STATE OF NEW YORK ________________________________________________________________________ 5056--A Cal. No. 1098 2023-2024 Regular Sessions IN SENATE February 22, 2023 ___________ Introduced by Sen. THOMAS -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- reported favora- bly from said committee and committed to the Committee on Finance -- committee discharged and said bill committed to the Committee on Rules -- reported favorably from said committee, ordered to a third reading, passed by Senate and delivered to the Assembly, recalled, vote recon- sidered, restored to third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the financial services law, in relation to creating a private education debt registry The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The financial services law is amended by adding a new arti- 2 cle 9 to read as follows: 3 ARTICLE 9 4 PRIVATE EDUCATION DEBT REGISTRY 5 Section 901. Definitions. 6 902. Private education debt registry. 7 903. Rules and regulations. 8 904. Violations. 9 905. Severability. 10 § 901. Definitions. As used in this article: 11 1. "Fiscal year" means the twelve-month period that the private educa- 12 tion creditor uses for financial reporting and budgeting. 13 2. "Higher education" means higher education, including career educa- 14 tion, as those terms are defined in section two of the education law, 15 via correspondence, online, or in person, regardless of whether the 16 higher education institution is accredited within New York state. 17 3. "Higher education expense" means any expense arising from higher 18 education. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08128-04-3
S. 5056--A 2 1 4. "Private education creditor" means any person engaged in the busi- 2 ness of securing, making, or extending a private education debt, or any 3 holder of a private education debt, including providers of higher educa- 4 tion to which a student education debt is owed. "Private education cred- 5 itor" shall not include the following persons, only to the extent that 6 state regulation is preempted by federal law: 7 (a) any federally chartered bank, savings bank, savings and loan asso- 8 ciation, or credit union; 9 (b) any bank, savings bank, savings and loan association, or credit 10 union organized under the laws of this or any other state; 11 (c) any wholly owned subsidiary of a federally chartered bank or cred- 12 it union; and 13 (d) any operating subsidiary where each owner of the operating subsid- 14 iary is wholly owned by the same federally chartered bank or credit 15 union. 16 5. "Private education debt" means an extension of credit or debt or 17 obligation owed or incurred by a consumer, contractual or otherwise, 18 contingent or absolute, that meets all of the following criteria: 19 (a) is not made, insured, or guaranteed under Title IV of the Higher 20 Education Act of 1965 (20 U.S.C. s.1070 et seq.); 21 (b) is extended to a consumer expressly, in whole or in part, for, or 22 accrues from nonpayment of, higher education expenses, regardless of 23 whether the credit or debt or obligation is owed to the provider of 24 higher education that the student attends; and 25 (c) shall not include any loan that is secured by real property or a 26 dwelling. 27 "Private education debt" shall include extensions of credit or debt or 28 obligations owed or incurred to refinance a private education debt. 29 6. "Provider of higher education" or "school" means a person engaged 30 in the business of higher education. For the purposes of this defi- 31 nition, a person need not have obtained authorization from the depart- 32 ment of education to operate in this state and need not be an accredited 33 institution. 34 § 902. Private education debt registry. 1. Beginning on or after the 35 one hundred eightieth day after the effective date of this article, no 36 person shall engage in business as a private education creditor in this 37 state without first satisfying the following requirements set forth in 38 subdivisions two and three of this section. 39 2. (a) A private education creditor operating in this state shall 40 register with the superintendent pursuant to any registration procedures 41 set forth by the superintendent by rule or regulation, which may include 42 registration through the Nationwide Multistate Licensing System and 43 Registry, and shall pay a fee set by the superintendent. The superinten- 44 dent may prescribe an alternative registration process and fee structure 45 for a provider of higher education. Registration shall include, at a 46 minimum, the name and address of the private education creditor and any 47 officer, director, partner, or owner of a controlling interest of the 48 private education creditor. A private education creditor shall annually 49 renew its registration and pay a renewal fee pursuant to a procedure and 50 on or before a date to be determined by the superintendent. 51 (b) This subdivision shall not apply to regulated persons, as such 52 term is defined in section one hundred four of this chapter, engaged in 53 business as a private education creditor in this state, to the extent 54 such regulation relates to its business as a private education creditor 55 and such persons are required to furnish data or reports annually to the 56 superintendent.
