(a)  A student loan servicer shall provide annually, and at the request of a student loan borrower, the terms of their loan, progress toward repayment, and eligibility for any loan relief programs including, but not limited to, income-driven repayment plans, public service loan forgiveness, forbearance, and deferment.

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Terms Used In Rhode Island General Laws 19-33-8

  • Distressed borrower: means a student loan education borrower who is not considered current on their student education loan payments by the student loan servicer. See Rhode Island General Laws 19-33-2
  • Forbearance: A means of handling a delinquent loan. A
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • person: may be construed to extend to and include co-partnerships and bodies corporate and politic. See Rhode Island General Laws 43-3-6
  • servicing: means :

    (i)(A)  Receiving any scheduled periodic payments from a student loan borrower or notification of such payments; and

    (B)  Applying payments to the student loan borrower's account pursuant to the terms of the student education loan or of the contract governing the servicing;

    (ii)  During a period when no payment is required on a student education loan, maintaining account records for the loan; and

    (iii)  Communicating with the student loan borrower regarding the loan, on behalf of the loan's holder; or

    (iv)  Interactions with a student loan borrower, including activities to help prevent default on obligations arising from student education loans, conducted to facilitate the activities described in this section. See Rhode Island General Laws 19-33-2

  • Student education loan: means any loan made to a student loan borrower primarily for personal use to finance postsecondary education or other school-related expenses, and does not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling. See Rhode Island General Laws 19-33-2
  • Student loan borrower: means :

    (i)  Any resident of this state who has received or agreed to pay a postsecondary student education loan; or

    (ii)  Any person who shares responsibility, as a guarantor or by other legal obligation, with such resident for repaying the postsecondary student education loan for another. See Rhode Island General Laws 19-33-2

  • Student loan servicer: means any person or entity who or that engages in student loan servicing as defined in this chapter. See Rhode Island General Laws 19-33-2

(b)  A student loan servicer shall establish policies and procedures, and implement them consistently, in order to facilitate evaluation of private student loan alternative repayment arrangement requests, including providing accurate information regarding any private student loan alternative repayment arrangements that may be available to the borrower through the promissory note, or that may have been marketed to the borrower through marketing materials.

(c)  A private student loan alternative repayment arrangement shall consider the affordability of repayment plans for a distressed borrower, as well as the investor, guarantor, and insurer guidelines, and previous outcome and performance information.

(d)  If a student loan servicer offers private student loan repayment arrangements, a student loan servicer shall consistently present and offer those arrangements to borrowers with similar financial circumstances.

(e)  If a borrower inquires of a servicer of private student loans about consolidating or refinancing a federal student loan into a private student loan, the servicer of private student loans must disclose in advance of the refinancing or consolidation, any benefits or protections exclusive to federal student loans that may be lost as a result of the consolidation or refinancing.

(f)(1)  A student loan servicer shall respond to a written inquiry from a student loan borrower, or the representative of a student loan borrower, within ten (10) business days after receipt of the request, and provide information relating to the request and, if applicable, the action the student loan servicer will take to correct the account or an explanation for the student loan servicer’s position that the borrower’s account is correct.

(2)  The ten-day (10) period described in subsection (f)(1) may be extended for not more than fifteen (15) days, if before the end of the ten-day (10) period the student loan servicer notifies the borrower or the borrower’s representative of the extension and the reasons for the delay in responding.

(3)  After receipt of a written request related to a credit reporting dispute on a borrower’s payment on a student education loan, a student loan servicer shall not furnish adverse information to a consumer reporting agency regarding a payment that is the subject of the written inquiry.

(g)  Except as provided by federal law or required by a student loan agreement, a student loan servicer shall inquire of a borrower how to apply an overpayment to a student education loan. A borrower’s direction on how to apply an overpayment to a student education loan shall stay in effect for any future overpayments during the term of a student education loan until the borrower provides different directions. For purposes of this section, “overpayment” means a payment on a student education loan in excess of the monthly amount due from a borrower on a student education loan, also commonly referred to as a prepayment.

(h)  Where a borrower has multiple loans at the same level of delinquency, a student loan servicer shall apply partial payments in a manner that minimizes late fees and negative credit reporting by applying such payments to satisfy as many individual loan payments as possible on a borrower’s account. For purposes of this section, “partial payment” means a payment on a student 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 student loan account, also commonly referred to as an underpayment.

(i)  In the event of the sale, assignment, or other transfer of the servicing of a student education loan that results in a change in the identity of the person to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan, the following provisions apply:

(1)  As a condition of a sale, an assignment, or any other transfer of the servicing of a student education loan, a student loan lender shall require the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of the benefits, including any benefits for which the student loan borrower has not yet qualified.

(2)  A student loan servicer shall transfer to the new student loan servicer all records regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower.

(3)  The records required under subsection (h)(2) shall include the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.

(4)  The student loan servicer shall complete the transfer of records required under subsection (h)(2) within forty-five (45) days after the sale, assignment, or other transfer of the servicing of a student education loan.

(5)  The parties shall notify all student loan borrowers impacted by the sale, assignment, or other transfer of the servicing of a student education loan at least seven (7) days before the next payment on the loan is due. Notice must include: The identity of the new loan holder and/or servicer; the effective date of the transfer; the date on which the old servicer will no longer accept payments; the date on which the new servicer will begin to accept payments; and contact and billing information for loan payments.

(j)  A student loan servicer that services a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all records regarding the student loan borrower; the account of the student loan borrower; and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.

(k)  When a prior student loan servicer receives a payment intended for the new student loan servicer, the prior student loan servicer must promptly transfer the payment to the new servicer, along with the date the prior servicer received the payment.

(l)  When a new servicer receives a payment from a prior servicer under subsection (j), the payment must be applied as of the date received by the prior servicer. A student loan servicer must implement processes and controls to ensure a student loan borrower does not incur additional interest, fees, or delinquency due to complications related to the sale, assignment, or other transfer of the servicing of a student education loan.

History of Section.
P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1; P.L. 2020, ch. 79, art. 2, § 12.