Requires registration of postsecondary education debt creditors; establishes protections for borrowers.

A5117

ASSEMBLY, No. 5117

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 18, 2026

Sponsored by:

Assemblywoman� CARMEN THERESA MORALES

District 34 (Essex)

SYNOPSIS

���� Requires registration of postsecondary education debt
creditors; establishes protections for borrowers.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning postsecondary education debt creditors 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 a postsecondary education debt extended to consolidate a
borrower�s pre-existing postsecondary education debt; 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.

���� �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 postsecondary education
debt creditor who, in the name of the postsecondary education debt creditor,
collects debts for that postsecondary education debt creditor, but it shall
include a postsecondary education debt 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
postsecondary education debt creditor identified in a promissory note,
postsecondary education debt agreement, or loan contract entered into with a
postsecondary education debt borrower or cosigner.

���� �Postsecondary education debt
borrower� or �borrower� means any resident of this State who has received or
agreed to pay for postsecondary education debt for the borrower�s own
educational expenses.

���� �Postsecondary education debt�
means an extension of credit, contractual or otherwise, contingent or absolute,
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.); and

���� (2)�� is extended to a
borrower expressly, in whole or in part, for postsecondary educational
expenses, regardless of whether the credit is provided by the provider of
postsecondary education that the student attends.

���� �Postsecondary education debt
creditor� means any entity engaged in the business of securing, originating, or
extending postsecondary education debt, or any purchaser, assignee, or holder
of such debt. �Postsecondary education debt creditor� shall not include the
following persons, only to the extent that State regulation is preempted by
federal law:

���� (1) any bank, savings bank,
savings and loan association, or credit union;

���� (2)�� any wholly owned
subsidiary of a bank or credit union; and

���� (3)�� any operating subsidiary
where each owner of the operating subsidiary is wholly owned by the same bank
or credit union. �Total and permanent disability� means 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, a doctor of
osteopathy, or a nurse practitioner 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 postsecondary
education debt, unless the individual�s condition has deteriorated later so as
to render the individual totally and permanently disabled.

���� 2.��� a.� No postsecondary
education debt creditor shall engage in the business of postsecondary education
debt in this State without first registering with the commissioner, and
re-registering annually thereafter, as applicable, as provided in this section
and in accordance with any requirements established by the commissioner, who
shall establish and collect a registration and re-registration fee. The
commissioner may require registration and re-registration using the Nationwide
Multistate Licensing System and Registry, and any costs associated with such
registry shall be paid by the registrant. The commissioner may establish
alternative registration and re-registration procedures and fees for
postsecondary education debt creditors that are also providers of postsecondary
education.

���� b.��� A postsecondary
education debt creditor that secures, originates, or extends postsecondary
education debt to a borrower shall provide the commissioner, at the time of
registration and at the time of any re-registration thereafter, with the
following documents and information about its postsecondary education debt
activity for borrowers who reside in the State, as applicable:

���� (1)�� a list of all schools
attended by borrowers who received postsecondary education debt from the
postsecondary education debt creditor and whose postsecondary education debt is
still outstanding, including postsecondary education debt to refinance an existing
debt;

���� (2)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers who received postsecondary education debt from the postsecondary
education debt creditor;

���� (3)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers associated with each school identified in paragraph (1) of this
subsection;

���� (4)�� the total dollar amount
and total number of new postsecondary education debts provided to borrowers in
the prior fiscal year;

���� (5)�� the total outstanding
dollar amount and total number of new postsecondary education debts provided at
each school identified under paragraph (1) of this subsection in the prior
fiscal year;

���� (6)�� the rate of default for
borrowers who obtained debt from the postsecondary education debt creditor;

���� (7)�� the rate of default for
borrowers who obtained debt from the postsecondary education debt creditor
associated with each school identified under paragraph (1) of this subsection;

���� (8)�� the eligibility criteria
to receive the lowest advertised starting interest rate and the percentage of
applicants who receive the lowest advertised starting interest rate in the
prior fiscal year;

���� (9) the range of initial
interest rates provided by the postsecondary education debt creditor to
borrowers, and the percentage of borrowers who received each rate identified in
the prior fiscal year;

