September 22, 2020, Introduced by Reps. Anthony, VanSingel, Hope, Shannon, Liberati, Hammoud, Koleszar, Guerra, Kuppa and Hood and referred to the Committee on Financial Services.

A bill to provide for a student loan ombudsman and prescribe his or her powers and duties; and to prescribe the powers and duties of certain other public officers and agencies.

the people of the state of michigan enact:

Sec. 1. This act shall be known and may be cited as the "student loan ombudsman act".

Sec. 3. As used in this act:

(a) "Department" means the department of insurance and financial services.

(b) "Director" means the director of the department or his or her designated representative.

(c) "Servicing" means any of the following:

(i) Receiving any scheduled periodic payments from a student loan borrower under the terms of a student education loan.

(ii) Applying the payments of principal and interest and any other payments with respect to the amounts received from a student loan borrower, as may be required under the terms of a student education loan.

(iii) Performing any other administrative services with respect to a student education loan.

(d) "Student education loan" means any loan that is primarily for personal use to finance education or other school-related expenses.

(e) "Student loan borrower" means either of the following:

(i) A resident of this state who has received or agreed to pay a student education loan.

(ii) Any person that shares responsibility with an individual described in subparagraph (i) for repaying his or her student education loan.

(f) "Student loan ombudsman" means the department employee designated as the student loan ombudsman under section 5.

(g) "Student loan servicer" means any person, wherever located, that is responsible for the servicing of any student education loan to any student loan borrower.

Sec. 5. The director shall designate an employee of the department as the student loan ombudsman to provide timely assistance to student loan borrowers. In consultation with the director, the ombudsman shall do all of the following:

(a) Ensure that every student loan borrower in this state has equal access to all of the following:

(i) A quality, affordable education.

(ii) The resources needed to pay for college.

(iii) An affordable repayment plan for his or her student debt.

(iv) Quality customer service, reliable information, and fair treatment, even if he or she struggles to repay his or her student debt.

(b) Receive, review, and attempt to resolve any complaints from student loan borrowers, including, but not limited to, attempting to resolve complaints in collaboration with institutions of higher education, student loan servicers, the department, and any other participants in student loan lending.

(c) Compile and analyze data on student loan borrower complaints as described in subdivision (b).

(d) Assist student loan borrowers to understand their rights and responsibilities under the terms of student education loans.

(e) Provide information to the public, agencies, legislators, and others regarding the problems and concerns of student loan borrowers and make recommendations for resolving those problems and concerns.

(f) Analyze and monitor the development and implementation of federal, state, and local laws, regulations, and policies relating to student loan borrowers and recommend any changes he or she considers necessary.

(g) Review the complete student education loan history for any student loan borrower who has provided written consent for that review.

(h) Disseminate information concerning the availability of the ombudsman to assist student loan borrowers and potential student loan borrowers and to assist any public institutions of higher education, student loan servicers, or any other participants in student education loan lending that have student loan servicing concerns.

(i) Take any other actions necessary to fulfill the duties of the student loan ombudsman under this section.

Sec. 7. Within 180 days after the effective date of this act, the student loan ombudsman, in consultation with the director, shall establish and maintain a student loan borrower education program that includes educational presentations and materials regarding student education loans. The program must include presentations and materials on key loan terms, documentation requirements, monthly payment obligations, income-based repayment options, loan forgiveness, disclosure requirements, and any other subject matter selected by the student loan ombudsman.

Sec. 9. Within 1 year after the effective date of this act, the student loan ombudsman, and a representative of the department of treasury designated by the state treasurer, shall conduct a study and submit a joint report to the senate and house standing committees with oversight over matters relating to banking and higher education that includes their recommendations regarding whether this state should return to providing state student loans and loan guarantees, and what authority the student loan ombudsman should have to refinance or modify those loans.