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A2343
ASSEMBLY, No. 2343
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman WILLIAM F. MOEN, JR.
District 5 (Camden and Gloucester)
Co-Sponsored by:
Assemblywoman Reynolds-Jackson and Assemblyman Verrelli
SYNOPSIS
���� Requires registration of private education lenders;
establishes protections for private education borrowers.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act
concerning private education lenders and
supplementing P.L.2019, c.200 (C.17:16ZZ-1 et seq.).
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
�����
1.�� As
used in this act:
���� �Commissioner� means the
Commissioner of Banking and Insurance.
���� �Cosigner� means:
���� (1)�� any individual who is
liable for the obligation of another without compensation, regardless of how
the individual is designated in the contract or instrument with respect to that
obligation, including an obligation under a private education loan extended to
consolidate a borrower�s pre-existing private education loans; and
���� (2)�� shall include any person
whose signature is requested as a condition to grant credit or to forbear on
collection.
���� As used in this act,
�cosigner� shall not include a spouse of an individual described in paragraph
(1), the signature of whom is needed to perfect the security interest in a
loan.
���� �Creditor� means:
���� (1)�� the original creditor,
where ownership of a private education loan debt has not been sold, assigned,
or transferred;
���� (2)�� the person or entity
that owned the private education loan debt at the time the debt defaulted, even
if that person or entity did not originate the private education loan, and
where such a debt has not subsequently been sold, transferred or assigned; or
���� (3)�� a person or entity that
purchased a defaulted private education loan debt for collection purposes,
whether it collects the debt itself, hires a third party for collection, or
hires an attorney for collection litigation.
���� �Debt collector� means a
person who regularly collects or attempts to collect, directly or indirectly,
consumer debts originally owed or due or asserted to be owed or due another.�
The term shall not include an officer or employee of a creditor who, in the
name of the creditor, collects debts for that creditor, but it shall include a
creditor who, in the process of collecting its own debt, uses a name other than
its own that would indicate that a third person is collecting or attempting to
collect the debt.
���� �Department� means the
Department of Banking and Insurance.
���� �Original Creditor� means the
private education lender identified in a promissory note, loan agreement, or
loan contract entered into with a student loan borrower or cosigner.
���� �Private education lender� or
�lender� means any person
engaged in the business of
securing, making, or extending private education loans, or any holder of a
private education loan.� �Private education lender� shall not include the
following persons, only to the extent that State regulation is preempted by federal
law:
���� (1)�� any federally chartered
bank, savings bank, savings and loan association, or credit union;
���� (2)�� any wholly owned
subsidiary of a federally chartered bank or credit union; and
���� (3)�� any operating subsidiary
where each owner of the operating subsidiary is wholly owned by the same
federally chartered bank or credit union.
���� �Private education loan� means
an extension of credit that:
���� (1)�� is not made, insured, or
guaranteed under Title IV of the �Higher Education Act of 1965� (20 U.S.C.
s.1070 et seq.);
���� (2)�� is extended to a
consumer expressly, in whole or in part, for postsecondary educational
expenses, regardless of whether the loan is provided by the educational
institution that the student attends;
���� (3)�� shall not include
open-end credit or any loan that is secured by real property or a dwelling; and
���� (4)�� shall not include an
extension of credit in which the covered educational institution is the
creditor if:
���� (a)�� the term of the
extension of credit is 90 days or less; or
���� (b)�� an interest rate shall
not be applied to the credit balance and the term of the extension of credit is
in effect until the student completes the educational program.
���� �Private education loan
borrower� or �borrower� means any resident of this State who has received or
agreed to pay a private education loan for the borrower�s own educational
expenses.
