Washington, D.C. student loan servicers will need to post a surety bond following the passage of B21-0877. Student loan servicers handle billing and other services like loan consolidation and repayment plans. The bill became law on February 28, 2017. The regulations implemented in D.C. are similar to those in place in other states, like those passed in California.
B21-0877 outlines licensing procedures for student loan servicers and creates the position of Student Loan Ombudsman within D.C.’s Department of Insurance, Securities and Banking. The Ombudsman is appointed by the Department and must be a D.C. resident. The Ombudsman has several duties, including the following:
- Enforce student loan servicer licensing
- Resolve complaints made by student loan borrowers
- Ensure student loan servicers inform borrowers of their rights and responsibilities under the terms of their loans
- Monitor federal and local laws pertaining to student loan borrowers
- Conduct examinations of student loan servicers at least once every three years
By October 1, 2017, the Ombudsman must establish and maintain an educational course to help student loan borrowers understand their loans, as well as a borrower’s bill of rights.
Licensing procedures for student loan servicers include a surety bond in an amount to be determined by the Mayor. The surety bond is required in case the borrower incurs damages brought about by the servicer’s noncompliance with the law. In addition to the surety bond, other requirements for servicers to obtain a license include the following:
- Completed application
- Any fees required by the Commissioner of the Department
- Three years of audited financial statements showing a net worth of at least $250,000
- Any other information required by the Commissioner
Student loan servicers’ licenses expire annually on December 31. Beginning on January 30, 2018, servicers must submit an annual report detailing the number of loans sold, assigned or transferred in the previous calendar year. The report must be submitted to the Commissioner who may require the inclusion of additional relevant information. Servicers must submit applications for renewal before or on the date their license expires.