Cuomo’s Proposal For Student Loan Borrowers
Gov. Andrew Cuomo’s 2020 budget proposal includes proposals to provide new protections for student loan borrowers.
The protections require companies servicing student loans held by New Yorkers to obtain a state license and meet standards consistent with the laws and 93 regulations governing other significant lending products, such as mortgages. There are 2.8 million student loan borrowers in New York state.
“Millions of students in New York have tens of billions of dollars in loans serviced by approximately 30 student loan servicers, yet these servicers are not licensed or regulated by the state,” Cuomo said. “The student loan servicer industry has repeatedly raised serious consumer protection concerns that need to be addressed and with this proposal, we will provide sweeping new protections for borrowers and help crack down on unscrupulous lending practices.”
Cuomo said the proposal will ensure no student loan servicer can mislead a borrower or engage in any predatory act or practice, misapply payments, provide credit reporting agencies with inaccurate information, or any other practices that may harm the borrower. The proposal will also ban upfront fees, require fair contracts and clear and conspicuous disclosures to borrowers, and provide penalties for failing to comply with the law.