In the 2022 legislative session, the Kentucky House of Representatives introduced House Bill 53, which seeks to regulate student loan servicers. If passed, the new law would create an entirely new subsection under Chapter 286 of the Kentucky Revised Statutes that would require student loan servicers who operate in Kentucky to be licensed through the Department of Financial Institutions.
The proposed law would not only establish licensing requirements for student loan servicers, but also requirements for student loan servicing activities and fines for violations. It would also allow for a private right of action to be brought for any violation. Finally, the law would empower the commissioner of the Department of Financial Institutions to 1) monitor risk to consumers relating to servicing student loans and 2) designate and set forth requirements for a student loan ombudsman.
House Bill 53 is Kentucky’s second attempt to pass this law. It was first introduced in the 2021 session in House Bill 239, but failed to make it out of committee. Similar laws relating to licensing and regulating student loan servicers have passed in other states such as California, Colorado, Connecticut, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New York, Oklahoma, Oregon, Rhode Island, and Virginia.
Our team is constantly monitoring this bill and its impact on servicers in Kentucky. If you have any questions, please connect with shareholder Jamie Hart at any time.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
