LRB-4467/1
ARG:cdc&wlj
2023 - 2024 LEGISLATURE
January 12, 2024 - Introduced by Representatives Joers, Drake, Sinicki,
Neubauer, Ratcliff, Bare, Emerson, Shelton, Jacobson, Considine,
Palmeri, C. Anderson, Subeck, Clancy, Hong, Moore Omokunde, J.
Anderson, Madison, Stubbs, Baldeh, Conley, Shankland and Ortiz-Velez,
cosponsored by Senators Hesselbein, Smith, Carpenter, Taylor, Roys,
Larson, L. Johnson, Agard and Spreitzer. Referred to Committee on Colleges
and Universities.
AB948,1,5
1An Act to amend 15.01 (6) and 15.02 (3) (c) 1.; and
to create 15.185 (6) and
2subchapter V of chapter 224 [precedes 224.101] of the statutes;
relating to:
3student loans for postsecondary education, requirements related to student
4loan servicers, creating an office of the student loan ombudsman in the
5Department of Financial Institutions, and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill creates an Office of the Student Loan Ombudsman (office) in the
Department of Financial Institutions and requires student loan servicers to be
licensed by this office. The bill contains a variety of provisions governing student
education loans, student loan borrowers, and student loan servicers. Under the bill,
a “student education loan" means a loan that is extended to a student loan borrower
expressly for postsecondary education expenses or related expenses. A “student loan
borrower" means a resident of this state who has received or agreed to pay a student
education loan or a person who shares legal responsibility for repaying the loan. A
“student loan servicer" means a person responsible for the servicing of a student
education loan, but excludes certain state-regulated financial service providers.
“Servicing” means receiving scheduled periodic payments from a student loan
borrower; applying payments received from a student loan borrower; and performing
other administrative services with respect to a student education loan.
The bill requires a student loan servicer, wherever located, to be licensed by the
office before directly or indirectly engaging in servicing student education loans in
this state. A student loan servicer must hold a separate license for each of its places
of business and the student loan servicer may not act under any name or at any place
of business that is not identified in the license.
The bill imposes numerous requirements on student loan servicers, including
requirements relating to all of the following:
1. Responding to written inquiries from student loan borrowers.
2. Handling and applying “nonconforming payments," defined as payments on
student education loans that are different from the required payments.
3. Responsibilities if there is a sale, assignment, or other transfer of the
servicing of a student education loan.
4. Maintaining and making available to the office records related to student
education loan transactions.
The bill also prohibits a student loan servicer from engaging in certain conduct
or activity, including the following:
1. Defrauding or misleading a student loan borrower.
2. Engaging in an unfair or deceptive practice or misrepresenting or omitting
material information in connection with the servicing of a student education loan.
3. Misapplying student education loan payments.
4. Providing inaccurate information to a credit bureau related to a student loan
borrower's creditworthiness.
5. Refusing to communicate with an authorized representative of a student
loan borrower.
6. Failing to evaluate a student loan borrower for an income-based repayment
program prior to placing the student loan borrower in default.
The bill also specifies the authority of the office to conduct investigations and
examinations and take administrative action and also provides a private right of
action for violations of the requirements or prohibitions under the bill.
The bill requires the office to perform certain functions, including: 1) assisting
student loan borrowers; 2) receiving and attempting to resolve complaints from
student loan borrowers and others; 3) compiling and analyzing data about these
complaints; 4) assisting student loan borrowers in various ways; 5) providing
information to the public and others regarding the problems and concerns of student
loan borrowers; and 6) analyzing and monitoring the development and
implementation of laws and policies relating to student loan borrowers.
Although the bill exempts certain state-regulated financial service providers,
primarily state-chartered financial institutions, from licensing and most other
requirements applicable to student loan servicers, the bill requires these exempt
organizations to cooperate with the office and provide information requested by the
office necessary to investigate and resolve student loan borrower complaints.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB948,3,153
15.01
(6) “Division," “bureau," “section," and “unit" means the subunits of a
4department or an independent agency, whether specifically created by law or created
5by the head of the department or the independent agency for the more economic and
6efficient administration and operation of the programs assigned to the department
7or independent agency. The office of credit unions
and the office of the student loan
8ombudsman in the department of financial institutions, the office of the inspector
9general in the department of children and families, the office of the inspector general
10in the department of health services, and the office of children's mental health in the
11department of health services have the meaning of “division" under this subsection.
12The office of the long-term care ombudsman under the board on aging and long-term
13care and the office of educational accountability and the office of literacy in the
14department of public instruction have the meaning of “bureau" under this
15subsection.
