Proposal Would Require Companies Servicing Student Loans In New York To Obtain a New York State License
Bans Upfront Fees, Requires Fair Contracts, and Penalizes Compliance Failure
Approximately 2.8 Million Student Loan Borrowers In New York State
Governor Andrew M. Cuomo today announced his fiscal year 2020 Executive Budget includes proposals that would provide sweeping new protections for student loan borrowers. The protections require companies servicing student loans held by New Yorkers to obtain a state license and meet standards consistent with the laws and 93 regulations governing other significant lending products, such as mortgages. This is the latest step in Governor Cuomo's historic commitment to protecting the approximately 2.8 million student loan borrowers in New York State.
"Millions of students in New York have tens of billions of dollars in loans serviced by approximately 30 student loan servicers, yet these servicers are not licensed or regulated by the state," Governor Cuomo said. "The student loan servicer industry has repeatedly raised serious consumer protection concerns that need to be addressed and with this proposal, we will provide sweeping new protections for borrowers and help crack down on unscrupulous lending practices."
The Governor's proposal will ensure no student loan servicer can mislead a borrower or engage in any predatory act or practice, misapply payments, provide credit reporting agencies with inaccurate information, or any other practices that may harm the borrower. The proposal will also ban upfront fees, require fair contracts and clear and conspicuous disclosures to borrowers, and provide penalties for failing to comply with the law.
Since taking office in 2011, Governor Cuomo has been a leading voice in protecting access to higher education, most notably through the first in the nation Excelsior Scholarship, a program that allows eligible full-time students to attend a SUNY or CUNY two-year or four-year college tuition-free. The Governor has also been a champion for increasing protections for the approximately 2.8 million student loan borrowers in New York. Additionally, the Governor created the Get on Your Feet Loan Forgiveness Program that provides up to 24 months of federal student loan debt relief to recent NYS college graduates who make $50,000 or less a year.