Bill Text: NY A00431 | 2025-2026 | General Assembly | Introduced

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Bill Title: Provides that each student loan servicer shall submit an annual report containing a list of all private education creditors associated with the private education debts serviced by the student loan servicer that are owed by persons who resided in New York during the prior calendar year and containing additional information for each private education creditor reported.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-01-28 - ordered to third reading rules cal.70 [A00431 Detail]

Download: New_York-2025-A00431-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                           431

                               2025-2026 Regular Sessions

                   IN ASSEMBLY

                                       (Prefiled)

                                     January 8, 2025
                                       ___________

        Introduced  by M. of A. EPSTEIN -- read once and referred to the Commit-
          tee on Banks

        AN ACT to amend the financial  services  law,  in  relation  to  private
          education debt reporting

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. The article heading of article 9 and sections 901, 902  and
     2  904  of the financial services law, as added by a chapter of the laws of
     3  2024 amending the financial services law relating to creating a  private
     4  education  debt  registry,  as  proposed in legislative bills numbers S.
     5  8197 and A. 8913, are amended to read as follows:
     6                                   ARTICLE 9
     7                 PRIVATE EDUCATION DEBT [REGISTRY] REPORTING

     8    § 901. Definitions. As used in this article:
     9    1.[ "Fiscal year" means  the  twelve-month  period  that  the  private
    10  education creditor uses for financial reporting and budgeting.
    11    2.]  "Higher  education" means higher education[, including] or career
    12  education, as those terms are defined in section two  of  the  education
    13  law, via correspondence, online, or in person, regardless of whether the
    14  provider  of such higher education [institution] is [accredited] located
    15  within New York state.
    16    [3.] 2. "Higher education expense" means any expense that is  incurred
    17  by a consumer arising from higher education.
    18    3.  "Student  loan  servicer"  has  the  same  meaning as such term is
    19  defined in subdivision six of section seven hundred ten of  the  banking
    20  law.
    21    4.  "Private education creditor" means any person engaged in the busi-
    22  ness of [securing, making, or] extending a private education  debt[,  or
    23  any  holder  of  a private education debt, including providers of higher

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02724-01-5
        A. 431                              2

     1  education to which a student education debt is owed. "Private  education
     2  creditor"  shall  not  include the following persons, only to the extent
     3  that state regulation is preempted by federal law:
     4    (a) any federally chartered bank, savings bank, savings and loan asso-
     5  ciation, or credit union;
     6    (b)  any  bank,  savings bank, savings and loan association, or credit
     7  union organized under the laws of this or any other state;
     8    (c) any wholly owned subsidiary of a federally chartered bank or cred-
     9  it union; and
    10    (d) any operating subsidiary where each owner of the operating subsid-
    11  iary is wholly owned by the same  federally  chartered  bank  or  credit
    12  union].
    13    5. "Private education debt" means an extension of credit to or debt or
    14  obligation  owed  or  incurred  by a consumer, contractual or otherwise,
    15  [contingent or absolute,] that [meets all of the following criteria]:
    16    (a) is not made, insured, or guaranteed under Title IV of  the  Higher
    17  Education Act of 1965 (20 U.S.C. s.1070 et seq.);
    18    (b)  is extended to a consumer expressly, in whole or in part, for, or
    19  accrues from nonpayment of, higher  education  expenses,  regardless  of
    20  whether  the credit or debt or obligation is owed to [the] a provider of
    21  higher education [that the student attends]; and
    22    (c) [shall] is not [include any] a loan that is secured by real  prop-
    23  erty or a dwelling.
    24    "Private education debt" shall include extensions of credit or debt or
    25  obligations owed or incurred to refinance a private education debt.
    26    6. "Provider of higher education" [or "school"] means a person engaged
    27  in  [the business of] providing or offering to provide higher education.
    28  [For the purposes of this definition, a person need  not  have  obtained
    29  authorization  from the department of education to operate in this state
    30  and need not be an accredited institution.]
    31    § 902. Private education debt [registry] reporting. 1.  [Beginning  on
    32  or  after the one hundred eightieth day after the effective date of this
    33  article, no person shall engage in business as a private education cred-
    34  itor in this state without first satisfying the  following  requirements
    35  set forth in subdivisions two and three of this section.
    36    2.  (a)  A  private  education  creditor operating in this state shall
    37  register with the superintendent pursuant to any registration procedures
    38  set forth by the superintendent by rule or regulation, which may include
    39  registration through the  Nationwide  Multistate  Licensing  System  and
    40  Registry, and shall pay a fee set by the superintendent. The superinten-
    41  dent may prescribe an alternative registration process and fee structure
    42  for  a  provider  of  higher education. Registration shall include, at a
    43  minimum, the name and address of the private education creditor and  any
    44  officer,  director,  partner,  or owner of a controlling interest of the
    45  private education creditor.  A private education creditor shall annually
    46  renew its registration and pay a renewal fee pursuant to a procedure and
    47  on or before a date to be determined by the superintendent.
    48    (b) This subdivision shall not apply to  regulated  persons,  as  such
    49  term  is defined in section one hundred four of this chapter, engaged in
    50  business as a private education creditor in this state,  to  the  extent
    51  such  regulation relates to its business as a private education creditor
    52  and such persons are required to furnish data or reports annually to the
    53  superintendent.
    54    3. A private education creditor operating in this state shall  annual-
    55  ly,  on  or before a date to be determined by the superintendent and not
    56  to exceed six months following  the  effective  date  of  this  article,
        A. 431                              3