���� �Student financing� means:
���� (1)�� an extension of credit
that:
���� (a)�� is not made, insured, or
guaranteed under Title IV of the �Higher Education Act of 1965� (20 U.S.C.
s.1070 et seq.);
���� (b)�� is extended to a
consumer expressly, in whole or in part, for postsecondary educational
expenses, regardless of whether the extension of credit is provided by the
provider of postsecondary education that the student attends; and
���� (c)�� shall not include any
loan that is secured by real property or a dwelling; or
���� (2)�� a debt or obligation
owed or incurred by a consumer, contractual or otherwise, that:
���� (a)�� is not a loan made,
insured, or guaranteed under Title IV of the �Higher Education Act of 1965� (20
U.S.C. s.1070 et seq.);
���� (b)�� is incurred by the
consumer, in whole or in part, expressly to finance postsecondary education
expenses regardless of whether the debt incurred is owed to the provider of
postsecondary education that the student attends; and
���� (c)�� shall not include any
loan that is secured by real property or a dwelling.
���� �Student financing company�
means any person engaged in the business of securing, making, or extending
credit to a consumer for postsecondary education expenses, or any holder of a
debt incurred by a consumer to finance postsecondary education expenses. �Student
financing company� shall not include the following persons, only to the extent
that State regulation is preempted by federal law:
���� (1)�� any federally chartered
bank, savings bank, savings and loan association, or credit union;
���� (2)�� any wholly owned
subsidiary of a federally chartered bank or credit union; and
���� (3)�� any operating subsidiary
where each owner of the operating subsidiary is wholly owned by the same
federally chartered bank or credit union.
���� �Total and permanent
disability� is the condition of an individual who:
���� (1)�� has been determined by
the United States Secretary of Veterans Affairs to be unemployable due to a
service-connected disability; or
���� (2)�� is eligible for Social
Security Disability Insurance or Supplemental Security Income and whose next
scheduled disability review will be five to seven years or more from the date
of the individual�s last Social Security Administration disability determination;
or
���� (3)
�is
unable to work and earn money or attend school by reason of any medically
determinable physical or mental impairment , as certified by a doctor of
medicine or a doctor of osteopathy who is legally licensed to practice in the
United States,
that can be expected to result in death, has lasted for a
continuous period of not less than 60 months, or can be expected to last for a
continuous period of not less than 60 months.
���� An individual shall not be
considered �totally and permanently disabled� under this act on the basis of a
condition that existed at the time the individual applied for the loan, unless
the individual�s condition has deteriorated later so as to render the
individual totally and permanently disabled.
���� 2.��� a.� No creditor, lender,
or student financing company shall extend student financing or a private
education loan to a resident of this State without first registering with the
Commissioner of Banking and Insurance as provided in this section and with the
Nationwide Multistate Licensing System and Registry in accordance with any
requirements established by that entity. The commissioner shall establish and
collect a registration fee.
���� b.��� A creditor, lender, or student
financing company shall:
���� (1)�� register with the
commissioner pursuant to any registration procedures set forth by the
commissioner by regulation;
���� (2)�� provide the
commissioner, at the time of registration and not less than once per year
thereafter, with the following documents and information:
���� (a)�� a list of all schools at
which the creditor, lender, or student financing company has provided loans to
a borrower residing in this State;
���� (b)�� the volume of loans made
annually to borrowers residing in this State;
���� (c)�� the volume of loans made
annually at each school identified under subparagraph (a) of this paragraph;
���� (d)�� the default rate for
borrowers obtaining loans from the creditor, lender, or student financing
company
���� (e)�� the eligibility criteria
to receive the lowest advertised starting interest rate and the percentage of
applicants who receive the lowest advertised starting interest rate; and
���� (f)�� the name and address of
the creditor, lender, or student financing company and any officer, director,
partner or owner of a controlling interest of the creditor, lender, or student
financing company.
