New York Codes, Rules and Regulations
Title 3 - BANKING
Chapter III - SUPERINTENDENT'S REGULATIONS
Subchapter B - NON-BANKING ORGANIZATIONS
Part 409 - STUDENT LOAN SERVICERS
Section 409.8 - Servicing standards
Universal Citation: 3 NY Comp Codes Rules and Regs § 409.8
Current through Register Vol. 47, No. 12, March 26, 2025
(a) A student loan servicer shall not misrepresent or omit any material information in connection with the servicing of a student loan, including, but not limited to, misrepresenting or omitting:
(1) the amount, nature, or terms of any fee
or payment due or claimed to be due on a student loan;
(2) the terms and conditions of a student
loan or a borrower's obligations under a student loan; or
(3) the availability of any program or
protection specific to or applicable to military borrowers, borrowers working
in public service, older borrowers, cosigners, or borrowers with
disabilities.
(b) Nonconforming payments. Except as provided in federal law or required by a student loan agreement:
(1) a student loan
servicer shall inquire of a borrower how to apply a borrower's nonconforming
payment, shall give a borrower not less than ten business days to provide
instructions, and shall follow the borrower's instructions on how to apply a
nonconforming payment. A borrower's instructions on how to apply a
nonconforming payment shall remain in effect for any future nonconforming
payment during the term of a student loan until the borrower provides different
instructions.
(2) if a borrower has
multiple loans with a student loan servicer and does not provide instructions
to the student loan servicer on how to apply a nonconforming payment, a student
loan servicer shall:
(i) apply an overpayment
in a manner that is in the best financial interest of the borrower. A student
loan servicer shall be considered to meet the requirements of this subparagraph
if the servicer applies the overpayment to the highest interest-rate loan on
the borrower's account.
(ii) apply
a partial payment in a manner that minimizes late fees and negative credit
reporting. If there are multiple loans on a borrower's account with an equal
stage of delinquency, a student loan servicer shall satisfy the requirements of
this subparagraph by applying a partial payment to satisfy as many loans as
possible on a borrower's account.
(c) Consumer reporting.
(1) A student loan servicer shall not provide
inaccurate information to a consumer reporting agency.
(2) If a student loan servicer regularly
reports information to a consumer reporting agency, the student loan servicer
shall accurately report a borrower's payment performance to at least one
consumer reporting agency that compiles and maintains files on consumers on a
nationwide basis as defined in Section 603 of the federal Fair Credit Reporting
Act (15 U.S.C. Sec.
1681a(p)), upon acceptance
as a data furnisher by that consumer reporting agency.
(d) Sale, assignment, or other transfer of servicing.
(1) If the sale, assignment, or
other transfer of the servicing of a student loan results in a change in the
identity of the person to whom a borrower is required to send subsequent
payments or direct any communications concerning a student loan, a student loan
servicer shall transfer all information regarding the borrower, the borrower's
account, and the borrower's student loan to the new student loan servicer
servicing the borrower's student loan within forty-five days. Such information
shall include, at a minimum:
(i) the
borrower's repayment status;
(ii)
any borrower benefits associated with the borrower's student loan;
(iii) a schedule of all transactions credited
or debited to the student loan account;
(iv) a copy of the promissory note for the
student loan;
(v) any notes created
by student loan servicer personnel reflecting communications with the borrower
about the student loan account;
(vi) a report of the data fields relating to
the borrower's student loan account created by the student loan servicer's
electronic systems in connection with servicing practices;
(vii) copies of any information or documents
provided by the borrower to the student loan servicer;
(viii) usable data fields with information
necessary to assess qualification for forgiveness, including public service
loan forgiveness; and
(ix) any
information necessary to compile a payment history.
(2) A student loan servicer shall adopt
policies and procedures to verify that it has received all information
regarding a borrower, a borrower's account, and a borrower's student loan,
including at a minimum the information listed in paragraph (1) of this
subdivision, when the student loan servicer obtains the right to service a
student loan.
