"For too long student loan servicers have gone unchecked and unregulated, and the growing student loan debt crisis threatens New York's future economic viability," Governor Cuomo said. "As Washington continues to strip away important consumer protections at every turn, legislation in this year's enacted budget will protect student borrowers from predatory practices that could derail their dreams and harm their futures."
This legislation will ensure that 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 engage in other practices that may harm the borrower. Moreover, it authorizes DFS to regulate and license student loan servicers that serve New York borrowers, and subjects all providers to regular examinations by DFS to ensure they meet standards consistent with the laws and regulations governing other significant lending products.
Based on complaints received and investigations conducted by DFS's Student Protection Unit, established by Governor Cuomo as part of his 2014-15 Executive Budget to serve as a consumer watchdog for New York's students, DFS became aware of significant problems facing New York consumers when dealing with student loan servicers. The difficulties borrowers experience with student loan servicers are nearly identical to those uncovered and remedied by DFS in the mortgage loan servicing industry and include: problems with how servicers handle borrowers' payments, what information or notices are given to borrowers, the kinds of relief available to borrowers experiencing financial distress and poor customer service.