AB948,2
16Section
2. 15.02 (3) (c) 1. of the statutes is amended to read:
AB948,3,2417
15.02
(3) (c) 1. The principal subunit of the department is the “division". Each
18division shall be headed by an “administrator". The office of credit unions
and the
19office of the student loan ombudsman in the department of financial institutions and
20the office of children's mental health in the department of health services have the
21meaning of “division" and the director of credit unions in the department of financial
22institutions and the director of the office of children's mental health in the
23department of health services have the meaning of “administrator" under this
24subdivision.
AB948,3
25Section
3. 15.185 (6) of the statutes is created to read:
AB948,4,2
115.185
(6) Office of the student loan ombudsman. There is created in the
2department of financial institutions an office of the student loan ombudsman.
AB948,4
3Section 4
. Subchapter V of chapter 224 [precedes 224.101] of the statutes is
4created to read:
AB948,4,76
Subchapter V
7
STUDENT LOANS
AB948,4,8
8224.101 Definitions. In this subchapter:
AB948,4,9
9(1) “Board” means the higher educational aids board.
AB948,4,11
10(2) “Exempt organization” means the board or a state-regulated financial
11service provider.
AB948,4,12
12(3) “Licensee” means a person holding a license issued under this subchapter.
AB948,4,13
13(4) “Office” means the office of the student loan ombudsman in the department.
AB948,4,14
14(5) “Servicing" means doing all of the following:
AB948,4,1615
(a) Receiving scheduled periodic payments from a student loan borrower
16pursuant to the terms of a student education loan.
AB948,4,1917
(b) Applying the payments of principal and interest and any other payments
18with respect to the amounts received from a student loan borrower as may be
19required pursuant to the terms of a student education loan.
AB948,4,2120
(c) Performing other administrative services with respect to a student
21education loan.
AB948,4,22
22(6) “State-regulated financial service provider” means any of the following:
AB948,4,2323
(a) A bank organized under ch. 221.
AB948,4,2424
(b) A savings bank organized under ch. 214.
AB948,4,2525
(c) A savings and loan association organized under ch. 215.
AB948,5,1
1(d) A credit union organized under ch. 186.
AB948,5,22
(e) A consumer lender licensed under s. 138.09.
AB948,5,5
3(7) “Student education loan" means a loan that is extended to a student loan
4borrower expressly for postsecondary education expenses or related expenses and
5does not include open-end credit or any loan that is secured by real property.
AB948,5,6
6(8) “Student loan borrower" means any of the following:
AB948,5,87
(a) A resident of this state who has received or agreed to pay a student
8education loan.
AB948,5,109
(b) A person who shares legal responsibility with a resident under par. (a) for
10repaying the student education loan.
AB948,5,13
11(9) “Student loan servicer" means a person, wherever located, responsible for
12the servicing of a student education loan, but does not include the board or any
13state-regulated financial service provider.
AB948,5,14
14224.102 Ombudsman services. The office shall do all of the following:
AB948,5,15
15(1) Provide timely assistance to student loan borrowers.
AB948,5,16
16(2) Receive, review, and attempt to resolve complaints from all of the following:
AB948,5,1717
(a) Student loan borrowers.
AB948,5,2018
(b) In collaboration with institutions of higher education, student loan
19servicers and any other participants in student education loan lending, including
20originators servicing their own student education loans.
AB948,5,22
21(3) Compile and analyze data on student loan borrower complaints as
22described in sub. (2) and as resolved under s. 224.104.
AB948,5,24
23(4) Assist student loan borrowers in understanding their rights and
24responsibilities under the terms of student education loans.
AB948,6,3
1(5) Provide information to the public, agencies, the legislature, and others
2regarding the problems and concerns of student loan borrowers and make
3recommendations for resolving those problems and concerns.
AB948,6,6
4(6) Analyze and monitor the development and implementation of federal, state,
5and local laws, ordinances, regulations, rules, and policies relating to student loan
6borrowers and recommend any necessary changes.
AB948,6,8
7(7) Review, as authorized and appropriate, the complete student education
8loan history for a student loan borrower who provides written consent for the review.
AB948,6,13
9(8) Provide sufficient outreach and disseminate information concerning the
10availability of the office to assist student loan borrowers and potential student loan
11borrowers, public institutions of higher education, student loan servicers, and any
12other participants in student education loan lending with any student education
13loan servicing concerns.
AB948,6,16
14(9) Seek the assistance of an exempt organization in the resolution of a student
15loan borrower complaint as described in sub. (2) involving that exempt organization.
16The exempt organization shall cooperate with the office as required by s. 224.104.
