Governor Andrew Cuomo today announced the Department of Financial Services has issued a final regulation that will protect student loan borrowers from unscrupulous practices in the student loan servicing industry. The regulation, which goes into effect today, requires companies that service student loans held by New Yorkers to meet new standards addressing problems that have plagued the student loan servicing industry. DFS issued the final regulation after taking into consideration comments submitted during a 60-day comment period. This is the latest step in Governor Cuomo's historic commitment to protecting the approximately 2.8 million student loan borrowers in New York.
"New York is taking aggressive action to protect students who invest in their education and to hold unscrupulous lenders accountable for deceptive practices," Governor Cuomo said. "This new regulation will force student loan servicers to be more transparent when it comes to how they do business and in the process help ensure students and their families aren't misled when trying to pay for their higher education."
Under the final regulation, student loan servicers are required to: provide clear and complete information concerning fees, payments due and terms and conditions of loans; apply payments in borrowers' best interest, rather than in ways that maximize servicer fees; inform borrowers of income-based repayment and loan forgiveness options; maintain and provide to consumers a detailed history of their account; when a borrower's loan is transferred to a new servicer, ensure all necessary servicing information is transferred with the loan so the borrower's repayment is not disrupted; provide accurate information to credit reporting agencies; and provide timely and substantive responses to consumer complaints.
Department of Financial Services Superintendent Linda A. Lacewell said, "While the federal government strips away consumer protections, New York continues to step up for students. Our new and final regulation will protect New York's nearly 3 million student loan borrowers from predatory practices and demand clear information from student loan servicers to help borrowers make the best financial choices towards their future."
The final regulation announced today also prohibits servicers from defrauding or misleading borrowers, engaging in any unfair, deceptive, abusive or predatory act or practice or misapplying borrowers' payments.
A copy of the final regulation is available on the DFS website.
Source: The Office of Governor Andrew M. Cuomo
"New York is taking aggressive action to protect students who invest in their education and to hold unscrupulous lenders accountable for deceptive practices," Governor Cuomo said. "This new regulation will force student loan servicers to be more transparent when it comes to how they do business and in the process help ensure students and their families aren't misled when trying to pay for their higher education."
Under the final regulation, student loan servicers are required to: provide clear and complete information concerning fees, payments due and terms and conditions of loans; apply payments in borrowers' best interest, rather than in ways that maximize servicer fees; inform borrowers of income-based repayment and loan forgiveness options; maintain and provide to consumers a detailed history of their account; when a borrower's loan is transferred to a new servicer, ensure all necessary servicing information is transferred with the loan so the borrower's repayment is not disrupted; provide accurate information to credit reporting agencies; and provide timely and substantive responses to consumer complaints.
Department of Financial Services Superintendent Linda A. Lacewell said, "While the federal government strips away consumer protections, New York continues to step up for students. Our new and final regulation will protect New York's nearly 3 million student loan borrowers from predatory practices and demand clear information from student loan servicers to help borrowers make the best financial choices towards their future."
The final regulation announced today also prohibits servicers from defrauding or misleading borrowers, engaging in any unfair, deceptive, abusive or predatory act or practice or misapplying borrowers' payments.
A copy of the final regulation is available on the DFS website.
Source: The Office of Governor Andrew M. Cuomo
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