���� c.���� The commissioner shall
post on the department�s Internet website the following information about
private education lenders registered in this State:
���� (1)�� the name, address,
telephone number and website for all registered private education lenders; and
���� (2)�� a summary of the
information required under subparagraphs (a) through (e) of paragraph (2) of
subsection b. of this section
���� d.��� A creditor, lender, or
student financing company shall post on its website a copy of each model
promissory note, agreement, contract or other instrument used by the creditor,
lender, or student financing company during the previous year to substantiate that
a private education loan has been extended to a borrower or that a borrower
owes a debt to the creditor, lender, or student financing company.�
���� e. The commissioner may impose
a civil penalty not exceeding $25,000 on any person for a violation of this
section.� Each violation of this section, including any order, rule or
regulation made or issued pursuant to the act, shall constitute a separate offense.�
Additionally, each violation which constitutes a knowing violation shall be a
crime of the third degree.
���� f.���� The commissioner may
order that any person who has been found to have knowingly violated any
provision of this section, or of the rules and regulations issued pursuant to
this section, be barred for a term not exceeding 10 years from acting as a
private education lender, or a stockholder, or an officer, director, partner or
other owner, or an employee of a private education lender.� The commissioner
may order the rescission of a loan made by a person who fails to register
pursuant to this section.� A violation of an order shall be a crime of the
third degree.
���� 3.��� a.� Prior to the
extension of a private education loan that requires a cosigner, a private
education lender shall deliver the following information to the cosigner:
���� (1)�� how the private
education loan obligation shall appear on the cosigner�s credit;
���� (2)�� how the cosigner shall
be notified if the private 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
���� (3)�� for a loan that provides
a cosigner release option, the conditions for eligibility for release of the
cosigner�s obligation on the private education loan, including the number of
on-time payments and any other criteria required to approve the release of
cosigner from the loan obligation.
���� �b.�� For any private
education loan that obligates a cosigner and provides for cosigner release, a
lender shall provide the borrower and the cosigner an annual written or
electronic notice containing clear and conspicuous information about cosigner
release, including the administrative, non-judgmental criteria the lender
requires to approve the release of the cosigner from the loan obligation and
the process for applying for cosigner release.� Such criteria may include
minimum income or credit, or both income and credit, requirements that the
lender requires the borrower to satisfy for cosigner release.
���� �c.��� If the borrower has met
the applicable payment requirement to be eligible for cosigner release, the
lender shall send the borrower and the cosigner a written notification by mail or
by electronic mail, where a borrower or cosigner has elected to receive
electronic communications from the lender, informing the borrower and cosigner
that the payments requirement to be eligible for cosigner release have been
met.� The notification shall also include information about any additional
criteria to qualify for cosigner release, and the procedure to apply for
cosigner release.
���� d.��� A lender shall provide
written notice to a borrower who applies for cosigner release, but whose
application is incomplete.� The written notice shall include a description of
the information needed to consider the application complete and the date by
which the applicant shall furnish the missing information.
���� e.���� Within 30 days after a
borrower submits a completed application for cosigner release, the lender shall
send the borrower and cosigner a written notice that informs the borrower and
cosigner whether the cosigner release application has been approved or denied.�
If the lender denies a request for cosigner release, the borrower may request
any documents or information used in the determination, including, but not
limited to, the credit score threshold used by the lender and any other
documents specific to the borrower , in the possession of the lender or the
lender�s third-party contractors.� The lender shall also provide any adverse
action notices required under applicable federal law if the denial is based in
whole or in part on any information contained in a consumer report.
���� 4.��� a. If a private
education loan provides a cosigner release option, in response to a written or
oral request for cosigner release, a lender shall provide the information
described in subsection b. of section 3 of this act.
���� b.��� If a private education
loan provides a cosigner release option, a lender shall not impose any
restriction that permanently bars a borrower from qualifying for cosigner
release, including restricting the number of times a borrower may apply for
cosigner release.
���� c.���� A lender shall not
impose any negative consequences on any cosigner during the 60 days following
the issuance of the notice required pursuant to subsection d. of section 3 of
this act, or until the lender makes a final determination about a borrower�s cosigner
release application.� For the purpose of this subsection, �negative
consequences� includes, but is not limited to, the imposition of additional
eligibility criteria, negative credit reporting, lost eligibility for cosigner
release, late fees, interest capitalization, or other financial injury.
