Wisconsin Senate Bill SB859

Wisconsin 2023-2024 Regular Session

• Introduced: 12/26/23
• Refer: 12/26/23
• Failed: 4/15/24

Caption

Student loans for postsecondary education, requirements related to student loan servicers, creating an office of the student loan ombudsman in the Department of Financial Institutions, and granting rule-making authority. (FE)

Impact

The bill aims to enhance consumer protection for student loan borrowers, addressing issues such as communication failures and improper payment applications by servicers. By licensing these servicers, the state hopes to ensure better compliance with consumer rights and provide a mechanism for borrowers to report grievances. The establishment of the Office of the Student Loan Ombudsman is expected to facilitate this process, potentially leading to improved accountability and transparency in how student loans are managed.

Summary

Senate Bill 859 establishes new regulations regarding student loans in the state, primarily focusing on the licensing of student loan servicers. This bill creates the Office of the Student Loan Ombudsman within the Department of Financial Institutions, tasked with overseeing and regulating student loan servicers that operate within the state. The legislation specifies requirements for these servicers, including those related to communication with borrowers, proper handling of payments, and maintenance of records. Servicers are also mandated to follow fair practices, ensuring that they do not misrepresent or defraud borrowers during the loan servicing process.

Contention

While the bill seeks to protect borrowers, there may be concerns regarding the enforcement of these new regulations and whether existing service providers can adapt to the heightened scrutiny and operational requirements. Some lawmakers and stakeholders may debate the adequacy of the oversight provided by the Office of the Student Loan Ombudsman, particularly in balancing the interests of borrowers against the operational realities of student loan servicers. Additionally, exempting certain state-regulated financial service providers from some requirements could raise questions about fairness and consistency in borrower protections.