Sponsored by:
Senator SANDRA B. CUNNINGHAM
District 31 (Hudson)
SYNOPSIS
Requires registration of private education lenders; establishes protections for private education borrowers.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning private education lenders and supplementing P.L.2019, c.200 (C.17:16ZZ-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
Commissioner means the Commissioner of Banking and Insurance.
Cosigner means:
(1) any individual who is liable for the obligation of another 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 borrower s pre-existing private education loans; and
(2) shall include any person whose signature is requested as a condition to grant credit or to forbear on collection.
As used in this act, cosigner shall not include a spouse of an individual described in paragraph (1), the signature of whom is needed to perfect the security interest in a loan.
Creditor means:
(1) the original creditor, where ownership of a private education loan debt has not been sold, assigned, or transferred;
(2) the person or entity that owned the private education loan debt at the time the debt defaulted, even if that person or entity did not originate the private education loan, and where such a debt has not subsequently been sold, transferred or assigned; or
(3) a person or entity that purchased a defaulted private education loan debt for collection purposes, whether it collects the debt itself, hires a third party for collection, or hires an attorney for collection litigation.
Debt collector means a person who regularly collects or attempts to collect, directly or indirectly, consumer debts originally owed or due or asserted to be owed or due another. The term shall not include an officer or employee of a creditor who, in the name of the creditor, collects debts for that creditor, but it shall include a creditor who, in the process of collecting its own debt, uses a name other than its own that would indicate that a third person is collecting or attempting to collect the debt.
Department means the Department of Banking and Insurance.
Original Creditor means the private education lender identified in a promissory note, loan agreement, or loan contract entered into with a student loan borrower or cosigner.
Private education lender or lender means any person engaged in the business of securing, making, or extending private education loans, or any holder of a private education loan. Private education lender shall not include the following persons, only to the extent that State regulation is preempted by federal law:
(1) any federally chartered bank, savings bank, savings and loan association, or credit union;
(2) any wholly owned subsidiary of a federally chartered bank or credit union; and
(3) any operating subsidiary where each owner of the operating subsidiary is wholly owned by the same federally chartered bank or credit union.
Private education loan means an extension of credit that:
(1) is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. s.1070 et seq.);
(2) is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the loan is provided by the educational institution that the student attends;
(3) shall not include open-end credit or any loan that is secured by real property or a dwelling; and
(4) shall not include an extension of credit in which the covered educational institution is the creditor if:
(a) the term of the extension of credit is 90 days or less; or
(b) an interest rate shall 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 four installments.
Private education loan borrower or borrower means any resident of this State who has received or agreed to pay a private education loan for the borrower s own educational expenses.
Student financing means:
(1) an extension of credit that:
(a) is not made, insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. s.1070 et seq.);
(b) is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the extension of credit is provided by the provider of postsecondary education that the student attends; and
(c) shall not include any loan that is secured by real property or a dwelling; or
(2) a debt or obligation owed or incurred by a consumer, contractual or otherwise, that:
(a) is not a loan made, insured, or guaranteed under Title IV of the Higher Education Act of 1965 (20 U.S.C. s.1070 et seq.);
(b) is incurred by the consumer, in whole or in part, expressly to finance postsecondary education expenses regardless of whether the debt incurred is owed to the provider of postsecondary education that the student attends; and
(c) shall not include any loan that is secured by real property or a dwelling.
Student financing company means any person engaged in the business of securing, making, or extending credit to a consumer for postsecondary education expenses, or any holder of a debt incurred by a consumer to finance postsecondary education expenses. Student financing company shall not include the following persons, only to the extent that State regulation is preempted by federal law:
(1) any federally chartered bank, savings bank, savings and loan association, or credit union;
(2) any wholly owned subsidiary of a federally chartered bank or credit union; and
(3) any operating subsidiary where each owner of the operating subsidiary is wholly owned by the same federally chartered bank or credit union.
Total and permanent disability is the condition of an individual who: