Kentucky Statutes 286.12-020 – License as student education loan servicer — Exemptions — Persons servicing federal loans
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(1) As used in this section, “federal student education loan” means any:
(a) Student education loan issued pursuant to the William D. Ford Federal Direct
Loan Program established under 20 U.S.C. § 1087a et seq., as amended;
(b) Student education loan issued pursuant to the Federal Family Education Loan Program, which was purchased by the United States pursuant to the federal Ensuring Continued Access to Student Loans Act of 2008, Pub. L. No. 110-
227, and is presently owned by the United States; or
(c) Other student education loan issued pursuant to a federal program that is identified by order of the commissioner as a federal student education loan.
(2) Except as provided in subsections (3) and (4) of this section, no person shall engage in the business of servicing student education loans in this state without having first obtained a license as a student education loan servicer in accordance with this subtitle.
(3) The following shall be exempt from the provisions of this subtitle:
(a) A bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter, issued by the United States, or any state, district, territory, or commonwealth of the United States, that is authorized to transact business in this state;
(b) A wholly owned subsidiary of any entity exempt under paragraph (a) of this subsection;
(c) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in this state;
(d) A savings and loan association, savings bank, or credit union organized under the laws of this or any other state that is authorized to transact business in this state;
(e) A public postsecondary education institution or private nonprofit postsecondary education institution servicing a student education loan extended to a borrower;
(f) The United States, or any state, district, territory, commonwealth, or possession of the United States;
(g) Any city, county, or other political subdivision of any entity exempt under paragraph (f) of this subsection; and
(h) Any agency, division, or corporate instrumentality of any entity exempt under paragraph (f) or (g) of this subsection.
(4) A person servicing federal student education loans in this state shall:
(a) As of July 14, 2022, automatically be deemed, by operation of law, as having been licensed by the commissioner to service federal student education loans in this state;
(b) Provide notice to the commissioner that the person is servicing federal student
education loans in this state;
(c) Comply with this subtitle, with the exception of KRS § 286.12-030; and
(d) Not be authorized to engage in the business of servicing non-federal student education loans in this state unless the person is:
1. Exempt from this subtitle under subsection (3) of this section; or
2. Licensed as a student education loan servicer in accordance with this subtitle.
Effective: July 14, 2022
History: Created 2022 Ky. Acts ch. 88, sec. 3, effective July 14, 2022.
(a) Student education loan issued pursuant to the William D. Ford Federal Direct
Terms Used In Kentucky Statutes 286.12-020
- any other state: includes any state, territory, outlying possession, the District of Columbia, and any foreign government or country. See Kentucky Statutes 446.010
- Borrower: means a person who:
(a) Has received, or agreed to pay, a student education loan. See Kentucky Statutes 286.12-010 - City: includes town. See Kentucky Statutes 446.010
- Commissioner: means the commissioner of the Department of Financial
Institutions. See Kentucky Statutes 286.1-010 - Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Federal: refers to the United States. See Kentucky Statutes 446.010
- In this state: means any activity of a person relating to servicing student education loans that originates:
(a) Inside this state and is directed to persons inside or outside this state. See Kentucky Statutes 286.12-010 - Person: means a natural person, or any type or form of corporation, company, partnership, proprietorship, association, or other legal entity. See Kentucky Statutes 286.1-010
- servicing: means participating in any of the following activities related to a student education loan:
(a) Performing both of the following:
1. See Kentucky Statutes 286.12-010 - State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
- Student education loan: means any loan to a borrower to finance postsecondary education or expenses related to postsecondary education. See Kentucky Statutes 286.12-010
Loan Program established under 20 U.S.C. § 1087a et seq., as amended;
(b) Student education loan issued pursuant to the Federal Family Education Loan Program, which was purchased by the United States pursuant to the federal Ensuring Continued Access to Student Loans Act of 2008, Pub. L. No. 110-
227, and is presently owned by the United States; or
(c) Other student education loan issued pursuant to a federal program that is identified by order of the commissioner as a federal student education loan.
(2) Except as provided in subsections (3) and (4) of this section, no person shall engage in the business of servicing student education loans in this state without having first obtained a license as a student education loan servicer in accordance with this subtitle.
(3) The following shall be exempt from the provisions of this subtitle:
(a) A bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter, issued by the United States, or any state, district, territory, or commonwealth of the United States, that is authorized to transact business in this state;
(b) A wholly owned subsidiary of any entity exempt under paragraph (a) of this subsection;
(c) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in this state;
(d) A savings and loan association, savings bank, or credit union organized under the laws of this or any other state that is authorized to transact business in this state;
(e) A public postsecondary education institution or private nonprofit postsecondary education institution servicing a student education loan extended to a borrower;
(f) The United States, or any state, district, territory, commonwealth, or possession of the United States;
(g) Any city, county, or other political subdivision of any entity exempt under paragraph (f) of this subsection; and
(h) Any agency, division, or corporate instrumentality of any entity exempt under paragraph (f) or (g) of this subsection.
(4) A person servicing federal student education loans in this state shall:
(a) As of July 14, 2022, automatically be deemed, by operation of law, as having been licensed by the commissioner to service federal student education loans in this state;
(b) Provide notice to the commissioner that the person is servicing federal student
education loans in this state;
(c) Comply with this subtitle, with the exception of KRS § 286.12-030; and
(d) Not be authorized to engage in the business of servicing non-federal student education loans in this state unless the person is:
1. Exempt from this subtitle under subsection (3) of this section; or
2. Licensed as a student education loan servicer in accordance with this subtitle.
Effective: July 14, 2022
History: Created 2022 Ky. Acts ch. 88, sec. 3, effective July 14, 2022.