Louisiana enacts new requirements for student loans

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On June 18, 2022, Louisiana’s Governor signed into law two new bills that impose new requirements for student loans.  Both bills are effective on August 1, 2022.

HB 610.  HB 610 creates the following new duties for student loan servicers:

  • Response to Inquiries/Complaints.  A student loan servicer must acknowledge receipt of a written inquiry or complaint from a student loan borrower or the authorized representative of a student loan borrower within 10 days after receiving the inquiry or complaint.  Unless a response to the written inquiry is included in such acknowledgment, the student loan servicer must provide information responding to such written inquiry or complaint within 30 days after receipt.  If such written inquiry or complaint relates to a student loan borrower’s account balance, the response must include either:
    • A statement that the student loan servicer has corrected the account; or
    • An explanation of why the student loan servicer believes that the student loan borrower’s account is correct.

If a student loan borrower requests a document concerning their account that is in the possession or control of a student loan servicer, the servicer must provide the document within 30 days after receiving the request.

  • Nonconforming Payments.  A “nonconforming payment” means a payment made by a student loan borrower that is more or less than the required payment for a student education loan account.  If a student loan servicer receives a nonconforming payment, the servicer must:
    • Notify the student loan borrower that the payment is nonconforming within 10 days after receiving the payment;
    • Ask the student loan borrower how he would like the student loan servicer to apply to nonconforming payment to the borrower’s account.
  • Prohibitions.  Except as required by a court order or federal law, student loan servicers are prohibited from:
    • Employing, directly or indirectly, any scheme, device, or artifice to mislead a student loan borrower.
    • Engaging in any unfair, abusive, or deceptive trade practices toward any person.
    • Misrepresenting information or omitting any material information in connection with the servicing of a student education loan, including but not limited to the following:
      • Any fee owed by a student loan borrower.
      • Any payment due by a student loan borrower.
      • The appropriateness or availability of a student loan borrower’s repayment options.
      • The terms and conditions of the student education loan.
      • The student loan borrower’s obligations pursuant to the student education loan.
    • Obtaining property by misrepresentation of fact or omission of material fact.
    • Allocating a nonconforming payment in a manner other than as directed by the student loan borrower if, in writing or electronically, the student loan borrower does any of the following:
      • Make a one-time direction for the allocation of future payments.
      • Direct an allocation of a payment at the time the payment is made.
      • Direct an allocation in response to an inquiry by the student loan servicer.
      • Change an existing direction for the allocation of future payments.
    • Misapplying or refusing to correct a misapplication of a payment from a student loan borrower.
    • Providing inaccurate information to a consumer reporting agency or refusing to correct inaccurate information provided to a consumer reporting agency.
    • If a student loan servicer regularly reports information to a consumer reporting agency, failing to report the favorable history of a student loan borrower to a nationally recognized consumer reporting agency at least once a year.
    • Refusing to communicate with an authorized representative of a student loan borrower who provides a written authorization signed by the student loan borrower.  However, a student loan servicer may adopt procedures to verify that an authorized representative of a student loan borrower is authorized to act on behalf of the student loan borrower.
    • Negligently making a false statement or omit a material fact in connections with any informational report filed with, or any investigation conducted by, a state or local government agency.

HB 789.  HB 789 requires private education lenders to register with the Louisiana Office of Financial Institutions and provide annual reporting to the state on certain of their private education loan activities.  “Private education lender” is defined as “any person engaged in the business of securing, making, or extending a private education loan, or any holder of a private education loan.”  “Private education lender” does not include any federally insured financial institution, its subsidiaries, and affiliates.  “Private education loan” is defined as an extension of credit or a debt or obligation owed or incurred by a consumer, contractual or otherwise, contingent or absolute, that:

  • Is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965;
  • Is extended to or owed or incurred by a consumer expressly, in whole or in part, for postsecondary education expenses, regardless of whether the extension of credit or debt or obligation owed or incurred is provided by the provider of postsecondary education that the student attends; and
  • Does not include any loan that is secured by immovable property or a dwelling.

The registration requirements do not apply to lenders licensed under the Louisiana Consumer Credit Law, La. Rev. Stat. Ann. § 9:3557.  The bill also requires the Louisiana Office of Financial Institutions to publish certain data and information about the registered private education lenders.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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