     1  provide  the superintendent with the following documents and information
     2  about such  creditor's  private  education  debt  portfolio  related  to
     3  consumers  that reside in this state pursuant to any procedure set forth
     4  by  the  superintendent, which may include reporting through the Nation-
     5  wide Multistate Licensing System and Registry,  and  which  may  further
     6  include  different  procedures  for  regulated  persons, as that term is
     7  defined in section one hundred four of this chapter,  and  non-regulated
     8  persons] Each student loan servicer shall, by the first of April of each
     9  year,  submit  an  annual  report  which  complies with any instructions
    10  published by the  superintendent,  in  the  manner  set  forth  in  such
    11  instructions,  certifying  as accurate the following information for the
    12  private education debt such student loan servicer  serviced  during  the
    13  prior calendar year:
    14    (a)  [For  private  education  creditors  that secure, make, or extend
    15  private education  debts,  other  than  those  private  education  debts
    16  reported pursuant to paragraph (c) of this subdivision, relating to such
    17  debts  owed  by  a  consumer residing in this state as of the end of the
    18  prior fiscal year] a list of all private education creditors  associated
    19  with  the  private education debts serviced by the student loan servicer
    20  that are owed by persons who resided in New York during the prior calen-
    21  dar year; and
    22    (b) for each private education creditor reported pursuant to paragraph
    23  (a) of this subdivision, the following information:
    24    (i) a list of [all schools for which such private education debts were
    25  used to finance] the providers of higher education[, including,  in  the
    26  case  of a refinancing loan, the school that the consumer attended using
    27  the private education debt that  was  refinanced]  associated  with  the
    28  private education debts serviced by the student loan servicer;
    29    (ii)  the total outstanding dollar amount and number of [such] private
    30  education debts and the number of consumers who owe such private  educa-
    31  tion debts;
    32    (iii)  the  total dollar amount and number of [such] private education
    33  debts [associated with each school identified under subparagraph (i)  of
    34  this paragraph] created in the prior calendar year;
    35    (iv)  the number of private education debts that experienced a default
    36  and the percentage of such private education debts associated with  each
    37  private education creditor;
    38    (v)  the  total  dollar  amount  and number of private education debts
    39  [secured, made, or extended] that defaulted for reasons other than  non-
    40  payment in the prior [fiscal] calendar year;
    41    [(v)]  (vi)  the  total  dollar amount and number of private education
    42  debts [secured, made, or extended in the prior fiscal  year  associated]
    43  with [each school identified under subparagraph (i) of this paragraph] a
    44  cosigner or guarantor;
    45    [(vi)]  (vii)  the [range of starting interest rates for] total dollar
    46  amount and number of private education debts [secured, made, or extended
    47  to consumers] with a cosigner or guarantor created in the prior [fiscal]
    48  calendar year [and percentage of consumers who receive those rates;
    49    (vii) the overall default rate, as well as  the  overall  default  for
    50  such  debts associated with each  school  listed  under subparagraph (i)
    51  of this paragraph];
    52    (viii) the total dollar amount and number of private  education  debts
    53  [that  defaulted  for  reasons  other    than   non-payment in the prior
    54  fiscal year, as applicable;
    55    (ix) the total dollar amount and number  of  private  education  debts
    56  with a cosigner, as applicable;
        A. 431                              4

