A 5117 — Requires registration of postsecondary education debt creditors; establishes protections for borrowers.

A5117 1R [First Reprint] ASSEMBLY, No.

  CURRENT VERSION OF TEXT      As introduced.reported by the Assembly Higher Education Committee on September 17, 2026, with amendments.

The1[The commissioner may establish alternative registration and re-registration procedures and fees for postsecondary education debt creditors that are also providers of postsecondary education.education.]1      b.    A postsecondary education debt creditor that secures, originates, or extends postsecondary education debt to a borrower shall provide the commissioner, at the time of registration and at the time of any re-registration thereafter, with the following documents and information about its postsecondary education debt activity for borrowers who reside in the State, as applicable:

     b.    A postsecondary education debt creditor that secures, originates, or extends postsecondary education debt to a borrower shall provide the commissioner, at the time of registration and at the time of any re-registration thereafter, with the following documents and information about its postsecondary education debt activity for borrowers who reside in the State, as applicable:

of this section to the commissioner under another provision of state or federal law.  The1[The commissioner may further establish an alternative process for reporting the information required under subsections b.

of this section for postsecondary education debt creditors that are providers of postsecondary education.education.]1      e.     1A postsecondary education debt creditor that is a provider of postsecondary education and that submits any documents required under subsections b.

     e.     On or before July 1, 2026, and eachc. July 1 thereafter, the commissioner shall post on the department’s Internet website the following information about each postsecondary education debt creditor registered in this State:

of this section to the commissioner, in accordance with any requirements established by the commissioner, shall be deemed to have satisfied the registration requirements under subsection a.

of this section.  The requirements established by the commissioner may be specific to providers of postsecondary education, and shall not include the use of the Nationwide Multistate Licensing System and Registry.

     f.1 On or before 1[July 1, 2026, and each July 1 thereafter] July 1 of each year1, the commissioner shall post on the department’s Internet website the following information about each postsecondary education debt creditor registered in this State:

and      (3)   a copy of each model promissory note, agreement, contract, or other instrument used by the postsecondary education debt creditor during the previous year to substantiate that postsecondary education debt has been extended to a borrower or that a borrower owes a debt to the postsecondary education debt creditor.       f.    1[f.] g.1      The commissioner may impose a civil penalty not exceeding $25,000 on any entity for a violation of this section.  Each violation of this section, including any order, rule or regulation made or issued pursuant to the act, shall constitute a separate offense.  Additionally, each violation which constitutes a knowing violation shall be a crime of the third degree.

     g.   1[g.] h.1     The commissioner may order that any entity who has been found to have knowingly violated any provision of this section, or of the rules and regulations issued pursuant to this section, be barred for a term not exceeding 10 years from acting as a postsecondary education debt creditor, or a stockholder, or an officer, director, partner or other owner, or an employee of a postsecondary education debt creditor.

       7.    a.  Prior to offering a person postsecondary education debt that is being used to refinance existing postsecondary education debt, a postsecondary education debt creditor shall provide the person a disclosure that benefits and protections applicable to the existing postsecondary education debt may be lost due to the refinancing.

       12.  a.

    STATEMENT         This bill requires the registration of postsecondary education debt creditors and establishes protections for borrowers.

      The bill prohibits a postsecondary education debt creditor from extending postsecondary education debt to a New Jersey resident without first registering with the Commissioner of Banking and Insurance and with the Nationwide Multistate Licensing System and Registry.

Postsecondary education debt creditors are required to provide the commissioner, at the time of registration and not less than once per year thereafter, certain information about the entities and the postsecondary education debt that they provide.  The commissioner is required to post on the department’s website information about postsecondary education debt creditors registered in the State.  The bill also requires postsecondary education debt creditors to post on their websites a copy of each model promissory note, agreement, contract or other instrument used by the postsecondary education debt creditor to substantiate postsecondary education debt.

The bill provides that the commissioner may impose a civil penalty not exceeding $25,000 on any person for a violation of the registration provisions of the bill.

Each violation which constitutes a knowing violation is a crime of the third degree, which is punishable by three to five years imprisonment or a fine of up to $15,000, or both.