���� (10) the total dollar amount
and total number of new postsecondary education debts provided to borrowers
with a cosigner in the prior fiscal year;

���� (11) the total dollar amount
and the total number of new postsecondary education debts provided to borrowers
used to refinance prior postsecondary education debt or federal student loans
in the prior fiscal year;

���� (12) the total dollar amount
and the total number of postsecondary education debts for which the
postsecondary education debt creditor had sued to collect from a borrower in
the prior fiscal year;

���� (13) the name and address of
the postsecondary education debt creditor and any officer, director, partner,
or owner of a controlling interest in the postsecondary education debt
creditor;

���� (14) a copy of any model
promissory note, agreement, contract, or other instrument used by the
postsecondary education debt creditor in the prior fiscal year to substantiate
that a borrower owes a new postsecondary education debt; and

���� (15) any other information
considered necessary by the commissioner to assess the total size and status of
the postsecondary education debt market and the well-being of borrowers.

���� c.���� A postsecondary
education debt creditor that purchases, assumes, or holds postsecondary debt of
borrowers who reside in the State shall provide the commissioner, at the time
of registration and at the time of any re-registration thereafter, with the
following documents and information associated with such debt, as applicable:

���� (1)�� a list of all schools
attended by borrowers who used, for attendance, any outstanding postsecondary
education debt purchased, assumed, or held by the postsecondary creditor;�

���� (2)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers and purchased, assumed, or held by the postsecondary education debt
creditor;

���� (3)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers that have been purchased, assumed, or held by the postsecondary
education debt creditor associated with each school identified under paragraph
(1) of this subsection;

���� (4)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers and newly purchased, assumed, or held by the postsecondary education
debt creditor in the prior fiscal year;

���� (5)�� the total outstanding
dollar amount and the total number of postsecondary education debts owed by
borrowers newly purchased, assumed, or held by the postsecondary education debt
creditor in the prior fiscal year and associated with each school identified
under paragraph (1) of this subsection;

���� (6)�� the rate of default for
postsecondary education debt purchased, assumed, or held by the postsecondary
education debt creditor;

���� (7)�� the rate of default for
postsecondary education debt purchased, assumed, or held by the postsecondary
education debt creditor associated with each school identified under paragraph
(1) of this subsection;

���� (8)�� the total outstanding
dollar amount and the total number of postsecondary education debts provided to
borrowers with a cosigner;

���� (9)�� the total outstanding
dollar amount and the total number of postsecondary education debts used by
borrowers to refinance prior postsecondary education debt or federal student
loans;

���� (10)� the total dollar amount
and the total number of postsecondary education debts for which the
postsecondary education debt creditor had sued to collect from borrowers in the
prior fiscal year;

���� (11)� the name and address of
the postsecondary education student creditor and any officer, director,
partner, or owner of a controlling interest of the postsecondary education debt
creditor; and

���� (12) any other information
considered necessary by the commissioner to assess the total size and status of
the student debt market and the well-being of borrowers.

���� d.��� The commissioner may
establish a process for reporting the information required under subsections b.
and c. of this section to avoid the duplicative reporting of information by
postsecondary education debt creditors to the commissioner if the postsecondary
education debt creditor is required to report the information required under
subsections b. and c. of this section to the commissioner under another
provision of state or federal law.� The commissioner may further establish an
alternative process for reporting the information required under subsections b.
and c. of this section for postsecondary education debt creditors that are
providers of postsecondary education.

���� e.���� On or before July 1,
2026, and each July 1 thereafter, the commissioner shall post on the
department�s Internet website the following information about each
postsecondary education debt creditor registered in this State:

���� (1)�� the name, address,
telephone number, and website for all registered postsecondary education debt
creditors;

���� (2)�� the information required
under subsections b. and c. of this section; and

���� (3)�� a copy of each model
promissory note, agreement, contract, or other instrument used by the
postsecondary education debt creditor during the previous year to substantiate
that postsecondary education debt has been extended to a borrower or that a
borrower owes a debt to the postsecondary education debt creditor.�

���� f.���� The commissioner may
impose a civil penalty not exceeding $25,000 on any entity 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.

