ENROLLED ORIGINAL
AN ACT
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IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
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To amend the Department of Insurance and Securities Regulation Establishment Act of 1996 to
prevent abusive acts or practices related to student education loans and private education
loans, require the creation of a revised Student Loan Borrower Bill of Rights by January
1, 2025, clarify that student loan servicers under contract with the United States
Department of Education shall be automatically issued a limited student loan servicing
license upon meeting certain criteria, clarify the rights and obligations regarding denials
of applications for approval, prescribe prohibited conduct on the part of student loan
servicers and private education lenders, assign duties to student loan servicers and private
education lenders, establish responsibilities of private education lenders regarding
disability discharge and cosigner release, authorize the Attorney General to bring an
action for a violation of certain provisions, and make a conforming amendment.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
act may be cited as the “New Student Loan Borrower Bill of Rights Amendment Act of 2024”.
Sec. 2. The Department of Insurance and Securities Regulation Establishment Act of
1996, effective May 21, 1997 (D.C. Law 11-268; D.C. Official Code § 31-101 et seq.), is
amended as follows:
(a) Section 2 (D.C. Official Code § 31-101) is amended as follows:
(1) Paragraph (1) is redesignated as paragraph (1A).
(2) A new paragraph (1) is added to read as follows:
“(1) “Abusive act or practice” means an act or practice that:
“(A) Materially interferes with the ability of a student loan borrower to
understand a term or condition of a student education loan or private education loan;
“(B) Takes unreasonable advantage of:
“(i) A lack of understanding on the part of a student loan borrower
of the material risks, costs, or conditions of a student education loan or private education loan;
“(ii) The inability of a student loan borrower to protect the interests
of the student loan borrower when selecting or using:
“(I) A student education loan or private education loan; or
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“(II) A feature, term, or condition of a student education
loan or private education loan; or
“(iii) The reasonable reliance by the student loan borrower on a
person engaged in servicing a student education loan or private education loan to act in the
interests of the borrower; or
“(C) Misrepresents the amount, nature, or terms of any fee or payment due
or claimed to be due on a student education loan or private education loan, the terms and
conditions of the student education loan agreement or private education loan agreement or the
student loan borrower's obligations under the student education loan or private education loan.”.
(2) A new paragraph (2A) is added to read as follows:
“(2A)(A) “Cosigner” means an individual who is liable for the obligation of a
student loan borrower without compensation, regardless of how the individual is designated in
the contract or instrument with respect to that obligation, including an obligation under a private
education loan extended to consolidate a student loan borrower’s pre-existing student loans.
“(B) The term includes an individual whose signature is requested as a
condition to grant credit or to forbear on collection, but does not include a spouse of a student
loan borrower, the signature of whom is needed to perfect the security interest in a loan.”.
(3) New paragraphs (6C), (6D), (6E), (6F), and (6G) are added to read as follows:
“(6C) “Overpayment” means a payment on a student education loan or private
education loan in excess of the monthly amount due from the student loan borrower on a student
education loan or private education loan.
“(6D) “Partial payment” means a payment on a student education loan account
that contains multiple individual loans in an amount less than the amount necessary to satisfy the
outstanding payment due on all loans in the student education loan account.
“(6E)(A) “Postsecondary education expense” means an expense related to
enrollment in or attendance at a postsecondary education institution regardless of whether the
debt incurred by a student to pay those expenses is owed to the provider of postsecondary
education whose school, program, or facility the student attends.
(B) For the purpose of this paragraph, the term “postsecondary”
has the same meaning as that term is defined in section 201(12B) of the Education Licensure
Commission Act of 1976, effective April 6, 1977 (D.C. Law 1-104; D.C. Official Code § 38-
1302(12B)).
“(6F) “Private education lender” means a person engaged in the business of
securing, making, or extending private education loans, or a holder of a private education loan.
The term does not include, to the extent preempted by federal law:
“(A) A bank or credit union;
“(B) A wholly owned subsidiary of a bank or credit union; or
“(C) An operating subsidiary of a bank or credit union where each owner
of the operating subsidiary is wholly owned by the same bank or credit union.
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“(6G)(A) “Private education loan” means an extension of credit that is not made,
insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. § 1070 et
seq.), and is extended to a consumer expressly, in whole or in part, for postsecondary education
expenses regardless of whether the loan is provided by the educational institution that the student
attends.
“(B) The term does not include:
“(i) Open-end credit or any loan that is secured by real property or
a dwelling; or
“(ii) An extension of credit in which the covered educational
institution is the creditor if the term is 90 days or less or an interest rate will not be applied to the
credit balance and the term of the extension of credit is one year or less, even if the credit is
payable in more than 4 installments.
(4) Paragraph (9) is amended to read as follows:
“(9) “Student loan borrower” means a resident of the District of Columbia who
has received or agreed to pay a student education loan or a private education loan to fund his or
her postsecondary education.”.
(5) A new paragraph (13) is added to read as follows:
“(13) “Total and permanent disability” is the condition of an individual who:
“(A) Has been determined by the United State Secretary of Veterans
Affairs to be unemployable due to a service-connected disability; or
“(B) Is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to result in
death, has lasted for a continuous period of not less than 12 months, or can be expected to last for
a continuous period of not less than 12 months.”.
(b) Section 7a(c)(10) (D.C. Official Code § 31-106.01(c)(10)) is amended to read as
follows:
“(10) By January 1, 2025, develop an updated consumer-facing student loan borrower bill
of rights, and make it available on the Department’s website.”.
(c) Section 7b (D.C. Official Code § 31-106.02) is amended as follows:
(1) Subsection (c) is amended as follows:
(A) Paragraph (1)(B) is amended by striking the phrase “Application fees
and other fees” and inserting the phrase “Application fees, investigation fees, and other fees” in
its place.
(B) A new paragraph (3) is added to read as follows:
“(3) The Commissioner shall automatically issue a limited, irrevocable license to
a person or entity servicing a student education loan under contract with the United States
Department of Education provided that:
“(A)(i), A person or entity seeking to act within the District of Columbia
as a student loan servicer is exempt from the application procedures established pursuant to this
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subsection, other than the requirements of paragraphs (1)(B) and (1)(D) of this subsection, to the
extent that the student loan servicing performed is conducted pursuant to a contract awarded by
the United States Secretary of Education under 20 U.S.C. § 1087f.
“(ii) The Commissioner shall prescribe the procedure to document
eligibility for the exemption and maintain records documenting each person and entity issued a
license pursuant to this paragraph.
“(B) A person or entity meeting the criteria set forth in subparagraph (A)
of this paragraph shall be issued a license by the Commissioner for the student loan servicing of
student education loans under contract with the United States Department of Education and shall
be deemed by the Commissioner to have met all the requirements established by subparagraphs
(1)(A) and (C) of this subsection.
“(C) The provisions of subsection (h) of this section shall not apply to a
person or entity issued a limited license pursuant to this section to the extent that the person or
entity is servicing a federal student education loan.
“(D)(i) A person or entity issued a license pursuant to this section shall
provide the Commissioner with written notice within 7 days following the notification of the
expiration, revocation, or termination of any contract awarded by the United States Secretary of
Education under 20 U.S.C § 1087f (“written notice”).
“(ii) After providing the written notice required by sub-
subparagraph (i) of this subparagraph, the person or entity shall have 30 days to satisfy all the
requirements established under this section in order to continue to act within the District of
Columbia as a student loan servicer for federal student education loans.
“(iii) At the expiration of the 30-day period provided in sub-
subparagraph (ii) of this subparagraph, if the person or entity has not satisfied the requirements
established pursuant to this section, the Commissioner shall immediately suspend any license
granted under this section.
“(E) In the case of student loan servicing that is not conducted pursuant to
a contract awarded by the United States Secretary of Education under 20 U.S.C. § 1087f, nothing
in this section shall prevent the Commissioner from issuing an order to temporarily or
permanently prohibit a person or entity from acting as a student loan servicer.
“(F) In the case of student loan servicing conducted pursuant to a contract
awarded by the United States Secretary of Education under 20 U.S.C § 1087f, nothing in this
section shall prevent the Commissioner from issuing a cease-and-desist order or an injunction
against a student loan servicer to cease activities in violation of this act or D.C. Official Code
§28-3901 et seq.”.
(2) Subsection (g)(1)(C) is amended by striking the phrase “The Commissioner
may deny an application for renewal” and inserting the phrase “Except as provided under
subsection (c)(3) of this section, the Commissioner may deny an application for renewal” in its
place.
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(3) A new subsection (k) is added to read as follows:
“(k) In a format prescribed by the Commissioner, a licensee shall maintain the
contact information for the Department and the Ombudsman, as defined in section 2(6B), on the
licensee’s website.”.
(d) New sections 7b-1, 7b-2, 7b-3, 7b-4, and 7b-5 are added to read as follows:
“Sec. 7b-1. Prohibited conduct – student loan servicers.
“(a) No student loan servicer shall:
“(1) Directly or indirectly employ any scheme, device, or artifice to defraud a
student loan borrower;
“(2) Directly or indirectly employ any scheme, device, or artifice to mislead a
student loan borrower;
“(3) Engage in any unfair or deceptive practice toward any person or misrepresent
or omit any material information in connection with the servicing of a student education loan,
including an abusive act and practice;
“(4) Obtain property by fraud;
“(5) Obtain property by misrepresentation;
“(6) Misapply student education loan payments to the outstanding balance of a
student education loan;
“(7) Provide inaccurate information to a credit bureau, harming a student loan
borrower's creditworthiness;
“(8) Fail to report both the favorable and unfavorable payment history of the
student loan borrower to a nationally recognized consumer credit bureau at least annually if the
student loan servicer regularly reports information to a credit bureau;
“(9) Refuse to communicate with an authorized representative of the student loan
borrower who provides a written authorization signed by the student loan borrower; except, that
the student loan servicer may adopt procedures reasonably related to verifying that the
representative is authorized to act on behalf of the student loan borrower;
“(10) Make a false statement or make an omission of a material fact in connection
with any information or report filed with a governmental agency or in connection with any
investigation conducted by the Commissioner or another governmental agency;
“(11) Fail to respond within 15 business days to a communication from the
Department, or the Office of the Attorney General, or within such shorter reasonable period of
time as may be requested by the Department or the Attorney General; or
“(12)(A) Fail to respond within 15 business days to a consumer complaint
submitted to the student loan servicer by the Department or the Office of the Attorney General.
“(B) A student loan servicer may request additional time to respond to the
complaint, up to a maximum of 45 business days, provided that the request is accompanied by an
explanation as to why additional time is reasonable and necessary.
“Sec. 7b-2. Affirmative duties – student loan servicers.
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“(a) Except as otherwise provided pursuant to federal law or a student education loan
agreement, a student loan servicer shall:
“(1) Respond to any written inquiry from a student loan borrower or the
representative of a student loan borrower by:
“(A) Acknowledging receipt of the inquiry within 10 business days; and
“(B) Providing information relating to the inquiry, and, if applicable, the
action the student loan servicer will take to correct the account or an explanation of the student
loan servicer's determination that the borrower's account is correct within 30 business days,
including copies of all information and account information used by the student loan servicer in
reaching the determination.
“(2) Inquire of a student loan borrower who has an overpayment on how the
student loan borrower wants to apply the overpayment to a student education loan. A student
loan borrower's instruction on how to apply an overpayment to a student education loan shall
stay in effect for any future overpayments during the term of the student education loan until the
borrower provides different instructions.
“(3)(A) In the absence of direction provided by a student loan borrower pursuant
to paragraph (2) of this subsection, allocate an overpayment on a student loan account in a
manner that reduces the total cost of the student loan, including principal and balance, interest,
and fees.
“(B) A student loan servicer shall be deemed to meet the requirements of
this paragraph if the servicer allocates the overpayment to the loan with the highest interest rate
on the student loan borrower’s account, unless the student loan borrower specifies otherwise.
“(4)(A) In the absence of direction provided by a student loan borrower pursuant
to paragraph (2) of this subsection, apply partial payments in a manner that minimizes late fees
and negative credit reporting.
“(B) If there are multiple loans on a student loan borrower’s account with
an equal stage of delinquency, apply the partial payment in a way that satisfies as many
individual loan payments as possible on a student loan borrower's account.
“(b) Except as otherwise provided by federal law or regulation, the following
requirements shall be applicable to a student loan servicer in the event of the sale, assignment, or
other transfer of the servicing of a student education loan that results in a change in the identity
of the student loan servicer to whom a student loan borrower is required to send payments or
direct any communication concerning the student education loan:
“(1)(A) As a condition of a sale, an assignment, or any other transfer of the
servicing of a student education loan, a student loan servicer shall require the new student loan
servicer to honor all benefits originally represented as available to a student loan borrower during
the repayment of the student education loan and preserve the availability of those benefits,
including any benefits for which the student loan borrower has not yet qualified.
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“(B) If a student loan servicer is not also the loan holder or is not acting on
behalf of the loan holder, the student loan servicer satisfies the requirement established by this
paragraph by providing the new student loan servicer with the information necessary for the new
student loan servicer to honor all benefits originally represented as available to a student loan
borrower during the repayment of the student education loan and preserve the availability of the
benefits, including any benefits for which the student loan borrower has not yet qualified.
“(2) A student loan servicer shall transfer to the new student loan servicer for the
student education loan all information regarding the student loan borrower, the account of the
student loan borrower, and the st