The governor of Washington last week signed a new bill into law that, among other things, will require servicers of student loans to obtain licenses and establish a number of responsibilities for servicers to follow.
The new law in Washington is similar to other measures that have been introduced at the state level, most notably in California and Illinois.
Along with obtaining a license from the state’s Department of Financial Institutions, student loan servicers must also now follow a number of other requirements, including providing details of the fees and charges assessed on the account, respond to requests from individuals within 15 days, maintain written or electronic records of all inquiries, and provide notification to individuals when servicing rights are transferred from one servicer to another.
The following programs are exempt from the state’s licensing requirements: Trade, technical, vocational, or apprentice programs that teach skills related to a specific job, and postsecondary schools that service their own student education loans.
To help make sure servicers are following the new rules, the law also requires the creation of a new position: student loan advocate. The advocate will receive complaints from individuals and refer complaints to the state’s attorney general, when necessary.
The bill also places financial requirements on servicers to ensure liquidity.
The state has also added a number of new provisions that, if not followed, would be considered violations of the law. Among those are:
- Provide inaccurate information to a credit bureau
- Fail to report to a consumer credit bureau at least annually if the student education loan servicer regularly reports information to a credit bureau
- Fail to respond within fifteen calendar days to communications from the student loan advocate, or within such shorter, reasonable time as the student loan advocate may request in his or her communication
