, 2019. The Department of Financial Services will then review all received comments and issue a final regulation. Under the proposed regulation, student loan servicers will be required to:
- Provide clear and complete information concerning fees, payments due, and terms and conditions of loans;
- Apply payments in borrowers’ best interest, rather than in ways that maximize servicer fees;
- Inform borrowers of income-based repayment and loan forgiveness options;
- Maintain and provide to consumers a detailed history of their account;
- When a borrower’s loan is transferred to a new servicer, ensure all necessary servicing information is transferred with the loan so the borrower’s repayment;
- Provide accurate information to credit reporting agencies; and
- Provide timely and substantive responses to consumer complaints.
DFS Superintendent Linda Lacewell said:
“New York’s more than 2 million student loan borrowers, who are already bearing the enormous burden of debt, should not have to suffer abuse by student loan servicers after investing in their education. We look forward to protecting New York students, their families and their futures under this new regulatory regime.”