HB 2505 Summary

• Establishes a licensing requirement for student loan servicers in Arizona, requiring them to obtain a license from the superintendent of the department of insurance and financial institutions, with exemptions for banks, credit unions, and their wholly-owned subsidiaries.

• Creates a student loan ombudsman position to receive and resolve complaints from student loan borrowers, analyze complaint data, provide education on borrower rights and responsibilities, and establish a borrower education course by October 1, 2020.

• Requires licensees to pay a $1,000 license fee and $800 investigation fee, with licenses expiring every two years on September 30 of odd-numbered years; renewal applications must be filed by September 1 with an additional $100 late fee if filed after that date.

• Prohibits student loan servicers from deceptive practices including misapplication of payments, providing inaccurate credit information, harassment, and false statements to government agencies; requires accurate reporting of payment history to credit bureaus and response to written borrower inquiries within 30 days.

• Establishes penalties of up to $100,000 per violation plus restitution for violations; creates private right of action for willful violations with actual damages, treble damages, punitive damages, and attorney fees, and negligent violations with actual damages and attorney fees.