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Financial Services Law Insights and Observations

Oklahoma enacts student loan servicer prohibitions

State Issues Student Loan Servicer State Legislation Student Lending

State Issues

On April 27, the Oklahoma governor signed SB 261, which creates the Oklahoma Student Borrower’s Bill of Rights Act and outlines new provisions for student loan servicers. Among other things, the act prohibits student loan servicers from (i) directly or indirectly defrauding or misleading student loan borrowers; (ii) engaging in unfair or deceptive practices, such as “misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the borrower’s obligations under the loan”; (iii) obtaining property by fraud or misrepresentation; (iv) incorrectly applying or failing to apply a borrower’s loan payments to an outstanding balance; (v) providing inaccurate information to a credit bureau about a borrower; (vi) failing to report a borrower’s favorable and unfavorable payment history at least once a year except in the case of loan rehabilitation; (vii) refusing to communicate with a borrower’s authorized representative; (viii) making false statements or misrepresenting by omission any material facts in connection with a government investigation; (ix) failing to inform borrowers of their federal income repayment options prior to offering deferment or forbearance; and (x) failing to inform borrowers if their loan does not qualify for a loan forgiveness program. The act takes effect November 1.

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