SF 539 (LSB 1254SV (1) 88)

SENATE FILE 539

BY  COMMITTEE ON EDUCATION

(SUCCESSOR TO SF 318)

A BILL FOR

An Act establishing the office of student loan ombudsman within the college student aid commission.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 261.2, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  13.  Support, maintain, and designate a student loan ombudsman to administer the office of student loan ombudsman in accordance with section 261.8.
    Sec. 2.  NEW SECTION.  261.8  Office of student loan ombudsman —— duties.
   1.  Office established.  The office of student loan ombudsman is established within the commission.
   2.  Appointment.  The commission shall appoint the student loan ombudsman.
   3.  Duties.  The student loan ombudsman, in consultation with the commission, shall do all of the following:
   a.  Receive, review, and attempt to resolve, in collaboration with postsecondary institutions, complaints from student loan borrowers involving entities that include but are not limited to student loan servicers, covered institutions and lenders providing private educational loans, as those terms are defined in section 261F.1, and any other participants in student loan lending, including but not limited to originators servicing their own student education loans. If, in meeting the requirements of this paragraph, the student loan ombudsman has reason to believe that a person or entity has knowingly engaged in an act or practice that constitutes a violation of chapter 261F or section 714.16, the student loan ombudsman shall submit the ombudsman’s information and findings to the commission and to the attorney general for further review and appropriate action.
   b.  Compile and analyze data on student loan borrower complaints as described in paragraph “a”.
   c.  Assist student loan borrowers to understand their rights and responsibilities under the terms of student education loans.
   d.  Provide information to the public, agencies, members of the general assembly, and others regarding the problems and concerns of student loan borrowers and make recommendations for resolving such problems and concerns.
   e.  Analyze and monitor the development and implementation of federal, state, and local laws, ordinances, regulations, rules and policies relating to student loan borrowers and recommend any necessary changes.
   f.  Review the complete student education loan history for a student loan borrower who provides written consent for such a review.
   g.  Disseminate information concerning the availability of the student loan ombudsman to assist student loan borrowers and potential student loan borrowers, public institutions of higher education, student loan servicers, and any other participants in student education loan lending with any student education loan servicing concerns.
   h.  Establish and maintain a student loan borrower education course within existing resources that includes educational presentations and materials regarding student education loans. The course must include, but is not limited to, key loan terms, documentation requirements, monthly payment obligations, income-based repayment options, loan forgiveness, and disclosure requirements.
   i.  Take any other actions necessary to fulfill any additional duties set forth by the commission in accordance with this section.
   j.  Submit to the commission, by August 1 annually, a report that includes but is not limited to all of the following:
   (1)  A description of the actions taken by the office of student loan ombudsman with respect to the implementation of this section during the previous fiscal year.
   (2)  An assessment of the overall effectiveness of the office of the student loan ombudsman.
   (3)  Recommendations for legislative or administrative action for changes to the duties and responsibilities established under this section and for measures to improve the efficacy and responsiveness of the office of student loan ombudsman.
   4.  Definitions.  As used in this section, unless the context otherwise requires:
   a.  “Commission” means the college student aid commission.
   b.  “Postsecondary institution” means an institution of higher learning under the control of the state board of regents, a community college established under chapter 260C, or an accredited private institution or eligible institution as defined in section 261.9.
   c.  “Servicing” means receiving scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan, applying the payments of principal and interest and such other payments with respect to the amounts received from a student loan borrower as may be required pursuant to the terms of a student education loan, and performing other administrative services with respect to a student education loan.
   d.  “Student education loan” means a loan that is extended to a student loan borrower expressly for postsecondary education expenses or other school-related expenses and does not include open-end credit or any loan that is secured by real property.
   e.  “Student loan borrower” means any of the following:
   (1)  A resident of this state who has received or agreed to pay a student education loan.
   (2)  A person who shares legal responsibility with a resident under subparagraph (1) for repaying the student education loan.
   f.  “Student loan servicer” means a person, wherever located, responsible for the servicing of a student education loan to a student loan borrower.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill establishes an office of student loan ombudsman within the college student aid commission, which shall support, maintain, and designate a student loan ombudsman to administer the office.
   The duties of the student loan ombudsman include receiving and attempting to resolve student loan borrowers’ complaints; compiling and analyzing data on such complaints; assisting student loan borrowers to understand their rights and responsibilities; providing information to various entities regarding the problems and concerns of student loan borrowers; analyzing and monitoring the development and implementation of federal, state, and local requirements relating to student loan borrowers; disseminating information about the services offered by the office; establishing and maintaining a student loan borrower education course; and making recommendations as appropriate and taking other actions that fulfill the duties of the office.
   If the ombudsman has reason to believe that a person or entity has knowingly engaged in an act or practice that constitutes a violation of Code chapter 261F relating to educational loans, or Code section 714.16 relating to consumer fraud, the ombudsman shall submit information and findings to the commission and to the attorney general for further review and appropriate action.
   The ombudsman must also submit to the commission, by August 1 annually, a report that describes the actions taken during the previous fiscal year, includes an assessment of office effectiveness, and provides recommendations for changes.
   The bill establishes definitions, including definitions for “postsecondary institution”, “servicing”, “student education loan”, and “student loan borrower”.