���� d.��� For any private
education loan executed after the effective date of this act, a lender shall
not require greater than 12 consecutive, on-time payments of principal and
interest as the initial criteria for the borrower to submit an application for
cosigner release.�
���� e.���� If a borrower or
cosigner requests a change in terms that restarts the count of consecutive,
on-time payments required for cosigner release, the lender shall notify the
borrower and cosigner in writing , by mail, or by electronic mail, if a
borrower or cosigner has elected to receive electronic communications from the
lender, of the impact of the change and provide the borrower or cosigner the
right to withdraw or reverse the request to avoid that impact.
���� f.���� A borrower shall have
the right to request an appeal of a lender�s determination to deny a request
for cosigner release, and the lender shall permit the borrower to submit
additional documentation evidencing the borrower�s ability, willingness, and
stability to meet the payment obligations. The borrower may request review of
the cosigner release determination by another employee.
���� g.��� A lender shall 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 and to ensure compliance with applicable
state and federal laws, including but not limited to the �Equal Credit
Opportunity Act,� 15 U.S.C. s.1691 et seq., and the �Fair Credit Reporting
Act,� 15 U.S.C. s.1681 et seq.� This system shall include the number of
cosigner release applications received, the approval and denial rate, and the
primary reasons for any denial.
���� h.��� (1)� A lender shall
provide a cosigner with access to all documents or records related to the
cosigned private education loan that are available to the borrower.
���� (2)�� If a lender provides
electronic access to documents and records for a borrower, it shall provide
equivalent electronic access to the cosigner.
���� 5.��� a.� (1)� A private
education loan executed after the effective date of this act shall not include
a provision that permits the private educational lender to accelerate, in whole
or in part, payments on the private education loan, except in cases of payment
default. A lender shall not place any loan or account into default or
accelerate a loan for any reason, other than for payment default.
���� (2)�� A private education loan
prior to the effective date of this act shall permit the lender to accelerate
payments only if the promissory note or loan agreement explicitly authorizes an
acceleration and only for the reasons stated in the note or agreement.
���� b.��� (1)� A private education
loan executed prior to or after the effective date of this act shall not
include a provision that permits the private education lender to attempt to
collect against the cosigner�s estate, other than for payment default.
�
���� (2)�� Upon receiving
notification of the death or bankruptcy of a cosigner, when the loan is not
more than 60 days delinquent at the time of the notification, the lender shall
not change any terms or benefits under the promissory note, repayment schedule,
repayment terms, or monthly payment amount or any other provision associated
with the loan.
���� c.���� A lender shall not
place any loan or account into default or accelerate a loan while a borrower is
seeking a loan modification or enrollment in a flexible repayment plan, except
that a lender may place a loan or account into default or accelerate a loan for
payment default 90 days following the borrower�s default.
���� 6.��� a. A private education
lender, upon determination of the total and permanent disability of a borrower,
shall release any cosigner from the obligations of the cosigner under a private
education loan.� The lender shall not attempt to collect a payment from any
cosigner
following a notification of total and permanent disability of the borrower.
���� b.��� A private education
lender, upon determination of the total and permanent disability of a cosigner,
shall release that individual cosigner from the obligations of the cosigner
under a private education loan.
���� c. A lender shall notify a
borrower and cosigner for a private education loan if either a cosigner or
borrower is released from the obligations of the private education loan under
this section, within 30 days of the release.
���� d.��� Any lender that extends
a private education loan shall provide the borrower an option to designate an
individual to have the legal authority to act on behalf of the borrower with
respect to the private education loan in the event of the total and permanent
disability of the borrower.
���� e.���� (1)� In the event a
cosigner is released from the obligations of a private education loan pursuant
to subsection a. of this section, the lender shall not require the borrower to
obtain another cosigner on the loan obligation.