���� g.��� The commissioner may
order that any entity 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
postsecondary education debt creditor, or a stockholder, or an officer,
director, partner or other owner, or an employee of a postsecondary education
debt creditor. The commissioner may order the rescission of postsecondary
education debt 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 postsecondary education debt that requires a cosigner, a
postsecondary education debt creditor shall deliver the following information
to the cosigner:

���� (1)�� how the postsecondary
education debt obligation shall appear on the cosigner�s credit;

���� (2)�� how the cosigner shall
be notified if the postsecondary education debt 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 postsecondary
education debt that provides a cosigner release option, the conditions for
eligibility for release of the cosigner�s obligation on the postsecondary
education debt, including the number of on-time payments and any other criteria
required to approve the release of cosigner from the postsecondary education
debt obligation.

���� b.��� For any postsecondary
education debt that obligates a cosigner and provides for cosigner release, a
postsecondary education debt creditor shall provide the borrower and the
cosigner an annual written or electronic notice containing clear and
conspicuous information about cosigner release, including the criteria the
postsecondary education debt creditor requires to approve the release of the
cosigner from the postsecondary education debt obligation and the process for
applying for cosigner release.� The criteria may include minimum income or
credit, or both income and credit, requirements that the postsecondary
education debt creditor 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
postsecondary education debt creditor 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 postsecondary
education debt creditor, informing the borrower and cosigner that the payment
requirement to be eligible for cosigner release has 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 postsecondary
education debt creditor 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
postsecondary education debt creditor 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 postsecondary
education debt creditor 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 postsecondary education
debt creditor and any other documents specific to the borrower in the
possession of the postsecondary education debt creditor or the postsecondary
education debt creditor�s third-party contractors. The postsecondary education
debt creditor 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 the postsecondary
education debt creditor provides a cosigner release option, in response to a
written or oral request for cosigner release, a postsecondary education debt
creditor shall provide the information described in subsection b. of section 3
of this act.

���� b.��� If a postsecondary
education debt creditor provides a cosigner release option, a postsecondary
education debt creditor 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 postsecondary
education debt creditor 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 postsecondary
education debt creditor makes a final determination about a borrower�s cosigner
release application. For the purpose of this subsection, �negative
consequences� include, but are 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 postsecondary
education debt executed after the effective date of this act, a postsecondary
education debt creditor 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 postsecondary education
debt creditor 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 postsecondary education debt creditor, 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 postsecondary education debt creditor�s
determination to deny a request for cosigner release, and the postsecondary
education debt creditor 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 a review of the cosigner
release determination by another employee.

���� g.��� A postsecondary
education debt creditor 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
postsecondary education debt creditor shall provide a cosigner with access to
all documents or records related to the cosigned postsecondary education debt
that are available to the borrower.

���� (2)�� If a postsecondary
education debt creditor provides electronic access to documents and records for
a borrower, it shall provide equivalent electronic access to the cosigner.

���� 5.��� a.�������� (1)������� A
postsecondary education debt executed after the effective date of this act
shall not include a provision that permits the postsecondary education debt
creditor to accelerate, in whole or in part, payments on the postsecondary
education debt, except in cases of payment default. A postsecondary education
debt creditor shall not place any postsecondary education debt or account into
default or accelerate postsecondary education debt for any reason, other than
for payment default.

���� (2)�� For any postsecondary
education debt executed prior to the effective date of this act, the
postsecondary education debt creditor shall accelerate payments only if the
promissory note or debt agreement explicitly authorizes an acceleration and
only for the reasons stated in the note or agreement.

���� b.��� (1)� Any postsecondary
education debt executed after the effective date of this act shall not include
a provision that permits the postsecondary education debt creditor 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 debt is not
more than 60 days delinquent at the time of the notification, the postsecondary
education debt creditor 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 postsecondary debt education.

���� c.���� A postsecondary
education debt creditor shall not place any postsecondary education debt or
account into default or accelerate postsecondary education debt while a
borrower is seeking a debt modification or enrollment in a flexible repayment
plan, except that a postsecondary education debt creditor may place
postsecondary education debt or account into default or accelerate
postsecondary education debt for payment default 90 days following the
borrower�s default.

���� 6.��� a.�������� A
postsecondary education debt creditor, upon determination of the total and
permanent disability of a borrower, shall discharge the liability of the
borrower and any cosigner on the postsecondary education debt.

���� b.��� A postsecondary
education debt creditor, upon determination of the total and permanent
disability of a cosigner, shall release that individual cosigner from the
obligations of the cosigner under the postsecondary education debt.

���� c.���� A postsecondary
education debt creditor shall notify a borrower and cosigner for postsecondary
education debt if either a cosigner or borrower is released from the
obligations of the postsecondary education debt under this section, within 30
days of the release.

���� d.��� Any postsecondary
education debt creditor that extends postsecondary education debt 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 postsecondary education debt
product 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 postsecondary education debt
pursuant to this section, the postsecondary education debt creditor shall not
require the borrower to obtain another cosigner on the postsecondary education
debt obligation.

���� (2)�� A postsecondary
education debt creditor shall not declare a default or accelerate the debt
against the borrower on the sole basis of the release of the cosigner from the
postsecondary education debt obligation.

���� f.���� After making the
determination described in subsection a. of this section, the postsecondary
education debt creditor 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 postsecondary education debt that is being used to refinance existing
postsecondary education debt, a postsecondary education debt creditor shall
provide the person a disclosure that benefits and protections applicable to the
existing postsecondary education debt 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 postsecondary
education debt creditor offers any borrower flexible repayment options in
connection with postsecondary education debt, those flexible repayment options
shall be made available to all borrowers of postsecondary education debt by the
postsecondary education debt creditor.� A postsecondary education debt creditor
shall:

���� (1)�� provide on its website a
description of any alternative repayment options offered by the postsecondary
education debt creditor for postsecondary education debt;

���� (2)�� establish policies and
procedures and implement them consistently in order to facilitate the
evaluation of flexible repayment option requests, including providing accurate
information regarding any 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 postsecondary education debt repayment options to borrowers with similar
financial circumstances, if the postsecondary education debt creditor offers
repayment options.

���� c.���� If a postsecondary
education debt creditor does not offer the same interest rate to all borrowers,
the postsecondary education debt creditor shall publish the criteria used to
determine the rate for which a borrower is eligible in all places where the interest
rate is published.

���� 8.��� No postsecondary
education debt creditor shall:

���� a.���� offer any postsecondary
education debt that is not in conformity with this act, or that is in violation
of any other State or federal law;

���� b.��� engage in any unfair,
deceptive, or abusive act or practice; or

���� c.���� make, advertise, print,
display, publish, distribute, electronically transmit, telecast or broadcast,
in any manner, any statement or representation which is false, misleading or
deceptive.

���� 9.��� a. In addition to any
other information required under applicable federal or State law, a debt
collector attempting to collect a postsecondary education debt shall provide in
the first debt collection communication with the borrower and at any other time
the borrower requests this documentation, as applicable:

���� (1)�� the name of the owner of
the postsecondary education debt;

���� (2)�� the original creditor's
name;

���� (3)�� the name of the
postsecondary creditor that owned the postsecondary education debt at the time
of default;

���� (4)�� the account number used
to identify the postsecondary education debt at the time of default and, if
different, the account number used by the original creditor to identify the
postsecondary education debt;

���� (5)�� the amount due at the
time of default;

���� (6)�� a schedule of all
transactions credited or debited to the postsecondary education debt� account;

���� (7)�� a copy of all pages of
the contract, application or other documents evidencing the borrower�s
liability for the postsecondary education debt, stating all terms and
conditions applicable to the postsecondary education debt; and

���� (8)�� a clear and conspicuous
statement disclosing that the borrower has a right to request all information
possessed by the postsecondary education debt creditor related to the defaulted
postsecondary education debt, including, but not limited to the required
information described in subsection b. of this section.

