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General Assembly Committee Bill No. 716
January Session, 2021
LCO No. 5521
Referred to Committee on HIGHER EDUCATION AND
EMPLOYMENT ADVANCEMENT
Introduced by:
(HED)
AN ACT CONCERNING TH E FEDERAL STUDENT LO AN
BORROWERS' BILL OF R IGHTS ACT OF 2019.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 36a-846 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective October 1, 2021): 2
As used in this section and sections 36a-847 to 36a-854, inclusive, and 3
sections 3 and 4 of this act: 4
(1) "Advertise" or "advertising" has the same meaning as provided in 5
section 36a-485; 6
(2) "Branch office" means a location other than the main office at 7
which a licensee or any person on behalf of a licensee acts as a student 8
loan servicer; 9
(3) "Consumer report" has the same meaning as provided in Section 10
603(d) of the Fair Credit Reporting Act, 15 USC, 1681a, as amended from 11
time to time; 12
[(3)] (4) "Control person" has the same meaning as provided in section 13
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36a-485; 14
(5) "Cosigner" has the same meaning as provided in 15 USC 1650(a), 15
as amended from time to time; 16
[(4)] (6) "Main office" has the same meaning as provided in section 17
36a-485; 18
(7) "Person" means a natural person, corporation, limited liability 19
company, trust, partnership, incorporated or unincorporated 20
association or any other legal entity; 21
(8) "Private education loan" has the same meaning as provided in 15 22
USC 1650(a), as amended from time to time; 23
[(5)] (9) "Student loan borrower" means any individual who resides 24
within this state who has agreed to repay a student education loan; 25
[(6)] (10) "Student loan servicer" means any person, wherever located, 26
responsible for the servicing of any student education loan to any 27
student loan borrower; 28
[(7)] (11) "Servicing" means (A) receiving any scheduled periodic 29
payments from a student loan borrower pursuant to the terms of a 30
student education loan [; (B)] and applying the payments of principal 31
and interest and such other payments with respect to the amounts 32
received from a student loan borrower, as may be required pursuant to 33
the terms of a student education loan; (B) maintaining account records 34
for and communicating with the student loan borrower concerning the 35
student education loan during the period when no scheduled periodic 36
payments are required; (C) interacting with a student loan borrower for 37
purposes of facilitating the servicing of a student education loan, 38
including, but not limited to, assisting a student loan borrower to 39
prevent such borrower from defaulting on obligations arising from the 40
student education loan; or [(C)] (D) performing other administrative 41
services with respect to a student education loan; 42
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[(8)] (12) "Student education loan" means any loan, including private 43
education loans, primarily for personal use to finance education or other 44
school-related expenses; 45
[(9)] (13) "Unique identifier" has the same meaning as provided in 46
section 36a-485. 47
Sec. 2. Section 36a-850 of the general statutes is repealed and the 48
following is substituted in lieu thereof (Effective October 1, 2021): 49
No person who is required to be licensed and who is subject to the 50
provisions of sections 36a-846 to 36a-854, inclusive, as amended by this 51
act, and no control person shall, directly or indirectly: 52
(1) Employ any scheme, device or artifice to defraud or mislead 53
student loan borrowers; 54
(2) Engage in any unfair or deceptive practice toward any person or 55
misrepresent or omit any material information in connection with the 56
servicing of a student education loan, including, but not limited to, 57
misrepresenting the amount, nature or terms of any fee or payment due 58
or claimed to be due on a student education loan, the terms and 59
conditions of the loan agreement or the borrower's obligations under the 60
loan; 61
(3) Obtain property by fraud or misrepresentation; 62
(4) Knowingly misapply or recklessly apply student education loan 63
payments to the outstanding balance of a student education loan; 64
(5) Knowingly or recklessly provide inaccurate information to a 65
credit bureau, thereby harming a student loan borrower's 66
creditworthiness; 67
(6) Fail to report both the favorable and unfavorable payment history 68
of the student loan borrower to a nationally recognized consumer credit 69
bureau at least annually if the student loan servicer licensee regularly 70
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reports information to a credit bureau; 71
(7) Refuse to communicate with an authorized representative of the 72
student loan borrower who provides a written authorization signed by 73
the student loan borrower, provided the student loan servicer licensee 74
may adopt procedures reasonably related to verifying that the 75
representative is in fact authorized to act on behalf of the student loan 76
borrower; 77
(8) Negligently make any false statement or knowingly and wilfully 78
make any omission of a material fact in connection with any information 79
or reports filed with a governmental agency or in connection with any 80
investigation conducted by the commissioner or another governmental 81
agency; 82
(9) Fail to establish, enforce and maintain policies and procedures for 83
supervising employees, agents and office operations that are reasonably 84
designed to achieve compliance with applicable student loan servicing 85
laws and regulations; [or] 86
(10) Fail to comply with the service standards set by the 87
