Louisiana enacts new requirements for student loans
On June 18, 2022, the Governor of Louisiana signed into law two new bills that impose new requirements for student loans. Both bills come into force on August 1, 2022.
HB 610. HB 610 creates the following new obligations for student loan servicers:
- Response to inquiries/complaints. A student loan officer must acknowledge receipt of a written request or complaint from a student borrower or authorized representative of a student borrower within 10 days of receiving the request or complaint. Unless a response to the written request is included in this acknowledgement, the student loans servicer must provide information in response to such written request or complaint within 30 days of receipt. If such a written request or complaint relates to a student borrower’s account balance, the response must include either:
- A statement that the student loan officer corrected the account; Where
- An explanation of why the student loan officer believes the student borrower’s account is correct.
If a student borrower requests a document relating to their account that is in the possession or control of a student loan servicer, the servicer must provide the document within 30 days of receiving the request.
- Non-Compliant Payments. A “non-conforming payment” means a payment made by a student borrower that is more or less than the payment required for a student loan account. If a student loan servicer receives a non-compliant payment, the servicer must:
- Notify the student loan borrower that the payment is non-compliant within 10 days of receiving payment;
- Ask the student loan borrower how they would like the student loan servicer to enforce the non-compliant payment on the borrower’s account.
- Prohibitions. Except as required by court order or federal law, student loan servicers are prohibited from:
- Employing, directly or indirectly, any scheme, device or artifice to mislead a student borrower.
- Engage in unfair, abusive or deceptive business practices towards any person.
- Misrepresent information or omit material information in connection with servicing a student loan, including, but not limited to, the following:
- All fees owed by a student borrower.
- Any payment due from a student borrower.
- The suitability or availability of a student borrower’s repayment options.
- The terms of the student loan for studies.
- The obligations of the student borrower under the student loan for education.
- Obtaining property by misrepresentation of fact or omission of material fact.
- Assign a non-conforming payment in a manner other than as instructed by the student borrower if, in writing or electronically, the student borrower does any of the following:
- Establish a single directive for allocating future payments.
- Directing an allocation of a payment at the time the payment is made.
- Directing an allocation in response to a request from the student loan officer.
- Modify an existing direction for allocating future payments.
- Misapplication or refusal to correct misapplication of a student loan payment.
- Provide inaccurate information to a consumer reporting agency or refuse to correct inaccurate information provided to a consumer reporting agency.
- If a student loan officer regularly reports information to a consumer reporting agency, failing to report a student borrower’s favorable history to a nationally recognized consumer reporting agency at least once a year.
- Refuse to communicate with an authorized representative of a student borrower who provides written authorization signed by the student borrower. However, a student loan servicer may adopt procedures to verify that an authorized representative of a student borrower is authorized to act on behalf of the student borrower.
- Carelessly misrepresent or omit a material fact in connection with any information report filed with, or investigation by, any state or local government agency.
HB 789. HB 789 requires private education lenders to register with the Louisiana Bureau of Financial Institutions and provide an annual report to the state on some of their private education lending activities. “Private Education Loan” is defined as “any person engaged in the business of obtaining, 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 debt or obligation owed or incurred by a consumer, contractual or otherwise, conditional or absolute, that:
- Is not made, assured 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 post-secondary education expenses, whether the extension of credit or indebtedness or obligation owed or incurred is provided by the provider of post-secondary education the student is attending; and
- Does not include any loan secured by real estate or housing.
Registration requirements do not apply to lenders licensed under the Louisiana Consumer Credit Law, La. Rev. Stat. Ann. § 9:3557, or to any bank, savings bank, credit union or credit union operating pursuant to the authorization granted by the Commissioner of the Office of Financial Institutions. The bill also requires the Louisiana Bureau of Financial Institutions to publish certain data and information about registered private education lenders.