Connecticut’s new “An Act Concerning A Student Loan Bill of Rights” creates a licensing requirement for servicers of student loans made to state residents and imposes other significant new requirements and prohibitions on such servicers. The Act was signed into law by Governor Dannel P. Malloy on July 2, 2015. Although certain administrative provisions are effective October 1, 2015, the Act’s servicer requirements and prohibitions are effective July 1, 2016. 

The law broadly defines a “student loan servicer” as any person, wherever located, who is responsible for servicing a “student education loan” made to a “student loan borrower.” A “student loan borrower” is defined as any Connecticut resident who has received or agreed to pay a “student education loan” or any person who shares responsibility for paying the loan. A “student education loan” is not limited to loans used for higher education and includes any loan made primarily for personal use to finance education or other school-related expenses.

Effective October 1, 2015, the law requires Connecticut’s Banking Commissioner to designate a Student Loan Ombudsman to assist student loan borrowers. The Ombudsman’s duties include reviewing borrower complaints, compiling and analyzing complaint data, and providing information “to the public, agencies, legislators and others” regarding borrower problems and making recommendations for resolving such problems.

Key provisions that become effective July 1, 2016 include the following:

  • To act as a “student loan servicer,” unless exempt from licensing, a servicer must be licensed by the state’s Banking Commissioner. Exempt entities include banks and credit unions, their wholly owned subsidiaries, and operating subsidiaries whose owners are wholly owned by an exempt bank or credit union.

  • Licensed servicers and exempt entities must “maintain adequate records of each student loan transaction for not less than two years following the final payment on such student loan transaction or the assignment of such student education loan, which occurs first, or such longer period as may be required by any other provision of law.” Such records must be made available to the Banking Commissioner upon request.

  • Student loan servicers are prohibited from engaging in certain conduct, including negligently making “any false statement” or knowingly and willfully making “any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the Banking Commissioner or another governmental agency.”

  • A servicer’s violation of any “applicable federal laws and regulations relating to student loan servicing” is deemed a violation of the new law and the basis for an enforcement action by the Banking Commissioner.

On August 11, 2015, Ballard Spahr attorneys will hold a webinar on recent developments in student loan servicing from 12 p.m. to 1 p.m. ET. The webinar registration form is available here link.

Ballard Spahr’s Higher Education Group regularly advises educational institutions on compliance with the HEA and other applicable laws. The firm’s Consumer Financial Services Group is nationally recognized for its experience with the full range of federal and state consumer credit laws, its skill in litigation defense and avoidance, and its guidance in structuring and documenting new consumer financial services products.

For more information, please contact Consumer Financial Services Group Practice Leader Alan S. Kaplinsky at 215.864.8544 or, John L. Culhane, Jr., at 215.864.8535 or, Heather S. Klein at 215.864.8732 or, or Higher Education Group Practice Leader Daniel V. Johns at 215.864.8107 or


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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.









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