An Act To Establish Protections for Private Student Loan Borrowers and a Registry of Lenders
Maine Legislature, Session 130, LD 1645
Committee: Health Coverage, Insurance and Financial Services
Sponsors: VITELLI, CURRY, DAUGHTRY, HICKMAN, RAFFERTY, HEPLER, MILLETT, TALBOT ROSS

Legislative Document
No. 1645
S.P. 530
In Senate, May 5, 2021
An Act To Establish Protections for Private Student Loan 
Borrowers and a Registry of Lenders
Received by the Secretary of the Senate on May 3, 2021.  Referred to the Committee on 
Health Coverage, Insurance and Financial Services pursuant to Joint Rule 308.2 and ordered 
printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator VITELLI of Sagadahoc.
Cosponsored by Senators: CURRY of Waldo, DAUGHTRY of Cumberland, HICKMAN of 
Kennebec, RAFFERTY of York, Representatives: HEPLER of Woolwich, MILLETT of Cape 
Elizabeth, TALBOT ROSS of Portland.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  9-A MRSA Art. 15 is enacted to read:
ARTICLE 15
PRIVATE STUDENT LENDER REGISTRY
§15-101.  Definitions
As used in this Article, unless the context indicates otherwise, the following terms have 
the following meanings.
1.  Provider of postsecondary education.  "Provider of postsecondary education" 
means a person engaged in the business of providing postsecondary education directly, by 
correspondence or by the Internet to a person located in the State.  "Provider of 
postsecondary education" also includes a person not authorized to operate as and not 
accredited as a postsecondary educational institution in the State. 
2.  Student financing.  "Student financing" means an extension of credit or a debt or 
obligation owned or incurred by a student, contractual or otherwise, that:
A.  Is not made, insured or guaranteed under the federal Higher Education Act of 1965, 
United States Code, Chapter 28, Subchapter IV; and
B.  Is extended to or owned or incurred by a student expressly for postsecondary 
education expenses regardless of whether the extension of credit or a debt or obligation 
owned or incurred is provided by or owed to the provider of postsecondary education 
that the student attends.
"Student financing" does not include a loan secured by real property or a dwelling.
3.  Student financing company.  "Student financing company" means a person 
engaged in the business of making or extending credit to a student for postsecondary 
education expenses or a holder of debt or obligation owned or incurred by a student to 
finance postsecondary education expenses.  To the extent that state regulation is preempted 
by federal law, "student financing company" does not include:
A.  A federally chartered bank, savings bank, savings and loan association or credit 
union;
B.  A wholly owned subsidiary of a federally chartered bank or credit union; or
C.  An operating subsidiary of a wholly owned subsidiary of a federally chartered bank 
or credit union in which each owner of the operating subsidiary is wholly owned by 
the same federally chartered bank or credit union.
4.  Superintendent.  "Superintendent" means the Superintendent of Consumer Credit 
Protection within the Department of Professional and Financial Regulation.
§15-102.  Private student lender registry
1.  Private student lender registry.  A person may not engage in the business of 
student financing as a student financing company in the State unless the person:
A.  Registers with the superintendent under rules adopted by the superintendent; and
B.  Provides the superintendent, at the time of registration under paragraph A and 
annually after registration, with the following information for the previous year:
(1)  A list of all providers of postsecondary education for which the person has 
provided student financing to a student residing in the State;
(2)  The number of student financing transactions made to students residing in the 
State;
(3)  The number of student financing transactions made for each provider of 
postsecondary education listed in subparagraph (1);
(4)  The default rate for a student obtaining student financing from the person; and
(5)  A sample copy of the promissory note, agreement, contract or other instrument 
used by the person to extend student financing.
2.  Publicly accessible website.  By November 15, 2022, the superintendent shall list 
on a publicly accessible website the following information, which must be updated on at 
least an annual basis:
A.  The name, address, telephone number and website address for each student 
financing company registered under this section;
B.  A summary of the information required under subsection 1, paragraph B, 
subparagraphs (1) to (4); and
C.  A sample copy of each promissory note, agreement, contract or other instrument 
provided to the superintendent pursuant to subsection 1, paragraph B, subparagraph 
(5).