(3) If a student loan
servicer sells, assigns, or otherwise transfers the servicing of a student loan
to a new student loan servicer, the sale, assignment or other transfer shall be
completed at least seven days before the borrower's next payment is
due.
(4) A student loan servicer
that sells, assigns, or otherwise transfers the servicing of a student loan
shall require as a condition of such sale, assignment, or other transfer that
the new student loan servicer shall honor all borrower benefits originally
represented as being available to a borrower during the repayment of the
student loan and the possibility of such benefits, including any benefits that
were represented as being available but for which the borrower had not yet
qualified.
(5) A student loan
servicer that obtains the right to service a student loan shall honor all
borrower benefits originally represented as being available to a borrower
during the repayment of the student loan and the possibility of such benefits,
including any benefits that were represented as being available but for which
the borrower had not yet qualified.
(e) A student loan servicer shall post, process, and credit student loan payments in a timely manner, including but not limited to:
(1) crediting a payment received
on the date on which that payment is due as effective on the date on which the
student loan servicer received the payment; and
(2) treating a payment received from a
borrower on or before the borrower's due date as an on-time payment.
(f) Customer service.
(1) A student loan servicer shall prominently
post, on the homepage of the student loan servicer's website, a toll-free
telephone number a borrower may call to discuss their student loans with a live
person.
(2) A student loan servicer
shall fully train representatives who answer calls to the toll-free number
described in paragraph (1) of this subdivision and shall ensure that such
representatives are capable of informing and discussing with callers any
available alternative repayment plans, loan forgiveness, cancellation, and
discharge benefits. If a caller calls to inquire about repayment options, such
student loan servicer representatives shall inform and discuss with callers any
available alternative repayment plans, loan forgiveness, cancellation, and
discharge benefits. Such student loan servicer representatives must also be
trained in the differences among deferment, forbearance, and alternative
repayment plans, and be able to answer caller questions regarding the
differences.
(g) Loan repayment options and loan forgiveness benefits.
(1) To assist the prevention of borrower
delinquency or default, a student loan servicer shall prominently post, on the
student loan servicer's website, clear and complete information, written in
easily understandable language, about any available repayment options,
including deferments and income-based alternative repayment plans, and
forgiveness or discharge benefits. The posted information may appear on the
student loan servicer's homepage or be available through links on the homepage
to specified web pages. Student loan servicers that service Direct Loans or
FFELP Loans shall include direct, live links to the following web pages, or
successor or replacement web pages, of the Student Aid Office of the United
States Department of Education website: "How to Repay Your Loans,"
https://studentaid.ed.gov/sa/repay-loans ;
and https://studentloans.gov/myDirectLoan/repayOptions.action .
(2) At least once per calendar year, a
student loan servicer shall send to borrowers a plain language notice,
containing the information or links to information regarding repayment, loan
forgiveness, and discharge options, required under this rule. This notice shall
also include the toll-free telephone number described in paragraph (1) of
subdivision (f) of this section to call to discuss student loans with a live
person.
(3) A student loan servicer
shall establish policies and procedures, and implement them consistently, in
order to facilitate disclosure of any available alternative repayment
arrangements, including:
(i) providing
accurate information regarding any alternative repayment arrangements that may
be available to the borrower through the promissory note, that may have been
marketed to the borrower though marketing materials, or that have been widely
advertised or marketed by the servicer, original lender, or promissory note
holder as available to similarly-situated borrowers; and
(ii) consistently presenting and offering any
available alternative repayment arrangements to borrowers with similar
financial circumstances.
(h) Borrower information and statements of account.
(1) A student loan servicer shall
maintain and make available through its website, free of charge, clear and
complete information and account records for each borrower. This information
and accounting shall be accessible to the borrower only, through a secure
log-in system. This information shall include a consolidated report for each
borrower, and a loan history for each student loan serviced. This information
and accounting shall be available to borrowers at all times, except for
occasional, short periods of time when the student loan servicer's system is
not available because the system is undergoing routine maintenance or blocked
for security reasons.
