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  • NJ A1670
  • Establishes Office of Student Loan Ombudsman; regulates student loan servicers.
In Committee
Crossed Over
2016-2017 Regular Session
This bill establishes the Office of the Student Loan Ombudsman and regulates student loan servicers. The bill creates within the Department of Banking and Insurance the Office of the Student Loan Ombudsman. Under the bill, the ombudsman is appointed by the Governor with the advice and consent of the Senate and serves at the pleasure of the Governor during the Governor's term of office. The bill provides that the ombudsman may not hold any other office, position, or employment outside of the position of ombudsman. The bill provides that the ombudsman shall: (1) Receive, review, and attempt to resolve any complaints from student loan borrowers; (2) Compile and analyze data on student loan borrower complaints; (3) Assist student loan borrowers to understand their rights and responsibilities; (4) Provide information and make recommendations to the public, agencies, legislators, and others regarding the problems and concerns of student loan borrowers; (5) Analyze and monitor the development and implementation of federal, State, and local laws, regulations, and policies relating to student loan borrowers; (6) Review the complete student education loan history for any student loan borrower who has provided written consent for review; (7) Disseminate information concerning the availability of the Student Loan Ombudsman to assist student loan borrowers and potential student loan borrowers; and (8) Take any other actions necessary to fulfill the duties of the Student Loan Ombudsman. The bill provides that no later than October 1, 2017, the Student Loan Ombudsman, in consultation with the commissioner, shall establish and maintain a student loan borrower education course that shall include educational presentations and materials regarding student education loans. The bill provides that no later than January 1, 2017, and annually thereafter, the commissioner shall submit a report on the implementation of the bill and the effectiveness of the Student Loan Ombudsman to the standing committees of the General Assembly and Senate having cognizance of matters relating to banking and higher education. The bill requires student loan servicers to obtain a license from the commissioner before directly or indirectly acting as a student loan servicer. Banks, out-of-State banks, credit unions, federal credit unions and out-of-State credit unions, and their subsidiaries, are exempt from the licensure requirement. Any person seeking to act within this State as a student loan servicer shall make a written application to the commissioner accompanied by: (1) a financial statement prepared by a certified public accountant or a public accountant; (2) the history of criminal convictions of the applicant or certain other individuals in the case of certain business entities; and (3) certain licensure fees. Upon the filing of an application for an initial license and the payment of the fees for license and investigation, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The bill provides that licenses expire at the close of business on September 30 of the odd-numbered year following their issuance, unless renewed or earlier surrendered, suspended or revoked. The bill establishes procedures for license renewal and surrender. The bill requires student loan servicers, and certain other entities exempt from the other requirements of the bill, to maintain student loan records for at least two years following final payment or assignment of the loan. These records are to be provided to the commissioner for inspection upon request. The bill prohibits loan servicers from: (1) Directly or indirectly employing any scheme, device or artifice to defraud or mislead student loan borrowers; (2) Engaging in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan; (3) Obtaining property by fraud or misrepresentation; (4) Knowingly misapplying or recklessly applying student education loan payments; (5) Knowingly or recklessly providing inaccurate information to a credit bureau; (6) Failing to report both the favorable and unfavorable payment history of the student loan borrower; (7) Refusing to communicate with an authorized representative of the student loan borrower; or (8) Negligently making any false statement or knowingly and willfully making any omission of a material fact in connection with any information filed with a governmental agency. The bill grants the commissioner the authority to conduct certain investigations and examinations for purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance, in which the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence. The bill provides that the commissioner may suspend, revoke or refuse to renew any license or take any other action, if the commissioner finds that: (1) the licensee has violated any provision of the bill; or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted a denial of the license. The bill also provides that any person who violates any provision of this act shall be liable, in a civil action brought by the commissioner in a court of competent jurisdiction, for a penalty of not more than $5,000 for the first violation, $10,000 for the second violation and $15,000 for each subsequent violation.
2nd Reading in the Assembly, Budget and Appropriations, Passed Assembly
Senate Budget and Appropriations Hearing (19:00 12/14/2017 A-3732 (1R), S-3309, S-3416 and S-3459 are all pending referral.)  (on 12/14/2017)
Date Chamber Action Description
12/14/2017 Senate Budget and Appropriations Hearing (19:00 12/14/2017 A-3732 (1R), S-3309, S-3416 and S-3459 are all pending referral.)
11/30/2017 S Referred to Senate Budget and Appropriations Committee
11/30/2017 S Reported from Senate Committee, 2nd Reading
11/30/2017 Senate Higher Education Hearing (19:00 11/30/2017 *S-3227/A-3739 (1R) were added to agenda for consideration. **S-)
11/30/2017 Senate Higher Education Hearing (19:00 11/30/2017 *S-3227/A-3739 (1R) were added to agenda for consideration.)
11/30/2017 Senate Higher Education Hearing (19:00 11/30/2017 )
6/12/2017 S Received in the Senate, Referred to Senate Higher Education Committee
6/8/2017 A Passed by the Assembly (56-9-11)
2/22/2016 A Reported out of Assembly Comm. with Amendments, 2nd Reading
2/22/2016 Assembly Higher Education Hearing (10:00 2/22/2016 Committee Room 15, 4th Floor)
1/27/2016 A Introduced, Referred to Assembly Higher Education Committee
Date Motion Yea Nay Other
Detail 11/30/2017 Senate Higher Eduction Committee: Reported Favorably 5 0 0
Detail 6/8/2017 Assembly Floor: Third Reading - Final Passage 56 9 15
Detail 2/22/2016 Assembly Higher Education Committee: Reported with Amendments 6 0 3