§15-103.  Violations
1.  Fine.  The superintendent may impose a fine of up to $25,000 on a person for any 
violation of this Article.  Each violation of this Article or of any rule adopted pursuant to 
section 15-104 is a separate offense for the purposes of this section.
2.  Suspended from operating in State.  If the superintendent finds that a person has 
knowingly violated any provision of this Article and the violation caused financial harm to 
a student, the superintendent may suspend the person from operating as or bar the person 
from being a stockholder, officer, director, partner, owner or employee of a student 
financing company for a period of up to 10 years.
3.  Crime.  A violation of this Article is a Class E crime.
4. Private right of action. A person who suffers damage as a result of the failure of 
another person to comply with this Article may bring an action against the other person for 
any of the following:
A. Actual damages or $500, whichever is greater;
B. An order enjoining the methods, acts or practices;
C. Restitution of property;
D. Punitive damages;
E. Attorney's fees; and
F. Any other relief that the court determines proper.
§15-104.  Rules
The superintendent shall adopt rules to carry out the purposes of this Article.  Rules 
adopted under this section are routine technical rules as defined in Title 5, chapter 375, 
subchapter 2-A.
Sec. 2.  9-A MRSA Art. 16 is enacted to read:
ARTICLE 16
PRIVATE EDUCATION LENDING
§16-101.  Definitions
As used in this Article, unless the context otherwise indicates, the following terms have 
the following meanings.
1.  Cosigner.  "Cosigner" means an individual who is liable for the loan obligation of 
another, regardless of how the individual is designated in the loan contract or instrument 
with respect to that obligation, including an obligation under a private education loan 
extended to consolidate a borrower's preexisting private education loan.  "Cosigner" 
includes an individual whose signature is requested as a condition to grant credit or forbear 
a collection.  "Cosigner" does not include a spouse of a cosigner.
2.  Cosigner release.  "Cosigner release" means the release of the obligations of a 
cosigner on a private education loan.
3.  Creditor.  "Creditor" means: 
A.  The original creditor of a private education loan if ownership of the loan has not 
been sold, assigned or transferred;
B.  A person that owns a private education loan at the time the private education loan 
is defaulted if the loan has not been subsequently sold, transferred or assigned, 
regardless of whether the person is the original creditor; or
C.  A person that purchases a defaulted private education loan for collection purposes, 
regardless of whether the person collects on the loan itself, hires a 3rd party for 
collection or hires an attorney for collection litigation.
4.  Original creditor.  "Original creditor" means the private education lender identified 
in a promissory note, loan agreement or loan contract entered into with a private education 
loan borrower or cosigner.
5.  Private education lender.  "Private education lender" or "lender" means any person 
engaged in the business of securing, making or extending private education loans or any 
holder of a private education loan.  To the extent that state regulation is preempted by 
federal law, "private education lender" does not include the following persons:
A.  Any federally chartered bank, savings bank, savings and loan association or credit 
union;
B.  Any wholly owned subsidiary of a federally chartered bank or credit union; and
C.  An operating subsidiary of a wholly owned subsidiary of a federally chartered bank 
or credit union in which each owner of the operating subsidiary is wholly owned by 
the same federally chartered bank or credit union.
6.  Private education loan.  "Private education loan" means an extension of credit that 
is extended to a consumer expressly, in whole or in part, for postsecondary education 
expenses, regardless of whether the loan is provided by the education institution that the 
student attends, and that is not made, insured or guaranteed under the federal Higher 
Education Act of 1965, 20 United States Code, Chapter 28, Subchapter IV.  "Private 
education loan" does not include:
A.  An open-ended credit or any loan that is secured by real property or a dwelling; or
B.  An extension of credit in which the covered education institution is the creditor if:
(1)  The term of the extension of credit is 90 days or less; or 
(2)  An interest rate is not applied to the credit balance and the term of the extension 
of credit is one year or less, regardless of whether the credit is payable in more than 
installments.
7.  Private education loan borrower.  "Private education loan borrower" or 
"borrower" means any resident of this State who has received or agreed to pay a private 
education loan for the borrower's own education expenses.
8.  Private education loan collector.  "Private education loan collector" means a 
person collecting or attempting to collect on a defaulted private education loan.