���� (2)�� A lender shall not
declare a default or accelerate the debt against the borrower on the sole basis
of the release of the cosigner from the loan obligation.
���� f.���� A lender shall, upon
determination of the total and permanent disability of a borrower, discharge
the liability of the borrower and cosigner on the loan.
���� g.��� After making the
determination described in subsection f. of this section, the lender shall not:
���� (1)�� attempt to collect on
the outstanding liability of the borrower or cosigner; or
���� (2)�� monitor the disability
status of the borrower at any point after the date of discharge.
���� 7.��� a.� Prior to offering a
person a private education loan that is being used to refinance an existing
education loan, a private education lender shall provide the person a disclosure
that benefits and protections applicable to the existing loan may be lost due
to the refinancing.
���� The information provided
pursuant to this subsection shall be provided on a one-page information sheet
in a 12-point font and shall be written in simple, clear, understandable and
easily readable language as provided in P.L.1980, c.125 (C.56:12-1 et seq.).
���� b.��� If a private education
lender offers any borrower flexible repayment options in connection with a
private education loan, those flexible repayment options shall be made
available to all borrowers of loans by the lender.� A lender shall:
���� (1)�� provide on its website a
description of any alternative repayment options offered by the lender for
private education loans;
���� (2)�� establish policies and
procedures and implement them consistently in order to facilitate evaluation of
private education loan flexible repayment option requests, including providing
accurate information regarding any private education loan alternative repayment
options that may be available to the borrower through the promissory note or
that may have been marketed to the borrower through marketing materials; and
���� (3)�� consistently present and
offer private education loan repayment options to borrowers with similar
financial circumstances, if the lender offers repayment options.
���� 8.��� a.� No private education
lender shall:
���� (1)�� offer any private
education loan that is not in conformity with this act, or that is in violation
of any other State or federal law;
���� (2)�� engage in any unfair,
deceptive, or abusive act or practice;� or make, advertise, print, display,
publish, distribute, electronically transmit, telecast or broadcast, in any
manner, any statement or representation which is false, misleading or
deceptive.
���� b.��� If a private education
lender does not offer the same interest rate to all borrowers, the private
education lender shall publish the criteria used to determine the rate for
which a borrower is eligible in all places where the interest rate is
published.
���� 9.��� a. In addition to any
other information required under applicable federal or State law, a debt
collector attempting to collect a private education loan shall provide in the
first debt collection communication with the borrower and at any other time the
borrower requests this documentation:
���� (1)�� the name of the owner of
the private education loan debt;
���� (2)�� the original creditor's
name at the time of default, if applicable;
���� (3)�� the original creditor's
account number used to identify the private education loan debt at the time of
default, if the original creditor used an account number to identify the
private education loan debt at the time of default;
���� (4)�� the amount due at the
time of default;
���� (5)�� a schedule of all
transactions credited or debited to the student loan account;
���� (6)�� a copy of all pages of
the contract, application or other documents evidencing the private education
loan borrower�s liability for the private education loan, stating all terms and
conditions applicable to the private education loan; and
���� (7)�� a clear and conspicuous
statement disclosing that the borrower has a right to request all information
possessed by the creditor related to the defaulted private education loan debt,
including, but not limited to the required information described in paragraph
(3) of this subsection.
