On June 14, Nevada Governor Joe Lombardo signed into law AB 332, An Act Relating to Student Education Loans, requiring, among other things, student loan servicers to be licensed by the Commissioner of Financial Institutions and regulating certain conduct of the servicers towards borrowers. The law will take effect on January 1, 2024.
The law defines a student loan servicer as “any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower.” The law does not apply to banks, savings and loan associations, savings banks, thrift companies, or credit unions.
The law requires that student loan servicers submit the following information with their license application:
- A financial statement prepared by a public accountant;
- Any other information requested by the Commissioner to evaluate the applicant’s qualifications and suitability for licensure;
- A nonrefundable license fee of $1,000;
- A nonrefundable investigation fee of $800; and
- A surety bond.
Under the law, student loan servicers are prohibited from:
- Directly or indirectly employing any scheme to defraud or mislead a student loan borrower.
- Engaging in any unfair or deceptive practice or misrepresenting or omitting any material information in connection with the servicing of a student loan.
- Misapplying student loan payments to the outstanding balance.
- Providing inaccurate information to a credit bureau.
- Failing to report both the favorable and unfavorable payment history of the borrower to a national consumer credit bureau at least annually if the student loan servicer regularly reports such information.
- Taking unreasonable advantage of any of the following:
- A lack of understanding on the part of the borrower of the material risks, costs or conditions of the student loan;
- The inability of a borrower to protect their interests when selecting or using a student loan or feature, term or condition of the loan; or
- The reasonable reliance by the borrower on a person engaged in servicing a student loan to act in the interests of the borrower.