Senate Bill No. 716
Public Act No. 21-190
AN ACT CONCERNING THE FEDERAL STUDENT LOAN
BORROWERS' BILL OF RIGHTS 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 Section 36a-846 of the general statutes is repealed and the
following is substituted in lieu thereof (Effective July 1, 2021):
As used in this section and sections 36a-847 to 36a-854, as amended
by this act, and sections 3 and 4 of this act:
(1) "Advertise" or "advertising" has the same meaning as provided in
section 36a-485;
(2) "Branch office" means a location other than the main office at
which a licensee or any person on behalf of a licensee acts as a student
loan servicer;
(3) "Consumer report" has the same meaning as provided in Section
603(d) of the Fair Credit Reporting Act, 15 USC, 1681a, as amended from
time to time;
[(3)] (4) "Control person" has the same meaning as provided in section
36a-485;
(5) "Cosigner" has the same meaning as provided in 15 USC 1650(a), Senate Bill No. 716
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as amended from time to time;
(6) "Federal student education loan" means any student education
loan (A) (i) made pursuant to the William D. Ford Federal Direct Loan
Program, 20 USC 1087a, et seq., as amended from time to time, or (ii)
purchased by the United States Department of Education pursuant to 20
USC 1087i-1(a), as amended from time to time, and (B) owned by the
United States Department of Education;
(7) "Federal student loan servicer" means any student loan servicer
responsible for the servicing of a federal student education loan to a
student loan borrower pursuant to a contract awarded to such person
by the United States Department of Education under 20 USC 1087f, as
amended from time to time;
[(4)] (8) "Main office" has the same meaning as provided in section
36a-485;
(9) "Private student education loan" means any student education
loan that is not a federal student education loan;
(10) "Private student education loan servicer" means any student loan
servicer responsible for the servicing of a private student education loan
to a student loan borrower;
[(5)] (11) "Student loan borrower" means any individual who resides
within this state who has agreed to repay a student education loan;
[(6)] (12) "Student loan servicer" means any person, wherever located,
responsible for the servicing of any student education loan to any
student loan borrower;
[(7)] (13) "Servicing" means (A) receiving any scheduled periodic
payments from a student loan borrower pursuant to the terms of a
student education loan; (B) applying the payments of principal and Senate Bill No. 716
Public Act No. 21-190 3 of 9
interest and such other payments with respect to the amounts received
from a student loan borrower, as may be required pursuant to the terms
of a student education loan; (C) maintaining account records for and
communicating with the student loan borrower concerning the student
education loan during the period when no scheduled periodic payments
are required; (D) interacting with a student loan borrower for purposes
of facilitating the servicing of a student education loan, including, but
not limited to, assisting a student loan borrower to prevent such
borrower from defaulting on obligations arising from the student
education loan; or [(C)] (E) performing other administrative services
with respect to a student education loan;
[(8)] (14) "Student education loan" means any loan primarily for
personal use to finance education or other school-related expenses;
[(9)] (15) "Unique identifier" has the same meaning as provided in
section 36a-485.
Sec. 2. Section 36a-850 of the general statutes is repealed and the
following is substituted in lieu thereof (Effective July 1, 2021):
No [person who is required to be licensed and who is subject to the
provisions of sections 36a-846 to 36a-854, inclusive,] student loan
servicer and no control person of a student loan servicer shall, directly
or indirectly:
(1) Employ any scheme, device or artifice to defraud or mislead
student loan borrowers;
(2) Engage in any unfair or deceptive practice toward any person or
misrepresent or omit any material information in connection with the
servicing of a student education loan, including, but not limited to,
misrepresenting the amount, nature or terms of any fee or payment due
or claimed to be due on a student education loan, the terms and
conditions of the loan agreement or the borrower's obligations under the Senate Bill No. 716
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loan;
(3) Obtain property by fraud or misrepresentation;
(4) Knowingly misapply or recklessly apply student education loan
payments to the outstanding balance of a student education loan;
(5) Knowingly or recklessly provide inaccurate information to a
credit bureau, thereby harming a student loan borrower's
creditworthiness;
(6) Fail to report both the favorable and unfavorable payment history
of the student loan borrower to a nationally recognized consumer credit
bureau at least annually if the student loan servicer [licensee] regularly
reports information to a credit bureau;
(7) Refuse to communicate with an authorized representative of the
student loan borrower who provides a written authorization signed by
the student loan borrower, provided the student loan servicer [licensee]
may adopt procedures reasonably related to verifying that the
representative is in fact authorized to act on behalf of the student loan
borrower;
(8) Negligently make any false statement or knowingly and wilfully
make any omission of a material fact in connection with any information
or reports filed with a governmental agency or in connection with any
investigation conducted by the commissioner or another governmental
agency;
(9) [Fail] Unless otherwise required pursuant to federal law, a federal
student loan agreement, or by a contract between a federal student loan
servicer and the United States Department of Education, fail to establish,
enforce and maintain policies and procedures for supervising
employees, agents and office operations that are reasonably designed to
achieve compliance with applicable student loan servicing laws and Senate Bill No. 716
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regulations [;] or fail to comply with the service standards set by the
commissioner in accordance with section 59 of public act 16-65; or
[(10) Fail to comply with the service standards set by the
commissioner in accordance with section 59 of public act 16-65.]
(10) Engage in an abusive act or practice, as described in Section 1031
of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
P.L. 111-203, as amended from time to time, when servicing a student
education loan.
Sec. 3. (NEW) (Effective July 1, 2021) In servicing a private student
education loan, a private student education loan servicer shall:
(1) Prior to sending the first billing statement on a private student
education loan or immediately upon receipt of a private student
education loan following the transfer or assignment of such private
student education loan, provide to the student loan borrower, and to
any cosigner of such private student education loan, information
concerning the rights and responsibilities of such student loan borrower
and cosigner, including information regarding (A) how such private
student education loan obligation will appear on the cosigner's
consumer report, (B) how the cosigner will be notified if the private
student education loan becomes delinquent, including how the cosigner
can cure the delinquency in order to avoid negative credit furnishing
and loss of cosigner release eligibility, and (C) eligibility for release of
the cosigner's obligation on such private student education loan,
including number of on-time payments and any other criteria required
to approve the release of the cosigner from the loan obligation;
(2) Send annual written notice to all student loan borrowers and
cosigners relating to information about cosigner release, including the
criteria the private student education loan servicer requires to approve
the release of a cosigner from a private student education loan Senate Bill No. 716
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obligation and the process for applying for cosigner release;
(3) Upon satisfaction by the student loan borrower of the applicable
consecutive on-time payment requirement for purposes of cosigner
release eligibility, send, in writing, to such student loan borrower and
cosigner (A) a notification that such consecutive on-time payment
requirement has been satisfied and that such cosigner may be eligible
for cosigner release, and (B) information relating to the procedure for
applying for cosigner release and any additional criteria that a cosigner
must satisfy in order to be eligible for cosigner release. Such notification
and information shall be sent by either United States mail or electronic
mail, provided such student loan borrower has elected to receive
electronic communications from the private student education loan
servicer;
(4) In the event that an application for a cosigner release is
incomplete, provide, in writing, (A) notice to the student loan borrower
and cosigner that such application is incomplete, and (B) a description
of the information that is missing or the additional information that is
needed to consider the application complete and the date by which the
borrower or cosigner are required to provide such information;