���� �b.�� A creditor shall not
collect or attempt to collect a private education loan debt unless the creditor
possesses:�
���� (1)�� the name of the owner of
the private education loan;
���� (2)�� the original creditor's
name at the time of default, if applicable;
���� (3)�� the original creditor's
account number used to identify the private education loan at the time of
default, if the original creditor used an account number to identify the
private education loan at the time of default;
���� (4)�� the amount due at
default;
���� (5)�� a schedule of all
transactions credited or debited to the student loan account;
���� (6)�� an itemization of
interest and fees, if any, claimed to be owed and whether those were imposed by
the original creditor or any subsequent owners of the private education loan;�
���� (7)�� the date that the
private education loan was incurred;
���� (8)�� a billing statement or
other account record indicating the date of the first partial payment or the
first day that a payment was missed, whichever is earlier;
���� (9)�� a billing statement or
other account record indicating the date of the last payment made by the
borrower, if applicable;
���� (10)��� any payments,
settlement, or financial remuneration of any kind paid to the creditor by a
guarantor, co-signer, or surety, and the amount of payment received;
���� (11)��� the names of all
persons or entities that owned the private education loan after the time of
default, if applicable, and the date of each sale or transfer;
���� �(12)� a log of all collection
attempts made in the last 12 months including date and time of all calls and
letters;
���� �(13)� copies of all
settlement letters made in the last 12 months, or, in the alternative, a
statement that the creditor has not attempted to settle or otherwise
renegotiate the debt prior to suit;
���� �(14) a copy of all pages of
the contract or other documents evidencing the private education loan
borrower�s liability for the private education loan, stating all terms and
conditions applicable to the private education loan; and
���� �(15)� documentation
establishing that the creditor is the owner of the specific individual private
education loan at issue.� If the private education loan was assigned more than
once, the creditor shall possess each assignment or other writing evidencing
the transfer of ownership of the specific individual private education loan to
establish an unbroken chain of ownership, beginning with the original creditor
to the first subsequent creditor and each additional creditor.� Each assignment
or other writing evidencing transfer of ownership or the right to collect shall
contain the original creditor�s account number, redacted for security purposes
to show only the last four digits, of the private education loan purchased or
otherwise assigned, the date of purchase and assignment, and shall clearly show
the borrower�s correct name associated with the original account number.� The
assignment or other writing attached shall be that by which the creditor or
other assignee acquired the private education loan, not a document prepared for
litigation or collection purposes.
���� c.���� Failure by a creditor
or debt collector to produce to a borrower, within 30 days of a verbal or
written request, any documentation described in subsection a. or b. of this
section shall be a violation of this act.
���� 10.� a.� Upon a payment
default on a private education loan by a borrower, and before a creditor may
accelerate the maturity of the loan or commence a legal action against the
borrower, the lender shall provide to the borrower a notice of intention to
accelerate the loan.� The creditor shall provide the notice at least 30 days,
but not more than 180 days, in advance of the action, and shall provide a copy
of the notice to the department at the same time it is provided to the
borrower.�
A notice provided pursuant to this
section shall contain a certification that the lender possesses all of the
information required pursuant to subsection b. of section 9 of this act.
���� 11.� a.� An action to enter a
judgment against a borrower shall be commenced within six years of the date the
borrower failed to make a payment.�
���� b.��� A creditor or lender
commencing a legal action against a borrower shall attach the following
documentation and information to the complaint filed in a court of competent
jurisdiction:
���� (1)�� a copy of the notice of
intention provided pursuant to section 10 of this act, including the
information a lender is required to retain pursuant to subsection b. of section
9 of this act;
���� (2)�� the date of the first
partial or missed payment;
���� (3)�� the date of the last
payment, if applicable;
���� (4)�� a copy of any
self-certification or needs analysis conducted by the original creditor prior
to origination of the loan;
���� (5)�� a statement as to
whether the creditor is willing to renegotiate the terms of the debt;
���� (6)�� a statement as to
whether the debt is eligible for any flexible repayment option; and
���� (7)�� a statement as to
whether the debt is dischargeable in bankruptcy.
���� Failure to attach the
information required by this subsection shall be an affirmative defense.
���� c.���� No court shall enter a
judgment on a private education loan obligation if the creditor or lender does
not comply with the requirements of this section.