S. 5056--A 3 1 3. A private education creditor operating in this state shall annual- 2 ly, on or before a date to be determined by the superintendent and not 3 to exceed six months following the effective date of this article, 4 provide the superintendent with the following documents and information 5 about such creditor's private education debt portfolio related to 6 consumers that reside in this state pursuant to any procedure set forth 7 by the superintendent, which may include reporting through the Nation- 8 wide Multistate Licensing System and Registry, and which may further 9 include different procedures for regulated persons, as that term is 10 defined in section one hundred four of this chapter, and non-regulated 11 persons: 12 (a) For private education creditors that secure, make, or extend 13 private education debts, other than those private education debts 14 reported pursuant to paragraph (c) of this subdivision, relating to such 15 debts owed by a consumer residing in this state as of the end of the 16 prior fiscal year: 17 (i) a list of all schools for which such private education debts were 18 used to finance higher education, including, in the case of a refinanc- 19 ing loan, the school that the consumer attended using the private educa- 20 tion debt that was refinanced; 21 (ii) the total outstanding dollar amount and number of such private 22 education debts and the number of consumers who owe such private educa- 23 tion debts; 24 (iii) the total dollar amount and number of such private education 25 debts associated with each school identified under subparagraph (i) of 26 this paragraph; 27 (iv) the total dollar amount and number of private education debts 28 secured, made, or extended in the prior fiscal year; 29 (v) the total dollar amount and number of private education debts 30 secured, made, or extended in the prior fiscal year associated with each 31 school identified under subparagraph (i) of this paragraph; 32 (vi) the range of starting interest rates for private education debts 33 secured, made, or extended to consumers in the prior fiscal year and 34 percentage of consumers who receive those rates; 35 (vii) the overall default rate, as well as the overall default for 36 such debts associated with each school listed under subparagraph (i) 37 of this paragraph; 38 (viii) the total dollar amount and number of private education debts 39 that defaulted for reasons other than non-payment in the prior fiscal 40 year, as applicable; 41 (ix) the total dollar amount and number of private education debts 42 with a cosigner, as applicable; 43 (x) the total dollar amount and number of private education debts 44 secured, made, or extended with a cosigner in the prior fiscal year, as 45 applicable; 46 (xi) the total dollar amount and number of private education debts 47 secured, made, or extended to refinance other private education debts or 48 federal student loans, respectively, as applicable; 49 (xii) the total dollar amount and number of private education debts 50 secured, made, or extended to refinance other private education debts or 51 federal student loans, respectively, in the prior fiscal year, as appli- 52 cable; 53 (xiii) the total dollar amount and number of private education debts 54 for which the private education creditor has sued to collect in the 55 prior fiscal year, as applicable;
S. 5056--A 4 1 (xiv) additional information as may in the judgment of the superinten- 2 dent be necessary and appropriate in order to assess the total size and 3 status of the private education debt market and to assess borrower well- 4 being; and 5 (xv) A copy of any model promissory note, agreement, contract or other 6 instrument used by a private education creditor during the previous 7 fiscal year to substantiate that a new private education debt has been 8 extended to the consumer or that a consumer owes a debt or obligation to 9 the private education creditor. 10 (b) For private education creditors that acquire or assume private 11 education debts owed by a consumer residing in this state, relating to 12 such debts as of the end of the prior fiscal year: 13 (i) a list of all schools for which such private education debts were 14 used to finance higher education, including, in the case of a refinanc- 15 ing loan, the school that the consumer attended using the private educa- 16 tion debt that was refinanced; 17 (ii) the total outstanding dollar amount and number of such private 18 education debts and number of consumers who owe such private education 19 debts; 20 (iii) the total dollar amount and number of private education debts 21 associated with each school identified under subparagraph (i) of this 22 paragraph; 23 (iv) the total dollar amount and number of private education debts 24 acquired or assumed in the prior fiscal year; 25 (v) the total dollar amount and number of private education debts 26 acquired or assumed in the prior fiscal year associated with each school 27 identified under subparagraph (i) of this paragraph; 28 (vi) the overall default rate, as well as the overall default for such 29 debts associated with each school listed under subparagraph (i) of this 30 paragraph; 31 (vii) the total dollar amount and number of private education debts 32 that defaulted for reasons other than nonpayment in the prior fiscal 33 year, as applicable; 34 (viii) the total dollar amount and number of private education debts 35 with a cosigner, as applicable; 36 (ix) the total dollar amount and number of private education debts 37 that were used to refinance other private education debts, as applica- 38 ble; 39 (x) the total dollar amount and number of private education debts for 40 which the private education creditor has sued to collect in the prior 41 fiscal year, as applicable; and 42 (xi) additional information as may in the judgment of the superinten- 43 dent be necessary and appropriate in order to assess the total size and 44 status of the private education debt market and to assess borrower well- 45 being. 46 (c) For private education creditors that are providers of higher 47 education and whose private education debts result from unpaid debts or 48 obligations that were not extensions of credit and that result from 49 higher education provided in this state, relating to such debts as of 50 the end of the prior fiscal year, reported by race and gender: 51 (i) the total outstanding dollar amount and number of private educa- 52 tion debts and number of consumers who owe those debts; 53 (ii) the total dollar amount and number of private education debts 54 accrued and number of consumers who owe those debts in the prior fiscal 55 year;