9.  Private education loan collection action.  "Private education loan collection 
action" means any judicial action in which a claim is asserted to collect on a defaulted 
private education loan.
10.  Total and permanent disability.  "Total and permanent disability" means the 
condition of an individual who:
A.  Has been determined by the United States Secretary of Veterans Affairs to be 
unemployable due to a service-connected disability; or
B.  Is unable to engage in any substantial gainful activity by reason of any medically 
determinable physical or mental impairment that can be expected to result in death, has 
lasted for a continuous period of not less than 12 months or can be expected to last for 
a continuous period of not less than 12 months.
§16-102.  Cosigned private education loan
1.  Information prior to extension of loan.  Prior to the extension of a private 
education loan that requires a cosigner, a private education lender shall deliver the 
following information to the cosigner:
A.  How the private education loan will appear on the cosigner's credit report;
B.  How the cosigner will be notified if the private education loan becomes delinquent, 
and how the cosigner can cure a delinquency to avoid negative credit reporting and loss 
of cosigner release eligibility; and
C.  Eligibility criteria for cosigner release, including the number of on-time payments 
and any other criteria required to approve the cosigner release.
2.  Disclosure.  Prior to offering a person a private education loan that is being used to 
refinance an existing education loan, a private education lender shall provide the person a 
disclosure that the benefits and protections applicable to the existing loan may be lost due 
to the refinancing.
3.  Form of and access to information and disclosure.  A private education lender 
shall provide the information disclosure required by subsections 1 and 2 on a one-page 
information sheet in 12-point type written in simple, clear, understandable and easily 
readable language.  A private education lender shall provide a cosigner with access to all 
documents or records related to a cosigned private education loan that is available to the 
borrower.  If a private education lender provides electronic access to a document or record 
to a borrower of a cosigned private education loan, the lender shall provide equivalent 
access to the cosigner.
§16-103.  Cosigner release
1.  Annual written notice.  A private education lender shall adopt administrative, 
nonjudgmental criteria for cosigner release.  A private education lender shall provide the 
borrower and the cosigner of a cosigned private education loan an annual written notice 
containing information about cosigner release, including the criteria the lender requires to 
approve cosigner release and the process for applying for cosigner release.
2.  Written notification of eligibility for release.  If the borrower of a cosigned private 
education loan has met the applicable payment requirement to be eligible for cosigner 
release and the borrower or cosigner has elected to receive electronic communications from 
the lender, the lender shall send the borrower and the cosigner a written notification by mail 
and, if the borrower or cosigner has elected to receive electronic communications from the 
lender, by e-mail informing the borrower and cosigner that the payment requirement to be 
eligible for cosigner release has been met.  The notification must also include information 
about any additional criteria to qualify for cosigner release and the procedure to apply for 
cosigner release.
3.  Incomplete cosigner release application.  If an application by a borrower of a 
cosigned private education loan for cosigner release is incomplete, the private education 
lender shall provide written notice to the borrower that the application is incomplete.  The 
written notice must include a description of the information needed to consider the 
application complete and the date by which the missing information must be received by 
the lender.
4.  Approval or denial of application for cosigner release.  Within 30 days after a 
borrower of a cosigned private education loan submits a completed application for cosigner 
release, the private education lender shall send the borrower and cosigner a written notice 
that informs the borrower and cosigner whether the cosigner release application has been 
approved or denied.  If the lender denies a request for cosigner release, the borrower may 
request any documents or information used in the determination, including, but not limited 
to, the credit score threshold used by the lender, the borrower's consumer report, the 
borrower's credit score and any other documents specific to the borrower.  The lender shall 
also provide any adverse action notices required under applicable federal law if the denial 
is based in whole or in part on any information contained in a consumer report.
5.  Request for cosigner release.  In response to a written or oral request for cosigner 
release, a private education lender shall provide the requestor information detailing the 
criteria to qualify for cosigner release and the procedure to apply for cosigner release.
6.  Prohibition on restriction from cosigner release.  A private education lender may 
not impose any restriction that permanently bars a borrower of a cosigned private education 
loan from qualifying for cosigner release, including restricting the number of times the 
borrower may apply for cosigner release.