���� d.��� If a creditor fails to
comply with the requirements of this section, a borrower may bring an action,
including a counterclaim, against the creditor to recover or obtain:
���� (1)�� an order setting aside
or vacating any default judgment entered against the person;
���� (2)�� a judgment in favor of
the borrower;
���� (3)�� actual damages, but in
no case shall the total award of damages action be less than $500;
���� (4)�� restitution of all
moneys invalidly taken from or paid by the borrower after a judgment was
obtained by a creditor;
���� (5) injunctive relief;
���� (6) correction of the
borrower�s credit report;
���� (7) attorney�s fees and court
costs; and
���� �(8)
any
other relief that the court deems proper.
���� e.���� In addition to any
other remedies provided by this section or otherwise provided by law, whenever
it is proven by a preponderance of the evidence that a creditor has filed
information with the court that is required pursuant to the act that is false,
the court shall award treble damages to the borrower, but in no case shall the
total award of damages action be less than $1,500.
���� 12.� A borrower or cosigner
who suffers damage as a result of a violation of this act may bring an action
in a court of competent jurisdiction to recover:
���� a.���� Actual damages, but in
no case shall the total award of damages action be less than $500;
���� b.��� An order enjoining the
methods, acts, or practices;
���� c.���� Restitution of
property;
���� d.��� Attorney's fees; and
���� e.���� Any other relief that
the court deems proper.
���� 13.� The Department of Banking
and Insurance shall promulgate rules and regulations pursuant to the
�Administrative Procedure Act,� P.L. 1968, c.410 (C.52:14B-1 et seq.),
necessary to effectuate the provisions of this act.
���� 14.� This act shall take
effect on the 180th day next following enactment.
STATEMENT
����� The bill prohibits a creditor, lender, or student
financing company from extending student financing or a private education loan
to a New Jersey resident without first registering with the Commissioner of
Banking and Insurance and with the Nationwide Multistate Licensing System and
Registry. Creditors, lenders, and student financing companies are required to
provide the commissioner, at the time of registration and not less than once
per year thereafter, certain information about the entities and the student
loans that they provide.� The commissioner is required to post on the
department�s website information about private education lenders registered in
the State.� The bill also requires creditors, lenders, and student financing
companies to post on their websites a copy of each model promissory note,
agreement, contract or other instrument used by the creditor, lender, or
student financing company to substantiate a private education loan.� The bill
provides that the commissioner may impose a civil penalty not exceeding $25,000
on any person for a violation of the registration provisions of the bill.� Each
violation, which constitutes a knowing violation, is a crime of the third
degree.
����� The bill requires private education lenders to
deliver certain information to a cosigner related to impacts on the cosigner in
certain circumstances, prior to the extension of a private education loan that
requires a cosigner.� For any private education loan that obligates a cosigner
and provides for cosigner release, a lender is required to provide the borrower
and the cosigner an annual written or electronic notice containing clear and
conspicuous information about cosigner release.� Under the bill, if the
borrower has met the applicable payment requirement to be eligible for cosigner
release, the lender must send the borrower and the cosigner a notification
informing them that the payments requirement to be eligible for cosigner
release has been met.�
����� The bill requires a lender to provide written notice
to a borrower who applies for cosigner release, but whose application is
incomplete. Within 30 days after a borrower submits a completed application for
cosigner release, the lender is required to send the borrower and cosigner a
written notice that informs them whether the cosigner release application has
been approved or denied.�
����� The bill prohibits a lender from imposing any
restriction that permanently bars a borrower from qualifying for cosigner
release.� For any private education loan executed after the effective date of
the bill, a lender is prohibited from requiring greater than 12 consecutive,
on-time payments of principal and interest as criteria to apply for cosigner
release.� Under the bill, if a borrower or cosigner requests a change in terms
that restarts the count of consecutive, on-time payments, the lender must notify
the borrower and cosigner in writing, by mail or by electronic mail, of the
impact of the change and provide the borrower or cosigner the right to withdraw
or reverse the request.� The bill provides that a borrower has the right to
request an appeal of a lender�s determination to deny a request for cosigner
release, and the lender is required to permit the borrower to submit certain
additional documentation.� The bill requires lenders to establish and maintain
a comprehensive record management system.