(2) The
consolidated report required under paragraph (1) of this subdivision must
include, at a minimum:
(i) borrower
name;
(ii) number of student
loan(s) serviced for each borrower;
(iii) loan number, for each student
loan;
(iv) loan type, i.e., Direct
Loan; FFELP Loan; Perkins Loan; or private student loan.
(v) loan disbursement amount and date, for
each student loan;
(vi) interest
rate(s) and maturity date, or number of monthly payments required to repay the
loan, for each student loan;
(vii)
loan balance and status, for each student loan;
(viii) cumulative balance owing for each
borrower;
(ix) whether the borrower
has an application pending for, or is repaying under, an alternative repayment
plan, listing the plan chosen; and
(x) whether the borrower has an application
pending for any loan forgiveness cancellation, or discharge benefit.
(3) The loan history required
under paragraph (1) of this subdivision must include, at a minimum, the
following information, including the corresponding dates for each:
(i) disbursements;
(ii) interest accruals;
(iii) fees;
(iv) late charges;
(v) any other miscellaneous amounts charged
to the borrower;
(vi) payments
received;
(vii) payments toward
loan forgiveness programs; and
(viii) the borrower's repayment
plan.
(i) A student loan servicer that services private student loans must provide on its website clear and complete information, written in easily understandable language, concerning the availability and criteria for a cosigner release.
(j) Consumer complaints and inquiries.
(1) A student loan servicer
shall respond within fifteen calendar days to a consumer complaint submitted to
the student loan servicer by the department. A student loan servicer may
request additional time to respond up to a maximum of forty-five calendar days.
Such a request for additional time must be accompanied by an explanation why
such additional time is reasonable and necessary. The department may grant
additional time to respond in its sole discretion.
(2) A student loan servicer shall not refuse
to communicate with an authorized representative of a borrower who provides a
written authorization signed by such borrower, including those transmitted to
the student loan servicer by mail, facsimile, or electronically, provided that
the student loan servicer may adopt procedures reasonably related to verifying
that the representative is in fact authorized to act on behalf of the
borrower.
(3) Complaints from a
Borrower or a Borrower's Representative. A student loan servicer shall comply
with the requirements of this section for any written complaint, including
those transmitted by mail, facsimile, or electronically, from a borrower or an
authorized representative of a borrower that enables the student loan servicer
to identify the name and account of the borrower, the borrower's student loan
account, and the nature of the borrower's complaint.
(i) Within ten days of receiving a complaint,
a student loan servicer shall acknowledge receipt of the complaint and inform
the borrower or the authorized representative of the borrower of any additional
information or documentation required by the student loan servicer to review
and address the complaint.
(ii) A
student loan servicer must conduct a reasonable investigation of the complaint
and either:
(a) correct any error or other
servicing-related issue identified and provide the borrower or the authorized
representative of the borrower with a written notification of the correction
and the effective date of the correction; or
(b) if the student loan servicer has
determined that no error occurred or that no action is warranted to correct a
servicing-related issue, inform the borrower or the authorized representative
of the borrower, in writing delivered via mail unless the borrower has elected
to receive this response in another format, of the results of the student loan
servicer's investigation and provide a statement of the reason or reasons for
this determination.
(iii) A student loan servicer shall comply
with the requirements of subparagraph (ii) of this paragraph within thirty days
of receiving a complaint.
(4) A student loan servicer shall adopt
policies and procedures permitting borrowers to escalate a complaint or inquiry
to a senior representative if the borrower is dissatisfied with the outcome of
the initial complaint or inquiry.
(k) All information listed in paragraph (1) of subdivision (d) of this section, and all communications with borrowers shall be considered books and records of the student loan servicer and shall be preserved pursuant to the requirements of section 409.13 of this part.
(l) A student loan servicer shall adopt policies and procedures permitting borrowers to obtain hard copies of information required to be disclosed by the student loan servicer, with particular focus on meeting the needs of borrowers without access to the internet.
Disclaimer: These regulations may not be the most recent version. New York may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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