     1    (x)  the  total  dollar  amount  and number of private education debts
     2  secured, made, or extended with a cosigner in the prior fiscal year,  as
     3  applicable;
     4    (xi)  the  total  dollar  amount and number of private education debts
     5  secured, made, or extended] created to refinance other private education
     6  debts or federal student loans, respectively[, as applicable];
     7    [(xii)] (ix) the total dollar amount and number of  private  education
     8  debts  [secured,  made,  or extended] created to refinance other private
     9  education debts or federal student loans,  respectively,  in  the  prior
    10  [fiscal] calendar year[, as applicable];
    11    [(xiii)]  (x)  the total dollar amount and number of defaulted private
    12  education debts for which the [private education creditor  has  sued  to
    13  collect]  student  loan  servicer  commenced,  maintained,  or settled a
    14  lawsuit for collection in the prior [fiscal] calendar year[, as applica-
    15  ble]; and
    16    [(xiv) additional] (xi) information as may  in  the  judgment  of  the
    17  superintendent be necessary and appropriate in order to assess the total
    18  size  and  status  of  the  private  education debt market and to assess
    19  borrower well-being[; and
    20    (xv) A copy of any model promissory note, agreement, contract or other
    21  instrument used by a private  education  creditor  during  the  previous
    22  fiscal  year  to substantiate that a new private education debt has been
    23  extended to the consumer or that a consumer owes a debt or obligation to
    24  the private education creditor.
    25    (b) For private education creditors that  acquire  or  assume  private
    26  education  debts  owed by a consumer residing in this state, relating to
    27  such debts as of the end of the prior fiscal year:
    28    (i) a list of all schools for which such private education debts  were
    29  used  to finance higher education, including, in the case of a refinanc-
    30  ing loan, the school that the consumer attended using the private educa-
    31  tion debt that was refinanced;
    32    (ii) the total outstanding dollar amount and number  of  such  private
    33  education  debts  and number of consumers who owe such private education
    34  debts;
    35    (iii) the total dollar amount and number of  private  education  debts
    36  associated  with  each  school identified under subparagraph (i) of this
    37  paragraph;
    38    (iv) the total dollar amount and number  of  private  education  debts
    39  acquired or assumed in the prior fiscal year;
    40    (v)  the  total  dollar  amount  and number of private education debts
    41  acquired or assumed in the prior fiscal year associated with each school
    42  identified under subparagraph (i) of this paragraph;
    43    (vi) the overall default rate, as well as the overall default for such
    44  debts associated with each school listed under subparagraph (i) of  this
    45  paragraph;
    46    (vii)  the  total  dollar amount and number of private education debts
    47  that defaulted for reasons other than nonpayment  in  the  prior  fiscal
    48  year, as applicable;
    49    (viii)  the  total dollar amount and number of private education debts
    50  with a cosigner, as applicable;
    51    (ix) the total dollar amount and number  of  private  education  debts
    52  that  were  used to refinance other private education debts, as applica-
    53  ble;
    54    (x) the total dollar amount and number of private education debts  for
    55  which  the  private  education creditor has sued to collect in the prior
    56  fiscal year, as applicable; and
        A. 431                              5