commissioner in accordance with section 59 of public act 16-65; or 88
(11) Engage in an abusive act or practice, as described in Section 1031 89
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 90
P.L. 111-203, as amended from time to time, when servicing a student 91
education loan. 92
Sec. 3. (NEW) (Effective October 1, 2021) In servicing a private 93
education loan, a student loan servicer shall: 94
(1) Prior to sending the first billing statement on a private education 95
loan or immediately upon receipt of a private education loan following 96
the transfer or assignment of such private education loan, provide to the 97
student loan borrower, and to any cosigner of such private education 98
loan, information concerning the rights and responsibilities of such 99
student loan borrower and cosigner, including information regarding 100
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(A) how such private education loan obligation will appear on the 101
cosigner's consumer report, (B) how the cosigner will be notified if the 102
private education loan becomes delinquent, including how the cosigner 103
can cure the delinquency in order to avoid negative credit furnishing 104
and loss of cosigner release eligibility, and (C) eligibility for release of 105
the cosigner's obligation on such private education loan, including 106
number of on-time payments and any other criteria required to approve 107
the release of the cosigner from the loan obligation; 108
(2) Send annual written notice to all student loan borrowers and 109
cosigners relating to information about cosigner release, including the 110
criteria the student loan servicer requires to approve the release of a 111
cosigner from a private education loan obligation and the process for 112
applying for cosigner release; 113
(3) Upon satisfaction by the student loan borrower of the applicable 114
consecutive on-time payment requirement for purposes of cosigner 115
release eligibility, send, in writing, to such student loan borrower and 116
cosigner (A) a notification that such consecutive on-time payment 117
requirement has been satisfied and that such cosigner may be eligible 118
for cosigner release, and (B) information relating to the procedure for 119
applying for cosigner release and any additional criteria that a cosigner 120
must satisfy in order to be eligible for cosigner release. Such notification 121
and information shall be sent by either United States mail or electronic 122
mail, provided such student loan borrower has elected to receive 123
electronic communications from the student loan servicer; 124
(4) In the event that an application for a cosigner release is 125
incomplete, provide, in writing, (A) notice to the student loan borrower 126
and cosigner that such application is incomplete, and (B) a description 127
of the information that is missing or the additional information that is 128
needed to consider the application complete and the date by which the 129
borrower or cosigner are required to provide such information; 130
(5) Not later than thirty days following the submission of an 131
application for cosigner release, send to the student loan borrower and 132
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cosigner a written notice of the decision that such application has been 133
approved or denied. If the application for cosigner release has been 134
denied, such written notice shall inform such student loan borrower and 135
cosigner that such student loan borrower and cosigner have the right to 136
request all documents and information used by the student loan servicer 137
in its decision to deny such application, including the credit score 138
threshold used by the student loan servicer, the consumer report of such 139
student loan borrower or cosigner, the credit score of such student loan 140
borrower or cosigner, and any other documents that are relevant or 141
specific to such student loan borrower or cosigner. The student loan 142
servicer shall provide such student loan borrower and cosigner with any 143
adverse action notices required under federal law if the denial of such 144
application was based in whole or in part on any information contained 145
in a consumer report; 146
(6) Include the information described in subdivision (2) of this section 147
in any response to an application for cosigner release; 148
(7) Refrain from imposing any restrictions on a student loan borrower 149
or cosigner that may permanently prevent such student loan borrower 150
or cosigner from qualifying for a cosigner release, including, but not 151
limited to, restrictions on the number of times a student loan borrower 152
or cosigner may apply for cosigner release; 153
(8) Refrain from imposing any negative consequences on a student 154
loan borrower or cosigner during the sixty days following issuance of 155
the notice described in subdivision (4) of this section, or until a final 156
decision concerning a student loan borrower or cosigner's application 157
for cosigner release is made. For purposes of this subdivision, "negative 158
consequences" includes, but is not limited to, the imposition of 159
additional eligibility criteria, negative credit reporting, lost eligibility for 160
a cosigner release, late fees, interest capitalization or other financial 161
penalties or injury; 162
(9) Refrain from requiring a student loan borrower to make more than 163
twelve consecutive on-time payments as part of the eligibility criteria 164
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for cosigner release. Such student loan servicer shall consider any 165
student loan borrower who has paid the equivalent of twelve-months of 166