����� The bill prohibits private education loans executed
after the effective date of the bill from including a provision that permits
the private educational lender to accelerate, in whole or in part, payments on
the private education loan, except in cases of payment default.� The bill
prohibits a private education loan executed prior to or after the effective
date of the bill from including a provision that permits a lender to attempt to
collect against the cosigner�s estate, other than for payment default.� Upon
receiving notification of the death or bankruptcy of a cosigner, when the loan
is not more than 60 days delinquent at the time of the notification, the lender
may not change any terms or benefits under the promissory note, repayment
schedule, repayment terms, or monthly payment amount or any other loan
provision.
����� Under the bill, a lender, upon determination of the
total and permanent disability of a borrower, is required to release any
cosigner from his obligations under a private education loan.� Upon
determination of the total and permanent disability of a cosigner, a lender is
required to release that individual cosigner from the obligations of the
cosigner.� The bill requires lenders to notify borrowers and cosigners if a
cosigner or borrower is released from the obligations of the private education
loan, within 30 days of the release.� The bill requires lenders that extend
private education loans to provide the borrower the option to designate an
individual to have the legal authority to act on behalf of the borrower with
respect to the private education loan in the event of the total and permanent
disability of the borrower.� In the event a cosigner is released from the
obligations of a private education loan, a lender may not require the borrower
to obtain another cosigner on the loan obligation.� The bill provides that
lenders may not declare a default or accelerate the debt against the borrower
on the sole basis of the release of the cosigner from the loan obligation.� The
bill requires lenders, upon determination of the total and permanent disability
of a borrower, to discharge the liability of the borrower and cosigner on the
loan.� After making the determination of the total and permanent disability of
a borrower, a lender may not attempt to collect on the outstanding liability of
the borrower or cosigner or monitor the disability status of the borrower after
the date of discharge.
����� The bill requires private education lenders to
deliver a statement that benefits and protections applicable to an existing
loan may be lost due to refinancing before offering a person a private
education loan that is being used to refinance an existing education loan.� If
a lender offers any borrower flexible repayment options in connection with a
private education loan, those flexible repayment options must be made available
to all borrowers of loans by the lender.�
����� The bill provides that a private education lender may
not: offer any private education loan that is not in conformity with the bill,
or that is in violation of any other State or federal law; engage in any
unfair, deceptive, or abusive act or practice; or make, advertise, print,
display, publish, distribute, electronically transmit, telecast or broadcast,
in any manner, any statement or representation which is false, misleading or
deceptive.� The bill requires private education lenders to publish the criteria
used to determine borrower interest rates in all places where the interest rate
is published, if the lender does not offer the same interest rate to all
borrowers.�
����� The bill provides that a debt collector attempting to
collect a private education loan must provide certain documentation related to
the loan in the first debt collection communication with the borrower and at
any other time the borrower requests the documentation.� The bill also
prohibits creditors from collecting or attempting to collect a private
education loan debt unless the creditor possesses certain information and
documentation related to the loan.�
����� Following a payment default on a private education
loan by a borrower, and before a creditor may accelerate the maturity of the
loan or commence a legal action against the borrower, a lender is required to
provide to the borrower a notice of intention to accelerate the loan.� The
creditor must provide the notice at least 30 days, but not more than 180 days,
in advance of the action, and must provide a copy of the notice to the
department at the same time it is provided to the borrower.�
����� The bill provides that an action to enter a default
judgment against a borrower must be commenced within six years of the date the
borrower failed to make a payment.� The bill requires a creditor or lender
seeking to commence legal action against a borrower to attach certain
documentation and information to a complaint filed in a court of competent
jurisdiction.� If a creditor fails to comply with the filing requirements of
the bill, a borrower may bring an action, including a counterclaim, against the
creditor to recover or obtain certain relief and damages.
����� The bill also provides that a borrower or cosigner
who suffers damage as a result of a violation may bring an action in a court of
competent jurisdiction to recover certain relief and damages.�
