A bill for an act
relating to commerce; requiring licensure of student loan servicers; prohibiting
certain practices in student loan servicing; appropriating money; amending
Minnesota Statutes 2020, section 13.712, by adding a subdivision; proposing
coding for new law as Minnesota Statutes, chapter 58B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Minnesota Statutes 2020, section 13.712, is amended by adding a subdivision
to read:
new text begin
Data collected, created, received, maintained, or
disseminated under chapter 58B are governed by section 58B.10.
new text end
new text begin
This chapter may be cited as the "Student Loan Borrower Bill of Rights."
new text end
new text begin
For purposes of this chapter, the following terms have the meanings
given them.
new text end
new text begin
"Borrower" means a resident of this state who has received or agreed
to pay a student loan or a person who shares responsibility with a resident for repaying a
student loan.
new text end
new text begin
"Commissioner" means the commissioner of commerce.
new text end
new text begin
"Financial institution" means any of the following
organized under the laws of this state, any other state, or the United States: a bank, bank
and trust, trust company with banking powers, savings bank, savings association, or credit
union.
new text end
new text begin
"Person in control" means any member of senior
management, including owners or officers, and other persons who directly or indirectly
possess the power to direct or cause the direction of the management policies of an applicant
or student loan servicer under this chapter, regardless of whether the person has any
ownership interest in the applicant or student loan servicer. Control is presumed to exist if
a person directly or indirectly owns, controls, or holds with power to vote ten percent or
more of the voting stock of an applicant or student loan servicer or of a person who owns,
controls, or holds with power to vote ten percent or more of the voting stock of an applicant
or student loan servicer.
new text end
new text begin
"Servicing" means:
new text end
new text begin
(1) receiving any scheduled periodic payments from a borrower or notification of
payments, and applying payments to the borrower's account pursuant to the terms of the
student loan or of the contract governing servicing;
new text end
new text begin
(2) during a period when no payment is required on a student loan, maintaining account
records for the loan and communicating with the borrower regarding the loan, on behalf of
the loan's holder; and
new text end
new text begin
(3) interacting with a borrower, including activities to help prevent default on obligations
arising from student loans, conducted to facilitate the requirements in clauses (1) and (2).
new text end
new text begin
"Student loan" means a government, commercial, or foundation
loan for actual costs paid for tuition and reasonable education and living expenses.
new text end
new text begin
"Student loan servicer" means any person, wherever
located, responsible for the servicing of any student loan to any borrower, including a
nonbank covered person, as defined in Code of Federal Regulations, title 12, section
1090.101, who is responsible for the servicing of any student loan to any borrower.
new text end
new text begin
No person shall directly or indirectly act as a student
loan servicer without first obtaining a license from the commissioner.
new text end
new text begin
The following persons are exempt from the requirements of
this chapter:
new text end
new text begin
(1) a financial institution;
new text end
new text begin
(2) a person servicing student loans made with the person's own funds if no more than
three such student loans are made in any 12-month period;
new text end
new text begin
(3) an agency, instrumentality, or political subdivision of this state that makes, services,
or guarantees student loans;
new text end
new text begin
(4) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of a
specific order issued by a court of competent jurisdiction;
new text end
new text begin
(5) the University of Minnesota; or
new text end
new text begin
(6) a person exempted by order of the commissioner.
new text end
new text begin
(a) Any person seeking to act within the state as a
student loan servicer must apply for a license in a form and manner specified by the
commissioner. At a minimum, the application must include:
new text end
new text begin
(1) a financial statement prepared by a certified public accountant or a public accountant;
new text end
new text begin
(2) the history of criminal convictions, excluding traffic violations, for persons in control
of the applicant;
new text end
new text begin
(3) any information requested by the commissioner related to the history of criminal
convictions disclosed under clause (2);
new text end
new text begin
(4) a nonrefundable license fee established by the commissioner; and
new text end
new text begin
(5) a nonrefundable investigation fee established by the commissioner.
new text end
new text begin
(b) The commissioner may conduct a state and national criminal history records check
of the applicant and of each person in control or employee of the applicant.
new text end
new text begin
(a) Upon receipt of a complete application for an initial
license and the payment of fees for a license and investigation, the commissioner must
investigate the financial condition and responsibility, character, financial and business
experience, and general fitness of the applicant. The commissioner may issue a license if
the commissioner finds that:
new text end
new text begin
(1) the applicant's financial condition is sound;
new text end
new text begin
(2) the applicant's business will be conducted honestly, fairly, equitably, carefully, and
efficiently within the purposes and intent of this chapter;
new text end
new text begin (3) each person in control of the applicant is in all respec