LRB-2971/1
ARG:cdc
2021 - 2022 LEGISLATURE
November 12, 2021 - Introduced by Representatives Hesselbein, Drake, Emerson,
S. Rodriguez, Shelton, Conley, Andraca, Vruwink, Spreitzer, Neubauer,
Hebl, Ohnstad, Milroy, Cabrera, Bowen, Considine, Stubbs, Shankland,
Subeck, Hong, Baldeh, L. Myers and Pope, cosponsored by Senators Smith,
Erpenbach, Roys, Wirch, Agard, Ringhand, Larson, Johnson and
Carpenter. Referred to Committee on Financial Institutions.
AB711,1,5
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:
AB711,1
1Section
1. 15.01 (6) of the statutes is amended to read:
AB711,3,132
15.01
(6) “Division," “bureau," “section," and “unit" means the subunits of a
3department or an independent agency, whether specifically created by law or created
4by the head of the department or the independent agency for the more economic and
5efficient administration and operation of the programs assigned to the department
6or independent agency. The office of credit unions
and the office of the student loan
7ombudsman in the department of financial institutions, the office of the inspector
8general in the department of children and families, the office of the inspector general
9in the department of health services, and the office of children's mental health in the
10department of health services have the meaning of “division" under this subsection.
11The office of the long-term care ombudsman under the board on aging and long-term
12care and the office of educational accountability in the department of public
13instruction have the meaning of “bureau" under this subsection.
AB711,2
14Section
2. 15.02 (3) (c) 1. of the statutes is amended to read:
AB711,3,2215
15.02
(3) (c) 1. The principal subunit of the department is the “division". Each
16division shall be headed by an “administrator". The office of credit unions
and the
17office of the student loan ombudsman in the department of financial institutions and
18the office of children's mental health in the department of health services have the
19meaning of “division" and the director of credit unions in the department of financial
20institutions and the director of the office of children's mental health in the
21department of health services have the meaning of “administrator" under this
22subdivision.
AB711,3
23Section
3. 15.185 (6) of the statutes is created to read:
AB711,3,2524
15.185
(6) Office of the student loan ombudsman. There is created in the
25department of financial institutions an office of the student loan ombudsman.
AB711,4
1Section
4. Subchapter V of chapter 224 [precedes 224.101] of the statutes is
2created to read:
AB711,4,54
Subchapter V
5
STUDENT LOANS
AB711,4,6
6224.101 Definitions. In this subchapter:
AB711,4,7
7(1) “Board” means the higher educational aids board.
AB711,4,9
8(2) “Exempt organization” means the board or a state-regulated financial
9service provider.
AB711,4,10
10(3) “Licensee” means a person holding a license issued under this subchapter.
AB711,4,11
11(4) “Office” means the office of the student loan ombudsman in the department.
AB711,4,12
12(5) “Servicing" means doing all of the following:
AB711,4,1413
(a) Receiving scheduled periodic payments from a student loan borrower
14pursuant to the terms of a student education loan.
AB711,4,1715
(b) Applying the payments of principal and interest and any other payments
16with respect to the amounts received from a student loan borrower as may be
17required pursuant to the terms of a student education loan.
AB711,4,1918
(c) Performing other administrative services with respect to a student
19education loan.
AB711,4,20
20(6) “State-regulated financial service provider” means any of the following:
AB711,4,2121
(a) A bank organized under ch. 221.
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(b) A savings bank organized under ch. 214.
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(c) A savings and loan association organized under ch. 215.
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(d) A credit union organized under ch. 186.
AB711,4,2525
(e) A consumer lender licensed under s. 138.09.
AB711,5,3
1(7) “Student education loan" means a loan that is extended to a student loan
2borrower expressly for postsecondary education expenses or related expenses and
3does not include open-end credit or any loan that is secured by real property.
AB711,5,4
4(8) “Student loan borrower" means any of the following:
AB711,5,65
(a) A resident of this state who has received or agreed to pay a student
6education loan.
AB711,5,87
(b) A person who shares legal responsibility with a resident under par. (a) for
8repaying the student education loan.
AB711,5,11
9(9) “Student loan servicer" means a person, wherever located, responsible for
10the servicing of a student education loan, but does not include the board or any
11state-regulated financial service provider.
AB711,5,12
12224.102 Ombudsman services. The office shall do all of the following:
AB711,5,13
13(1) Provide timely assistance to student loan borrowers.
AB711,5,14
14(2) Receive, review, and attempt to resolve complaints from all of the following:
AB711,5,1515
(a) Student loan borrowers.
AB711,5,1816
(b) In collaboration with institutions of higher education, student loan
17servicers and any other participants in student education loan lending, including
18originators servicing their own student education loans.
AB711,5,20
19(3) Compile and analyze data on student loan borrower complaints as
20described in sub. (2) and as resolved under s. 224.104.
AB711,5,22
21(4) Assist student loan borrowers in understanding their rights and
22responsibilities under the terms of student education loans.
AB711,5,25
23(5) Provide information to the public, agencies, the legislature, and others
24regarding the problems and concerns of student loan borrowers and make
25recommendations for resolving those problems and concerns.
AB711,6,3
1(6) Analyze and monitor the development and implementation of federal, state,
2and local laws, ordinances, regulations, rules, and policies relating to student loan
3borrowers and recommend any necessary changes.
AB711,6,5
4(7) Review, as authorized and appropriate, the complete student education
5loan history for a student loan borrower who provides written consent for the review.
AB711,6,10
6(8) Provide sufficient outreach and disseminate information concerning the
7availability of the office to assist student loan borrowers and potential student loan
8borrowers, public institutions of higher education, student loan servicers, and any
9other participants in student education loan lending with any student education
10loan servicing concerns.
AB711,6,13
11(9) Seek the assistance of an exempt organization in the resolution of a student
12loan borrower complaint as described in sub. (2) involving that exempt organization.
13The exempt organization shall cooperate with the office as required by s. 224.104.
AB711,6,15
14(10) Take any other action necessary to fulfill the duties of the office as set forth
15in this subchapter.
AB711,6,19
16224.103 Annual report. The office shall submit a report by January 1 of each
17year to the standing committee of each house of the legislature having jurisdiction
18over matters related to higher education. The report shall include all of the
19following:
AB711,6,21
20(1) A description of actions taken with respect to the implementation of this
21subchapter.
