§ 31–106.02b. Affirmative duties – student loan servicers.

(a) Except as otherwise provided pursuant to federal law or a student education loan agreement, a student loan servicer shall:

(1) Respond to any written inquiry from a student loan borrower or the representative of a student loan borrower by:

(A) Acknowledging receipt of the inquiry within 10 business days; and

(B) Providing information relating to the inquiry, and, if applicable, the action the student loan servicer will take to correct the account or an explanation of the student loan servicer's determination that the borrower's account is correct within 30 business days, including copies of all information and account information used by the student loan servicer in reaching the determination.

(2) Inquire of a student loan borrower who has an overpayment on how the student loan borrower wants to apply the overpayment to a student education loan. A student loan borrower's instruction on how to apply an overpayment to a student education loan shall stay in effect for any future overpayments during the term of the student education loan until the borrower provides different instructions.

(3)(A) In the absence of direction provided by a student loan borrower pursuant to paragraph (2) of this subsection, allocate an overpayment on a student loan account in a manner that reduces the total cost of the student loan, including principal and balance, interest, and fees.

(B) A student loan servicer shall be deemed to meet the requirements of this paragraph if the servicer allocates the overpayment to the loan with the highest interest rate on the student loan borrower's account, unless the student loan borrower specifies otherwise.

(4)(A) In the absence of direction provided by a student loan borrower pursuant to paragraph (2) of this subsection, apply partial payments in a manner that minimizes late fees and negative credit reporting.

(B) If there are multiple loans on a student loan borrower's account with an equal stage of delinquency, apply the partial payment in a way that satisfies as many individual loan payments as possible on a student loan borrower's account.

(b) Except as otherwise provided by federal law or regulation, the following requirements shall be applicable to a student loan servicer in the event of the sale, assignment, or other transfer of the servicing of a student education loan that results in a change in the identity of the student loan servicer to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan:

(1)(A) As a condition of a sale, an assignment, or any other transfer of the servicing of a student education loan, a student loan servicer shall require the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of those benefits, including any benefits for which the student loan borrower has not yet qualified.

(B) If a student loan servicer is not also the loan holder or is not acting on behalf of the loan holder, the student loan servicer satisfies the requirement established by this paragraph by providing the new student loan servicer with the information necessary for the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of the benefits, including any benefits for which the student loan borrower has not yet qualified.

(2) A student loan servicer shall transfer to the new student loan servicer for the student education loan all information regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower. The information shall include the repayment status of the student loan borrower and any benefits associated with the student education loan of the borrower.

(3) The student loan servicer shall complete the transfer of information required pursuant to paragraph (2) of this subsection within 45 calendar days after the sale, assignment, or other transfer of the servicing of the student education loan.

(4) The transferring student loan servicer shall notify affected student loan borrowers of the sale, assignment, or other transfer of the servicing of the student education loan at least 7 days before the next payment on the loan is due, which notice shall include:

(A) The identity of the new student loan servicer;

(B) The effective date of the transfer of the student loan borrower's student education loan to the new student loan servicer;

(C) The date on which the existing student loan servicer will no longer accept payments and whether and by when any action will need to be taken to update auto-debit payments; and

(D) The contact information for the new student loan servicer, including phone number, email address, mailing address, and fax number.

(c) A student loan servicer who obtains the right to service a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all information regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.

(d) A student loan servicer shall evaluate a student loan borrower for eligibility for an income-driven repayment program prior to placing the student loan borrower in forbearance or default if an income-driven repayment program is available to the student loan borrower.