7.  Prohibition on negative consequences.  A private education lender may not 
impose any negative consequences on any borrower or cosigner of a cosigned private 
education loan during the 60 days following the issuance of the notice under subsection 3 
or until the lender makes a final determination about a borrower's cosigner release 
application, whichever is earlier.  For the purpose of this subsection, "negative 
consequences" includes, but is not limited to, the imposition of additional cosigner release 
eligibility criteria, negative credit reporting, lost eligibility for cosigner release, late fees, 
interest capitalization and other financial injury.
8.  Consecutive on-time payments.  For a loan made after the effective date of this 
section, a private education lender may not require more than 12 consecutive on-time 
payments as criteria for cosigner release.  A borrower of a cosigned private education loan 
who has paid the equivalent of 12 months of principal and interest payments within any 
12-month period satisfies the consecutive on-time payment requirement, regardless of 
whether the borrower has made payments monthly during the 12-month period.
9.  Change in terms.  If a borrower or cosigner of a cosigned private education loan 
requests a change in terms of the loan that restarts the count of consecutive on-time 
payments required for cosigner release, the private education lender shall notify the 
borrower and cosigner in writing of an adverse effect of the change and provide the 
borrower or cosigner the right to withdraw or reverse the request to avoid that adverse 
effect. 
10.  Appeal of denial.  A borrower of a cosigned private education loan has the right 
to request an appeal of a private education lender's determination to deny a request for 
cosigner release and the lender shall permit the borrower to submit additional 
documentation evidencing the borrower's ability, willingness and stability to meet the 
payment obligations. The borrower may request review of the cosigner release 
determination by another employee of the private education lender.
11.  Comprehensive record management system.  A private education lender shall 
establish and maintain a comprehensive record management system designed to reasonably 
ensure the accuracy, integrity and completeness of data and other information about 
cosigner release applications and to ensure compliance with applicable state and federal 
laws, including but not limited to the federal Equal Credit Opportunity Act and the federal 
Fair Credit Reporting Act. The system required by this subsection must include the number 
of cosigner release applications received by the lender, the approval and denial rate and the 
primary reasons for any denial.
§16-104.  Disability; discharge of liability
1.  Notification of total and permanent disability.  A private education lender, when 
notified of the total and permanent disability of a borrower or cosigner of a cosigned private 
education loan, shall release a cosigner from the obligations of the cosigner under the loan. 
The lender may not attempt to collect a payment from a cosigner following a notification 
of total and permanent disability of a cosigner or borrower. A private education lender 
shall, when notified of the total and permanent disability of a borrower, discharge the 
liability of the borrower and cosigner on the loan.
2.  Notification of release.  If either a cosigner or a borrower is released from the 
obligations of a cosigned private education loan under this section, the private education 
lender shall notify the borrower and cosigner within 30 days of the release.
3.  Legal authority to act on behalf of borrower.  A private education lender that 
extends a cosigned private education loan shall provide the borrower an option to designate 
an individual to have the legal authority to act on behalf of the borrower with respect to the 
private education loan in the event of the total and permanent disability of the borrower.
4.  Cosigner release.  If a cosigner is released from the obligations of a cosigned 
private education loan pursuant to subsection 1, the private education lender may not 
require the borrower to obtain another cosigner on the loan.
5.  Prohibition on default or acceleration of loan.  A private education lender may 
not declare a default or accelerate the debt against a borrower on the sole basis of a cosigner 
release under subsection 1.
6.  Prohibited activities after notice of disability of borrower.  After receiving a 
notification of a borrower's total and permanent disability under subsection 1, the private 
education lender may not:
A.  Attempt to collect on the outstanding liability of the borrower or cosigner; or
B.  Monitor the disability status of the borrower at any point after the date of discharge 
of liability.
§16-105.  Availability of alternative repayment options
1.  Flexible repayment option.  If a private education lender offers a borrower a 
flexible repayment option in connection with a private education loan, the private education 
lender shall make the flexible repayment option available to all borrowers by the lender. 
2.  Other alternative repayment options.  If a private education lender offers 
alternative repayment options other than flexible repayment options, the lender shall 
consistently present and offer the alternative repayment options to borrowers with similar 
financial circumstances.
