The state of New Jersey recently passed a new law with increased student loan borrower resources and licensing requirements for student loan servicers in effect on Nov. 27, 2019.
In particular, this means student loan servicers in the state need to secure a license from the New Jersey Department of Banking and Insurance before that date, according to an article from Holland & Knight Of Counsel Bob Jaworski, “New Jersey Passes New Law to Help Student Loan Borrowers: Servicers Should Take Note .”
Before student loan servicers can even obtain a license, Jaworski reports the department needs to develop regulations for the licenses, create application forms and approval processes, according to the article.
“This raises the possibility that the department might have to allow for some sort of a grace period. Nevertheless, servicers should start now to assemble the information and documentation they can expect to be required to submit as part of their license applications and begin developing comprehensive policies and procedures to comply with the Act, since it will likely take them a considerable period of time to do so,” Jaworski reports.
Before this law passed, New Jersey did not have a licensing requirement for student loan servicers working with federal, state or private loans.
Additional provisions of the law, according to Jaworski, include:
- The department will appoint a student loan ombudsman to help student loan borrowers with understanding loan agreements and dispute resolution.
- Student loan servicing licenses will have to be renewed on an annual basis.
- Banks and credit unions and servicers working on student loans under contract with the U.S. Department of Education are exempt from the licensing requirement.
- Servicers licensed in New Jersey and those exempt from the licensing requirements will need to keep records of all student loan education reports for two years after payoff or assignment, whichever occurs first.