���� b.�� A postsecondary education
debt creditor or debt collector shall not collect or attempt to collect a
postsecondary education debt unless the postsecondary education debt creditor
or debt collector possesses the following documents and information, as
applicable:

���� (1)�� the name of the owner of
the postsecondary education debt;

���� (2)�� the original creditor's
name;

���� (3)�� the postsecondary
creditor�s name at the time of default;

���� (4)�� the account number used
to identify the postsecondary education debt at the time of default and, if
different, the account number used by the original creditor to identify the
postsecondary education debt;

���� (5)�� the amount due at
default;

���� (6)�� a schedule of all
transactions credited or debited to the postsecondary education debt account;

���� (7)�� 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 postsecondary education
debt product;

���� (8)�� the date that the
postsecondary education debt was incurred;

���� (9)�� 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;

���� (10)� a billing statement or
other account record indicating the date of the last payment made by the
borrower, if applicable;

���� (11)� any payments,
settlement, or financial remuneration of any kind paid to the postsecondary
education debt creditor by a guarantor, co-signer, or surety, and the amount of
payment received;

���� (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 postsecondary education debt 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 postsecondary education debt
borrower�s liability for the postsecondary education debt, stating all terms
and conditions applicable to the postsecondary education debt; and

���� (15)� documentation
establishing that the postsecondary education debt creditor is the owner of the
specific individual postsecondary education debt at issue. If the postsecondary
education debt was assigned more than once, the postsecondary education debt
creditor shall possess each assignment or other writing evidencing the transfer
of ownership of the specific individual postsecondary education debt to
establish an unbroken chain of ownership, beginning with the original creditor
to the first subsequent postsecondary education debt creditor and each
additional postsecondary education debt 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 postsecondary education debt 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 postsecondary
education debt creditor or other assignee that purchased, acquired, or held the
postsecondary education debt, not a document prepared for litigation or
collection purposes.

���� c.���� Failure by a
postsecondary education debt 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 postsecondary education debt by a borrower, and before a
postsecondary education debt creditor may accelerate the maturity of the
postsecondary education debt or commence a legal action against the borrower,
the postsecondary education debt creditor shall provide to the borrower a
notice of intention to accelerate the postsecondary education debt.� The
postsecondary education debt 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.

���� b.��� A notice provided
pursuant to this section shall contain a certification that the postsecondary
education debt creditor 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 postsecondary
education debt creditor or debt collector 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 postsecondary education debt creditor 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 postsecondary education debt;

���� (5)�� a statement as to
whether the postsecondary education debt creditor is willing to renegotiate the
terms of the debt; and

���� (6)�� a statement as to
whether the debt is eligible for any flexible repayment option.

���� Failure to attach the
information required by this subsection shall be an affirmative defense.

���� c.���� No court shall enter a
judgment on a postsecondary education debt obligation if the postsecondary
education debt creditor or debt collector does not comply with the requirements
of this section.

���� 12.� a. 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:

���� (1)�� an order setting aside
or vacating any default judgment entered against the person;

���� (2)�� a judgment in favor of
the borrower or cosigner;

���� (3)�� actual damages, but in
no case shall the total award of damages be less than $500;

���� (4)�� an order enjoining the
unlawful methods, acts, or practices;

���� (5) restitution of money and
property;

���� (6)�� attorney's fees and
costs; and

���� (7)�� any other relief that
the court deems proper.

���� b. In addition to any other
remedies provided by this act or otherwise provided by law, whenever it is
proven by a preponderance of the evidence that a postsecondary education debt
creditor or debt collector 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 or cosigner, but in no case shall the total award of damages be less
than $1,500.

���� 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

����� This bill requires the registration of postsecondary
education debt creditors and establishes protections for borrowers.

����� The bill prohibits a postsecondary education debt
creditor from extending postsecondary education debt to a New Jersey resident
without first registering with the Commissioner of Banking and Insurance and
with the Nationwide Multistate Licensing System and Registry. Postsecondary
education debt creditors 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 postsecondary education debt that they provide.� The
commissioner is required to post on the department�s website information about
postsecondary education debt creditors registered in the State.� The bill also
requires postsecondary education debt creditors to post on their websites a
copy of each model promissory note, agreement, contract or other instrument
used by the postsecondary education debt creditor to substantiate postsecondary
education debt. 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, which is punishable by three to five years
imprisonment or a fine of up to $15,000, or both.

