Assembly Speaker Carl Heastie and Assemblymember Kenneth Zebrowski today announced the passage of legislation to protect the interests of New York's student borrowers by requiring the licensure of student loan servicers (A.7582, Zebrowski).
"As the Assembly continues its efforts to make higher education affordable and accessible for as many New Yorkers as possible, we must also confront the looming student debt crisis," said Heastie. "We have worked very hard to achieve critical protections for consumers in this state and with the sizeable population of education borrowers in New York, we must ensure that the businesses engaged in this industry are operating in a manner that is accountable."
"Crushing student loan debt has unfortunately become commonplace for many New Yorkers and our State has a responsibility to ensure borrowers are treated fairly," said Assemblymember Zebrowski. "With consumer protections uncertain on the federal level, this bill will give DFS the tools necessary to protect our residents."
The legislation would require student loan servicers operating in New York, other than banking organizations and credit unions, to obtain a license from the New York State Department of Financial Services and provide conditions for their operation including prohibited acts and penalties for violations. The bill would also require these entities to:
New York's student loan debt burden is over $2 billion and growing. The entities engaged in the management and collection of these debts are regulated by the United States Department of Education but this offers few consumer protections for borrowers. They administer millions of dollars in payments each year and their business practices have a direct impact on the financial health and well-being of consumers. Student loan servicers are not presently regulated by the Department of Financial Services (DFS), leaving New Yorkers vulnerable to the realities of improper and unlawful debt collection practices and with few options if their rights are violated. This bill would bring these companies under the jurisdiction of DFS to promote transparency and accountability in their dealings with borrowers.