HB 432 Summary

• Requires student loan servicers to obtain a license from the Division of Financial Institutions, effective January 1, 2019, with exemptions for federally-regulated depository institutions and their subsidiaries.

• Establishes licensing requirements including a $1,000 nonrefundable fee, investigation fee, financial statement, and criminal background check; superintendent may suspend, revoke, or refuse renewal for violations or unfitness.

• Prohibits licensees from engaging in fraud, deceptive practices, misapplying payments, providing inaccurate credit reporting, and other misconduct; requires two-year record retention for loan transactions.

• Creates a student loan ombudsperson position within the Division of Financial Institutions to receive and resolve borrower complaints, provide education on loan rights and responsibilities, and make recommendations to the superintendent.

• Establishes a student loan servicer licensing fund consisting of license fees, investigation fees, and fines to support the ombudsperson position and required borrower education course covering loan terms, repayment options, and forgiveness programs.