3.  Policies and procedures.  A private education lender shall:
A.  Provide on its publicly accessible website a description of any alternative 
repayment options under this section offered by the lender for private education loans; 
and
B.  Establish consistently implemented policies and procedures to evaluate private 
education loan alternative repayment options requests, including providing accurate 
information regarding any private education loan alternative repayment options that 
may be available to a borrower of a private education loan through the promissory note 
or that may have been marketed to the borrower.
§16-106.  Record retention
A private education lender shall establish and maintain records and permit the 
superintendent to access and copy any records required to be maintained pursuant to this 
Article.  The private education lender shall retain a loan file, including any record specified 
for retention by rules adopted by the superintendent, for at least 6 years after the termination 
of the loan account. 
§16-107.  Prohibition on acceleration of private education loans
1.  Prohibition on acceleration.  A private education loan executed after the effective 
date of this section may not include a provision that permits the private education lender to 
accelerate, in whole or in part, payments on the private education loan, except in cases of 
payment default. A lender may not place any private education loan or account into default 
or accelerate a private education loan for any reason, other than for payment default.
2.  Private education loans executed prior to effective date of section.  For a private 
education loan executed prior to the effective date of this section:
A.  The loan may permit the private education lender to accelerate payments only if the 
promissory note or loan agreement explicitly authorizes an acceleration and only for 
the reasons stated in the note or agreement;
B.  If a cosigner of the private education loan dies, the lender may not attempt to collect 
against the cosigner's estate other than for payment default;
C.  Upon receiving notification of the death or bankruptcy of a cosigner of the loan, if 
the loan is not more than 60 days delinquent at the time of the notification, the private 
education lender may not change any terms or benefits under the promissory note, 
repayment schedule, repayment terms or monthly payment amount or any other 
provision associated with the loan; and
D.  The private education lender may not place the loan or account into default or 
accelerate payments on a loan while a borrower is seeking a loan modification or 
enrollment in an alternative repayment plan, except that the lender may place a loan or 
account into default or accelerate a loan for payment default 90 days following the 
borrower's default.
§16-108. Requirements for collecting on private education loan debt
1. Private education loan collection. This section applies to a private education loan 
collection action that is maintained by a private education lender or a private education 
loan collector.
2. Initial collection communication with borrower.  In addition to any other 
information required under applicable federal or state law, a private education loan 
collector shall provide in the first collection communication with the borrower, and at any 
other time the borrower requests, the information listed under subsection 4.
3. Initiation of action.  A private education lender or a private education loan collector 
may not initiate a private education loan collection action unless the private education 
lender or private education loan collector possesses all of the information listed under 
subsection 4.
4. Information required.  A private education lender or a private education loan 
collector shall introduce the following information as evidence in a private education loan 
collection action:
A. The name of the owner of the private education loan;
B. The original creditor's name at the time of default, if applicable; 
C. If the original creditor used an account number to identify the private education loan 
at the time of default, the original creditor's account number used to identify the private 
education loan at the time of default;
D. The amount due at default;
E. An itemization of interest and fees, if any, incurred after default and claimed to be 
owed and whether the interest and fees were imposed by the original creditor or any 
subsequent owners of the private education loan;  
F. The date the private education loan was executed;
G. The date of the first partial payment or the date of the first missed payment, 
whichever is earlier;
H. The date and amount of the last payment, if applicable;
I. Any payments, settlement or financial remuneration of any kind paid to the creditor 
by a guarantor, cosigner or surety and the amount of payment received;
J. A copy of a self-certification form and any other needs analysis conducted by the 
original creditor prior to execution of the loan;
K. The names of all persons that owned the private education loan after the time of 
default, if applicable, and the date of each sale or transfer; 
L. A log of all collection attempts made in the last 12 months including the date and 
time of all calls and written communications; 
M. A statement as to whether the creditor is willing to renegotiate the terms of the loan;
N. Copies of all settlement documents made in the last 12 months or a statement that 
the creditor has not attempted to settle or otherwise renegotiate the loan prior to the 
private education loan collection action;
O. Documentation establishing that the creditor is the owner of the private education 