����� The bill requires postsecondary education debt
creditors to deliver certain information to a cosigner related to impacts on
the cosigner in certain circumstances, prior to the extension of postsecondary
education debt that requires a cosigner.� For any postsecondary education debt
that obligates a cosigner and provides for cosigner release, a postsecondary
education debt creditor 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 postsecondary
education debt creditor is to 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 postsecondary education debt
creditor 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 postsecondary
education debt creditor 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 postsecondary education debt
creditor from imposing any restriction that permanently bars a borrower from
qualifying for cosigner release.� For any postsecondary education debt executed
after the effective date of the bill, a postsecondary education debt creditor
is prohibited from requiring greater than 12 consecutive, on-time payments of
principal and interest as criteria to apply for cosigner release.� This
codifies the standard currently used by major student loan companies, such as
Sallie Mae Bank. Under the bill, if a borrower or cosigner requests a change in
terms that restarts the count of consecutive, on-time payments, the
postsecondary education debt creditor is to 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
postsecondary education debt creditor determination to deny a request for
cosigner release, and the postsecondary education debt creditor is required to
permit the borrower to submit certain additional documentation.� The bill
requires postsecondary education debt creditors to establish and maintain a
comprehensive record management system.

����� The bill prohibits postsecondary education debt
executed after the effective date of the bill from including a provision that
permits the postsecondary education debt creditor to accelerate, in whole or in
part, payments on the postsecondary education debt, except in cases of payment
default.� The bill prohibits a postsecondary education debt executed after the
effective date of the bill from including a provision that permits a
postsecondary education debt creditor 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 postsecondary education debt is not
more than 60 days delinquent at the time of the notification, the postsecondary
education debt creditor may not change any terms or benefits under the
promissory note, repayment schedule, repayment terms, or monthly payment amount
or any other debt provision.

����� Under the bill, a postsecondary education debt
creditor, upon determination of the total and permanent disability of a
borrower or cosigner, is required to release the borrower or cosigner from
their obligations under postsecondary education debt, as is the case with
federal student loans. Upon determination of the total and permanent disability
of a cosigner, a postsecondary education debt creditor is required to release
that individual cosigner from the obligations of the cosigner. The bill
requires postsecondary education debt creditors to notify borrowers and
cosigners if a cosigner or borrower is released from the obligations of the
postsecondary education debt, within 30 days of the release.� The bill requires
postsecondary education debt creditors that extend postsecondary education debt
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 postsecondary
education debt in the event of the total and permanent disability of the
borrower.� In the event a cosigner is released from the obligations of a
postsecondary education debt, a postsecondary education debt creditor may not
require the borrower to obtain another cosigner on the debt obligation.� The
bill provides that postsecondary education debt creditors may not declare a
default or accelerate the debt against the borrower on the sole basis of the
release of the cosigner from the postsecondary education debt.� After making
the determination of the total and permanent disability of a borrower, a
postsecondary education debt creditor 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 the postsecondary education debt
creditor to deliver a statement that benefits and protections applicable to
existing postsecondary education debt may be lost due to refinancing before
offering a person a postsecondary education debt that is being used to
refinance an existing postsecondary education debt.� If a postsecondary
education debt creditor offers any borrower flexible repayment options in
connection with a postsecondary education debt, those flexible repayment
options are to be made available to all borrowers of the postsecondary
education debt creditor. The bill requires postsecondary education debt
creditors to publish the criteria used to determine borrower interest rates in
all places where the interest rate is published, if the postsecondary education
debt creditor does not offer the same interest rate to all borrowers.

����� The bill provides that a postsecondary education debt
creditor may not: offer any postsecondary education debt 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 provides that a postsecondary education debt
creditor or debt collector attempting to collect a postsecondary education debt
is to provide certain documentation related to the debt in the first debt
collection communication with the borrower and at any other time the borrower
requests the documentation.� The bill also prohibits postsecondary education
debt creditors or debt collector from collecting or attempting to collect a
postsecondary education debt unless the postsecondary education debt creditor
or debt collector possesses certain information and documentation related to
the debt.

����� Following a payment default on postsecondary
education debt by a borrower, and before a postsecondary education debt
creditor may accelerate the maturity of the postsecondary education debt or
commence a legal action against the borrower, a postsecondary education debt
creditor is required to provide to the borrower a notice of intention to
accelerate the postsecondary education debt.� The postsecondary education debt
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 postsecondary education
debt creditor 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 postsecondary education debt creditor fails to
comply with the filing requirements of the bill, a borrower may bring an action,
including a counterclaim, against the postsecondary education debt 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.