Washington Enacts a Student Loan Bill of Rights
Washington recently enacted Senate Bill 6029 which establishes a student loan bill of rights (SBOR). The Washington SBOR, among other things: (1) requires student education loan servicers to obtain and maintain a license; (2) imposes state specific compliance requirements on student education loan servicers; and (3) creates a “student loan advocate” position. The Washington SBOR becomes effective on June 7, 2018.
The Washington SBOR will require student loan servicers to be licensed throughout Washington. However, certain entities will not be required to obtain and maintain the license but will be subject to the student education loan servicer requirements implemented by the Washington SBOR. These entities include: (i) trade, technical, vocational, or apprentice programs that teach skills related to a specific job, and postsecondary schools that service their own student education loans; (ii) persons servicing five or fewer student education loans; (iii) guarantors of federal student loans that do not also service federal student loans; (iv) the United States or any department or agency of the United States; and (v) any state, county, city, or any department or agency of the state.
Under the Washington SBOR, a student loan servicer will have to, in addition to complying with applicable federal program requirements, among other things: (i) provide information to the borrower on his or her account and make reasonable attempts to respond to any dispute initiated by the borrower about the loan account; (ii) notify borrowers of a transfer of servicing rights; and (iii) provide a disclosure on the possible effects of refinancing a federal student loan with one or more consumer loans. Moreover, under the Washington SBOR, third party student education loan modification services will not be able to charge or receive any money prior to fully completing the services the person has agreed to perform for the borrower.
Once effective, the SBOR will create a student loan advocate position whose duties will include, among other things: (i) assisting student education loan borrowers in understanding their rights and responsibilities under the terms of a student education loan; (ii) referring student education loan borrower complaints to the Department of Financial Institutions; and (iii) establishing and maintaining a student education loan borrower education course by 2020.
The requirements of this act do not apply to any person doing business under, and as permitted by, any Washington law or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.