     1    (xi) additional information as may in the judgment of the  superinten-
     2  dent  be necessary and appropriate in order to assess the total size and
     3  status of the private education debt market and to assess borrower well-
     4  being.
     5    (c)  For  private  education  creditors  that  are providers of higher
     6  education and whose private education debts result from unpaid debts  or
     7  obligations  that  were  not  extensions  of credit and that result from
     8  higher education provided in this state, relating to such  debts  as  of
     9  the end of the prior fiscal year, reported by race and gender:
    10    (i)  the  total outstanding dollar amount and number of private educa-
    11  tion debts and number of consumers who owe those debts;
    12    (ii) the total dollar amount and number  of  private  education  debts
    13  accrued  and number of consumers who owe those debts in the prior fiscal
    14  year;
    15    (iii) the total number and balance of student accounts with an academ-
    16  ic or administrative hold resulting from a private education debt;
    17    (iv) the total number and balance of student accounts with an academic
    18  or administrative hold resulting from a private education debt for which
    19  a payment was made in the prior fiscal year and average payment made;
    20    (v) the total number of student accounts for which  federal  financial
    21  aid was returned to the federal government upon the student's withdrawal
    22  from  the provider of higher education in the prior fiscal year, and the
    23  total dollar amount of any private education debt accrued as a result;
    24    (vi) the number of consumers who owe  a  private  education  debt  who
    25  received a federal pell grant and the average debt owed;
    26    (vii) the number of consumers who owe a private education debt who are
    27  considered  in-state  and out-of-state students, and the total debt owed
    28  by each group;
    29    (viii) the total dollar amount, number of private education debts, and
    30  number of consumers for which the private education creditor has in  the
    31  prior fiscal year (A) charged off the debt, (B) sent the debt to a third
    32  party  collection  agency,  (C)  initiated  a  collection  lawsuit,  (D)
    33  reported the debt to a consumer credit reporting agency,  and  (E)  sold
    34  the debt;
    35    (ix)  the  total dollar amount, number of private education debts, and
    36  number of consumers for which the private education creditor has, in the
    37  prior fiscal year, collected on a private education debt in the  follow-
    38  ing  instances:  (A)  payment  arrangements  wherein the payment was not
    39  considered  past  due,  such  as  tuition  installment  agreements;  (B)
    40  payments made on past due debts during the same academic term or billing
    41  cycle  in  which  the  debt accrued and before such debts were sent to a
    42  collection agency; (C) payments made on past due debts before they  were
    43  sent  to  a  collection agency, excluding those payments made during the
    44  same academic term or billing cycle in which the  debt  accrued;  (D)  a
    45  third  party collection agency, prior to initiating a lawsuit; and (E) a
    46  collection lawsuit, including payments made by settlement or pursuant to
    47  a judgment;
    48    (x) additional information as may in the judgment of  the  superinten-
    49  dent  be necessary and appropriate in order to assess the total size and
    50  status of the private education debt market and to assess borrower well-
    51  being; and
    52    (xi) a copy of any model written instrument  used  by  a  provider  of
    53  higher  education  in  the  prior  fiscal year to substantiate a private
    54  education debt, including but not limited to a promissory note,  enroll-
    55  ment agreement, or contract.]
        A. 431                              6

     1    4. Not later than [one year] two years following the effective date of
     2  this  section,  the  superintendent  shall  create a publicly accessible
     3  website that includes at least the following information [about  private
     4  education creditors registered in this state]:
     5    (a)  The  name, address, telephone number and website for all[ private
     6  education creditors] student loan servicers; and
     7    (b) A summary of the information required by subdivision  [three]  one
     8  of this section[; and
     9    (c)  Copies of all documents provided under subparagraph (xv) of para-
    10  graph (a) of subdivision three of this section and subparagraph (xi)  of
    11  paragraph (c) of subdivision three of this section].
    12    §  904.  Violations.  1. If the superintendent finds, after notice and
    13  hearing, that a [private education creditor] student loan  servicer  has
    14  knowingly violated this article by failing to comply with any [registra-
    15  tion  or]  reporting  requirement  or by knowingly furnishing materially
    16  inaccurate information to the  superintendent,  the  superintendent  may
    17  impose  a  civil  penalty of not more than ten thousand dollars for each
    18  violation.
    19    2. The superintendent may order that any person who has been found  to
    20  have  knowingly  violated any provision of this article, or of the rules
    21  and regulations issued pursuant thereto, and has thereby  caused  finan-
    22  cial  harm  to  consumers,  be barred for a term not exceeding ten years
    23  from acting as a [private education creditor] student loan servicer,  or
    24  a  stockholder,  or  an officer, director, partner or other owner, or an
    25  employee of a [private education creditor] student loan servicer.
    26    § 2. This act shall take effect on the  same  date  and  in  the  same
    27  manner  as a chapter of the laws of 2024 amending the financial services
    28  law relating to creating a private education debt registry, as  proposed
    29  in legislative bills numbers S. 8197 and A. 8913, takes effect.