principal and interest during any twelve-month period to have satisfied 167
the consecutive on-time payment requirement, even if such student loan 168
borrower has not made payments monthly during such twelve-month 169
period; 170
(10) Upon receipt of a request by a student loan borrower or cosigner 171
to a change that results in restarting the count of consecutive on-time 172
payments required for cosigner release eligibility, provide to such 173
student loan borrower and cosigner written notification of the impact of 174
such change on cosigner release eligibility and an opportunity to 175
withdraw or reverse such change for purposes of avoiding such impact; 176
(11) Provide a student loan borrower or cosigner (A) the right to 177
request an appeal of a determination to deny a cosigner release 178
application, (B) an opportunity to submit additional information or 179
documentation evidencing that such student loan borrower has the 180
ability, willingness and stability to make his or her payment obligations, 181
and (C) the right to request that a different employee of the student loan 182
servicer review and make a determination on the application for a 183
cosigner release; 184
(12) Establish and maintain a comprehensive record management 185
system reasonably designed to ensure the accuracy, integrity and 186
completeness of data and other information about cosigner release 187
applications. Such system shall include the number of cosigner release 188
applications received, the approval and denial rate of such applications 189
and the primary reasons for denial of such applications; 190
(13) In the event that a cosigner has a total and permanent disability, 191
as determined by any federal or state agency or doctor of medicine or 192
osteopathy legally authorized to practice in the state, and unless 193
otherwise expressly prohibited under the terms of a private education 194
loan agreement, (A) release the cosigner from his or her obligation to 195
repay the private education loan upon receipt of notification that such 196
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cosigner has a total and permanent disability, and (B) refrain from 197
requiring that a new cosigner be added to such private education loan 198
after the original cosigner has been released from such private education 199
loan; 200
(14) Provide the cosigner of a private education loan with access to 201
the same documents and records associated with the private education 202
loan that are available to the student loan borrower of such private 203
education loan; and 204
(15) If a student loan borrower has electronic access to documents and 205
records associated with a private education loan, provide equivalent 206
electronic access to such documents and records to the cosigner of such 207
private education loan. 208
Sec. 4. (NEW) (Effective October 1, 2020) (a) Any student loan 209
borrower, class of student loan borrowers or the legal representative of 210
such borrower or borrowers aggrieved by a violation of sections 36a-846 211
to 36a-854, inclusive, of the general statutes, as amended by this act, or 212
section 3 of this act, by a student loan servicer, may bring an action in 213
the Superior Court. Upon finding that a student loan servicer has 214
committed a violation of said sections, the court may award a prevailing 215
party actual damages, reasonable attorneys' fees and court costs, and 216
may, in its discretion, award punitive damages and restitution of 217
property and may provide such equitable relief as it deems necessary. 218
(b) In addition to the judicial relief permitted under subsection (a) of 219
this section, in any civil action brought under this section in which the 220
student loan borrower prevails, the court shall award treble damages 221
upon a finding that the student loan servicer has engaged in conduct 222
that substantially interferes with (1) such student loan borrower's right 223
to an alternative payment arrangement, loan forgiveness, cancellation 224
or discharge of the student education loan, or (2) any other financial 225
benefit (A) established under the terms of such student loan borrower's 226
promissory note, or (B) pursuant to the Higher Education Act of 1965, 227
as amended from time to time, or the regulations adopted thereunder. 228
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(c) Any student loan borrower, or the legal representative of such 229
borrower, entitled to bring an action under subsection (a) of this section 230
may, pursuant to rules established by the Superior Court, bring a class 231
action on behalf of themselves and other similarly situated student loan 232
borrowers to recover damages. 233
(d) The remedies provided under this section are in addition to any 234
other remedies provided by state or federal law, and a student loan 235
borrower shall not be required to exhaust any administrative remedies 236
established pursuant to sections 36a-846 to 36a-854, inclusive, of the 237
general statutes, as amended by this act, and section 3 of this act, prior 238
to bringing an action under this section. 239
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2021 36a-846
Sec. 2 October 1, 2021 36a-850
Sec. 3 October 1, 2021 New section
Sec. 4 October 1, 2020 New section
Statement of Purpose:
To provide additional protections for student loan borrowers and
cosigners of private education loans and to create a cause of action
against student loan servicers who engage in abusive acts or practices
while servicing a student education loan.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]
Co-Sponsors: SEN. LESSER, 9th Dist.
S.B. 716