S. 5056--A 5 1 (iii) the total number and balance of student accounts with an academ- 2 ic or administrative hold resulting from a private education debt; 3 (iv) the total number and balance of student accounts with an academic 4 or administrative hold resulting from a private education debt for which 5 a payment was made in the prior fiscal year and average payment made; 6 (v) the total number of student accounts for which federal financial 7 aid was returned to the federal government upon the student's withdrawal 8 from the provider of higher education in the prior fiscal year, and the 9 total dollar amount of any private education debt accrued as a result; 10 (vi) the number of consumers who owe a private education debt who 11 received a federal pell grant and the average debt owed; 12 (vii) the number of consumers who owe a private education debt who are 13 considered in-state and out-of-state students, and the total debt owed 14 by each group; 15 (viii) the total dollar amount, number of private education debts, and 16 number of consumers for which the private education creditor has in the 17 prior fiscal year (A) charged off the debt, (B) sent the debt to a third 18 party collection agency, (C) initiated a collection lawsuit, (D) 19 reported the debt to a consumer credit reporting agency, and (E) sold 20 the debt; 21 (ix) the total dollar amount, number of private education debts, and 22 number of consumers for which the private education creditor has, in the 23 prior fiscal year, collected on a private education debt in the follow- 24 ing instances: (A) payment arrangements wherein the payment was not 25 considered past due, such as tuition installment agreements; (B) 26 payments made on past due debts during the same academic term or billing 27 cycle in which the debt accrued and before such debts were sent to a 28 collection agency; (C) payments made on past due debts before they were 29 sent to a collection agency, excluding those payments made during the 30 same academic term or billing cycle in which the debt accrued; (D) a 31 third party collection agency, prior to initiating a lawsuit; and (E) a 32 collection lawsuit, including payments made by settlement or pursuant to 33 a judgment; 34 (x) additional information as may in the judgment of the superinten- 35 dent be necessary and appropriate in order to assess the total size and 36 status of the private education debt market and to assess borrower well- 37 being; and 38 (xi) a copy of any model written instrument used by a provider of 39 higher education in the prior fiscal year to substantiate a private 40 education debt, including but not limited to a promissory note, enroll- 41 ment agreement, or contract. 42 4. Not later than one year following the effective date of this 43 section, the superintendent shall create a publicly accessible website 44 that includes at least the following information about private education 45 creditors registered in this state: 46 (a) The name, address, telephone number and website for all private 47 education creditors; 48 (b) A summary of the information required by subdivision three of this 49 section; and 50 (c) Copies of all documents provided under subparagraph (xv) of para- 51 graph (a) of subdivision three of this section and subparagraph (xi) of 52 paragraph (c) of subdivision three of this section. 53 § 903. Rules and regulations. In addition to such powers as may other- 54 wise be prescribed by this chapter, the superintendent is hereby author- 55 ized and empowered to promulgate such rules and regulations as may in 56 the judgment of the superintendent be consistent with the purposes of
S. 5056--A 6 1 this article, or appropriate for the effective administration of this 2 article. 3 § 904. Violations. 1. If the superintendent finds, after notice and 4 hearing, that a private education creditor has knowingly violated this 5 article by failing to comply with any registration or reporting require- 6 ment or by furnishing inaccurate information to the superintendent, the 7 superintendent may impose a civil penalty of not more than ten thousand 8 dollars for each violation. 9 2. The superintendent may order that any person who has been found to 10 have knowingly violated any provision of this article, or of the rules 11 and regulations issued pursuant thereto, and has thereby caused finan- 12 cial harm to consumers, be barred for a term not exceeding ten years 13 from acting as a private education creditor, or a stockholder, or an 14 officer, director, partner or other owner, or an employee of a private 15 education creditor. 16 § 905. Severability. If any provision of this article or the applica- 17 tion thereof to any person or circumstance is adjudged invalid by a 18 court of competent jurisdiction, that judgment shall not affect or 19 impair the validity of the other provisions of this article or the 20 application thereof to other persons and circumstances. 21 § 2. This act shall take effect immediately.