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.

AB948,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB948,1 Section 1. 15.01 (6) of the statutes, as affected by 2023 Wisconsin Act 20, is amended to read:

AB948,,6 15.01 (6) “Division,” “bureau,” “section,” and “unit” means the subunits of a department or an independent agency, whether specifically created by law or created by the head of the department or the independent agency for the more economic and efficient administration and operation of the programs assigned to the department or independent agency. The office of credit unions and the office of the student loan ombudsman in the department of financial institutions, the office of the inspector general in the department of children and families, the office of the inspector general in the department of health services, and the office of children’s mental health in the department of health services have the meaning of “division” under this subsection. The office of the long-term care ombudsman under the board on aging and long-term care and the office of educational accountability and the office of literacy in the department of public instruction have the meaning of “bureau” under this subsection.

AB948,2 Section 2. 15.02 (3) (c) 1. of the statutes is amended to read:

AB948,,8 15.02 (3) (c) 1. The principal subunit of the department is the “division”. Each division shall be headed by an “administrator”. The office of credit unions and the office of the student loan ombudsman in the department of financial institutions and the office of children’s mental health in the department of health services have the meaning of “division” and the director of credit unions in the department of financial institutions and the director of the office of children’s mental health in the department of health services have the meaning of “administrator” under this subdivision.

AB948,3 Section 3. 15.185 (6) of the statutes is created to read:

AB948,,10 15.185 (6) Office of the student loan ombudsman. There is created in the department of financial institutions an office of the student loan ombudsman.

AB948,4 Section 4. Subchapter V of chapter 224 [precedes 224.101] of the statutes is created to read:

AB948,,12 CHAPTER 224

AB948,,14 SUBCHAPTER V STUDENT LOANS

AB948,,15 224.101 Definitions. In this subchapter: