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Cuomo Proposes Student Loan Regs

Gov. Andrew M. Cuomo has announced a new proposed regulation that will provide consumer protections for New York student loan borrowers.

The regulation would require companies that service student loans held by New Yorkers to meet new standards which will address problems that have plagued the student loan servicing industry. The proposed regulation is subject to a 60-day comment period following publication in the State Register on July 31, 2019. The Department of Financial Services will then review all received comments and issue a final regulation.

“While the federal administration ignores the growing problem of student loan debt, New York is taking action to protect borrowers,” Cuomo said. “This measure will help curb unscrupulous practices of the student loan servicing industry and empower borrowers to make better informed choices about how to finance their education.”

Under the proposed regulation, student loan servicers will be required to:

¯ Provide clear and complete information concerning fees, payments due, and terms and conditions of loans;

¯ Apply payments in borrowers’ best interest, rather than in ways that maximize servicer fees;

¯ Inform borrowers of income-based repayment and loan forgiveness options;

¯ Maintain and provide to consumers a detailed history of their account;

¯ When a borrower’s loan is transferred to a new servicer, ensure all necessary servicing information is transferred with the loan so the borrower’s repayment is not disrupted;

¯ Provide accurate information to credit reporting agencies; and

¯ Provide timely and substantive responses to consumer complaints.

The proposed regulation announced today will also prohibit servicers from defrauding or misleading borrowers, engaging in any unfair, deceptive, abusive, or predatory act or practice, or misapplying borrowers’ payments.

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