Except to the extent that this section is inconsistent with any provision of federal law or regulation, and then only to the extent of the inconsistency, a person engaged in qualified education loan servicing shall:

Ask a legal question, get an answer ASAP!
Click here to chat with a lawyer about your rights.

1. Evaluate a qualified education loan borrower for eligibility for an income-driven repayment program prior to placing the borrower in forbearance or default, if an income-driven repayment program is available to the borrower;

2. Respond to a written inquiry from a qualified education loan borrower or the representative of a qualified education loan borrower within 10 business days after receipt of the request and, within 30 business days after receipt of the request, provide information relating to the request and, if applicable, to the action the qualified education loan servicer will take to correct the account or an explanation for the qualified education loan servicer’s position that the borrower’s account is correct. Such 30-day period may be extended for not more than 15 days if, before the end of the 30-day period, the qualified education loan servicer notifies the borrower, or the borrower’s representative, as applicable, of the extension and the reasons for the delay in responding;

3. Not furnish to a consumer reporting agency, during 60 days following receipt of a written request related to a dispute on a borrower’s payment on a qualified education loan, information regarding a payment that is the subject of the written request;

4. Except as provided in federal law or required by a qualified education loan agreement, inquire of a borrower how to apply an overpayment to a qualified education loan. A borrower’s direction on how to apply an overpayment to a qualified education loan shall remain in effect for any future overpayments during the term of a qualified education loan or until the borrower provides different directions. As used in this subdivision, “overpayment” means a payment on a qualified education loan that exceeds the monthly amount due from a borrower on the qualified education loan, which payment may be referred to as a prepayment;

5. Apply partial payments in a manner that minimizes late fees and negative credit reporting. If loans on a borrower’s qualified education loan account have an equal level of delinquency, a qualified education loan servicer shall apply partial payments to satisfy as many individual loan payments as possible on a borrower’s account. As used in this subdivision, “partial payment” means a payment on a qualified education loan account that contains multiple individual loans in an amount less than the amount necessary to satisfy the outstanding payment due on all loans in the qualified education loan account, which payment may be referred to as an underpayment;

6. Require, as a condition of a sale, an assignment, or any other transfer of the servicing of a qualified education loan, that the new loan servicer honor all benefits originally represented as available to a qualified education loan borrower during the repayment of the qualified education loan and preserve the availability of the benefits, including any benefits for which the qualified education loan borrower has not yet qualified. If a qualified education loan servicer is not also the loan holder or is not acting on behalf of the loan holder, the loan servicer satisfies the requirement of this subsection by providing the new loan servicer with information necessary for the new loan servicer to honor all benefits originally represented as available to a qualified education loan borrower during the repayment of the qualified education loan and preserve the availability of the benefits, including any benefits for which the loan borrower has not yet qualified; and

7. In the event of a sale, assignment, or other transfer of the servicing of a qualified education loan that results in a change in the identity of the person to whom a qualified education loan borrower is required to send payments or direct any communication concerning the qualified education loan:

a. Transfer to the new loan servicer all records regarding the qualified education loan borrower, the account of the loan borrower, and the qualified education loan of the loan borrower. Such records include the repayment status of the qualified education loan borrower and any benefits associated with the qualified education loan of the loan borrower. The transfer of records shall be completed within 45 days after the sale, assignment, or other transfer of the servicing of a qualified education loan;

b. Notify affected qualified education loan borrowers of the sale, assignment, or other transfer of the servicing of a qualified education loan at least seven days before the next payment on the loan is due. The notice shall include (i) the identity of the new qualified education loan servicer; (ii) the effective date of the transfer of the borrower’s qualified education loan to the new loan servicer; (iii) the date on which the existing loan servicer will no longer accept payments; and (iv) the contact information for the new loan servicer; and

c. Adopt policies and procedures to verify that the new qualified education loan servicer has received all records regarding the qualified education loan borrower, the account of the qualified education loan borrower, and the qualified education loan of the borrower, including the repayment status of the qualified education loan borrower and any benefits associated with the qualified education loan of the borrower.

2020, cc. 1198, 1250.