(5) Not later than thirty days following the submission of an
application for cosigner release, send to the student loan borrower and
cosigner a written notice of the decision that such application has been
approved or denied. If the application for cosigner release has been
denied, such written notice shall inform such student loan borrower and
cosigner that such student loan borrower and cosigner have the right to
request all documents and information used by the private student
education loan servicer in its decision to deny such application,
including the credit score threshold used by the private student
education loan servicer, the consumer report of such student loan
borrower or cosigner, the credit score of such student loan borrower or
cosigner, and any other documents that are relevant or specific to such Senate Bill No. 716
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student loan borrower or cosigner. The private student education loan
servicer shall provide such student loan borrower and cosigner with any
adverse action notices required under federal law if the denial of such
application was based in whole or in part on any information contained
in a consumer report;
(6) Include the information described in subdivision (2) of this section
in any response to an application for cosigner release;
(7) Refrain from imposing any restrictions on a student loan borrower
or cosigner that may permanently prevent such student loan borrower
or cosigner from qualifying for a cosigner release, including, but not
limited to, restrictions on the number of times a student loan borrower
or cosigner may apply for cosigner release;
(8) Refrain from imposing any negative consequences on a student
loan borrower or cosigner during the sixty days following issuance of
the notice described in subdivision (4) of this section, or until a final
decision concerning a student loan borrower or cosigner's application
for cosigner release is made. For purposes of this subdivision, "negative
consequences" includes, but is not limited to, the imposition of
additional eligibility criteria, negative credit reporting, lost eligibility for
a cosigner release, late fees, interest capitalization or other financial
penalties or injury;
(9) Refrain from requiring a student loan borrower to make more than
twelve consecutive on-time payments as part of the eligibility criteria
for cosigner release. Such private student education loan servicer shall
consider any student loan borrower who has paid the equivalent of
twelve months of principal and interest during any twelve-month
period to have satisfied the consecutive on-time payment requirement,
even if such student loan borrower has not made payments monthly
during such twelve-month period; Senate Bill No. 716
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(10) Upon receipt of a request by a student loan borrower or cosigner
to a change that results in restarting the count of consecutive on-time
payments required for cosigner release eligibility, provide to such
student loan borrower and cosigner written notification of the impact of
such change on cosigner release eligibility and an opportunity to
withdraw or reverse such change for purposes of avoiding such impact;
(11) Provide a student loan borrower or cosigner (A) the right to
request an appeal of a determination to deny a cosigner release
application, (B) an opportunity to submit additional information or
documentation evidencing that such student loan borrower has the
ability, willingness and stability to make his or her payment obligations,
and (C) the right to request that a different employee of the private
student education loan servicer review and make a determination on the
application for a cosigner release;
(12) Establish and maintain a comprehensive record management
system reasonably designed to ensure the accuracy, integrity and
completeness of data and other information about cosigner release
applications. Such system shall include the number of cosigner release
applications received, the approval and denial rate of such applications
and the primary reasons for denial of such applications;
(13) In the event that a cosigner has a total and permanent disability,
as determined by any federal or state agency or doctor of medicine or
osteopathy legally authorized to practice in the state, and unless
otherwise expressly prohibited under the terms of a private student
education loan agreement, (A) release the cosigner from his or her
obligation to repay the private student education loan upon receipt of
notification that such cosigner has a total and permanent disability, and
(B) refrain from requiring that a new cosigner be added to such private
student education loan after the original cosigner has been released
from such private student education loan; Senate Bill No. 716
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(14) Provide the cosigner of a private student education loan with
access to the same documents and records associated with the private
student education loan that are available to the student loan borrower
of such private student education loan; and
(15) If a student loan borrower has electronic access to documents and
records associated with a private student education loan, provide
equivalent electronic access to such documents and records to the
cosigner of such private student education loan.
Sec. 4. (NEW) (Effective July 1, 2021) The provisions of section 3 of this
act shall not apply to the following persons: (1) Any bank, out-of-state
bank that has a physical presence in the state, Connecticut credit union,
federal credit union or out-of-state credit union; (2) any wholly owned
subsidiary of any such bank or credit union; (3) any operating
subsidiary where each owner of such operating subsidiary is wholly
owned by the same bank or credit union; and (4) the Connecticut Higher
Education Supplemental Loan Authority.