loan at issue. If the private education loan was assigned more than once, the creditor 
must introduce as evidence each assignment or other writing evidencing the transfer of 
ownership of the specific individual private education loan to establish an unbroken 
chain of ownership, beginning with the original creditor to the first subsequent creditor 
and each additional creditor. Each assignment or other writing evidencing transfer of 
ownership or the right to collect must contain the original creditor's account number, 
redacted for security purposes to show only the last 4 digits, of the private education 
loan purchased or otherwise assigned, must contain the date of purchase and 
assignment and must clearly show the borrower's correct name associated with the 
original account number. The assignment or other writing attached must be the 
assignment or other writing by which the creditor or other assignee acquired the private 
education loan and not a document prepared for litigation; 
P. A copy of all pages of the contract, application or other documents evidencing the 
borrower's liability for the private education loan, stating all terms and conditions 
applicable to the private education loan. If a signed writing evidencing the original 
private education loan does not exist, a copy of a document provided to the borrower 
before default demonstrating that the private education loan was incurred by the 
borrower and including all terms and conditions applicable to the private education 
loan must be introduced as evidence; and
Q. An affidavit stating that a representative of the creditor personally reviewed for 
factual accuracy the evidence under this subsection submitted to the court and 
confirmed the factual accuracy of the allegations set forth in the complaint and any 
supporting affidavits or affirmations filed with the court, as well as the accuracy of any 
notarizations contained in the supporting documents filed in the action. 
5. Statute of limitations.  In addition to any other requirement of law or rule, a court 
may not enter a judgment in favor of a private education lender or a private education loan 
collector unless the court finds that the applicable statute of limitations for the action on 
the private education loan owned by the creditor has not expired.
6. Judgment.  In addition to any other requirement of law or rule, a court may not enter 
a judgment in favor of a private education lender or a private education loan collector in a 
collection action under this section unless the private education lender or private education 
loan collector introduces the evidence under subsection 4 in accordance with applicable 
rules of evidence.
7. Violation.  Failure to produce to a borrower upon request any documentation 
described in subsection 4 is a violation of the Maine Unfair Trade Practices Act.
§16-109.  Violations
1.  Fine.  The superintendent may impose a fine of up to $25,000 on a person for any 
violation of this Article.  Each violation of this Article or of any rule adopted pursuant to 
section 16-110 is a separate offense for the purposes of this section.
2.  Suspended from operating in State.  If the superintendent finds that a person has 
knowingly violated any provision of this Article and the violation caused financial harm to 
a student, the superintendent may suspend the person from operating as or bar the person 
from being a stockholder, officer, director, partner, owner or employee of a student 
financing company for a period of up to 10 years.
3.  Crime.  A violation of this Article is a Class E crime.
4. Private right of action. A person who suffers damage as a result of the failure of 
another person to comply with this Article may bring an action against the other person for 
any of the following:
A. Actual damages or $500, whichever is greater;
B. An order enjoining the methods, acts or practices;
C. Restitution of property;
D. Punitive damages;
E. Attorney's fees; and
F. Any other relief that the court determines proper.
§16-110.  Rules
The superintendent shall adopt rules to carry out the purposes of this Article.  Rules 
adopted under this section are routine technical rules as defined in Title 5, chapter 375, 
subchapter 2-A.
SUMMARY
This bill directs that private lenders of postsecondary education financing to students 
for expenses related to postsecondary education, regardless of whether the education is 
provided by businesses authorized to do business in or accredited by the State, register with 
the Superintendent of Consumer Credit Protection within the Department of Professional 
and Financial Regulation and for the superintendent to publish a registry of the private 
lenders on a publicly accessible website.  This bill affords cosigners of private student 
financing the same rights and protections afforded the primary student borrowers of private 
student financing.  This bill provides for fines, suspension from operating in the State, 
criminal liability for and private rights of action against lenders of private student financing 
that violate the provisions of the bill.
This bill also contains provisions for private education lenders to provide information 
and disclosures to borrowers and cosigners of private education loans, provisions to allow 
a cosigner to be released from obligations under a private education loan, the discharge of 
the loan or release of a cosigner if the borrower or cosigner dies or suffers a total and 
permanent disability, provisions regarding alternative repayment options, prohibitions on 
accelerating loan payments under most conditions and requirements for the collection of 
delinquent private education loans.