      The bill requires postsecondary education debt creditors to deliver certain information to a cosigner related to impacts on the cosigner in certain circumstances, prior to the extension of postsecondary education debt that requires a cosigner.  For any postsecondary education debt that obligates a cosigner and provides for cosigner release, a postsecondary education debt creditor is required to provide the borrower and the cosigner an annual written or electronic notice containing clear and conspicuous information about cosigner release.

Under the bill, if the borrower has met the applicable payment requirement to be eligible for cosigner release, the postsecondary education debt creditor is to send the borrower and the cosigner a notification informing them that the payments requirement to be eligible for cosigner release has been met.

      The bill requires a postsecondary education debt creditor to provide written notice to a borrower who applies for cosigner release, but whose application is incomplete.

Within 30 days after a borrower submits a completed application for cosigner release, the postsecondary education debt creditor is required to send the borrower and cosigner a written notice that informs them whether the cosigner release application has been approved or denied.

      The bill prohibits a postsecondary education debt creditor from imposing any restriction that permanently bars a borrower from qualifying for cosigner release.  For any postsecondary education debt executed after the effective date of the bill, a postsecondary education debt creditor is prohibited from requiring greater than 12 consecutive, on-time payments of principal and interest as criteria to apply for cosigner release.  This codifies the standard currently used by major student loan companies, such as Sallie Mae Bank.

Under the bill, if a borrower or cosigner requests a change in terms that restarts the count of consecutive, on-time payments, the postsecondary education debt creditor is to notify the borrower and cosigner in writing, by mail, or by electronic mail, of the impact of the change and provide the borrower or cosigner the right to withdraw or reverse the request.  The bill provides that a borrower has the right to request an appeal of a postsecondary education debt creditor determination to deny a request for cosigner release, and the postsecondary education debt creditor is required to permit the borrower to submit certain additional documentation.  The bill requires postsecondary education debt creditors to establish and maintain a comprehensive record management system.

      The bill prohibits postsecondary education debt executed after the effective date of the bill from including a provision that permits the postsecondary education debt creditor to accelerate, in whole or in part, payments on the postsecondary education debt, except in cases of payment default.  The bill prohibits a postsecondary education debt executed after the effective date of the bill from including a provision that permits a postsecondary education debt creditor to attempt to collect against the cosigner’s estate, other than for payment default.  Upon receiving notification of the death or bankruptcy of a cosigner, when the postsecondary education debt is not more than 60 days delinquent at the time of the notification, the postsecondary education debt creditor may not change any terms or benefits under the promissory note, repayment schedule, repayment terms, or monthly payment amount or any other debt provision.

      Under the bill, a postsecondary education debt creditor, upon determination of the total and permanent disability of a borrower or cosigner, is required to release the borrower or cosigner from their obligations under postsecondary education debt, as is the case with federal student loans.

Upon determination of the total and permanent disability of a cosigner, a postsecondary education debt creditor is required to release that individual cosigner from the obligations of the cosigner.

The bill requires postsecondary education debt creditors to notify borrowers and cosigners if a cosigner or borrower is released from the obligations of the postsecondary education debt, within 30 days of the release.  The bill requires postsecondary education debt creditors that extend postsecondary education debt to provide the borrower the option to designate an individual to have the legal authority to act on behalf of the borrower with respect to the postsecondary education debt in the event of the total and permanent disability of the borrower.  In the event a cosigner is released from the obligations of a postsecondary education debt, a postsecondary education debt creditor may not require the borrower to obtain another cosigner on the debt obligation.  The bill provides that postsecondary education debt creditors may not declare a default or accelerate the debt against the borrower on the sole basis of the release of the cosigner from the postsecondary education debt.  After making the determination of the total and permanent disability of a borrower, a postsecondary education debt creditor may not attempt to collect on the outstanding liability of the borrower or cosigner or monitor the disability status of the borrower after the date of discharge.         The bill requires the postsecondary education debt creditor to deliver a statement that benefits and protections applicable to existing postsecondary education debt may be lost due to refinancing before offering a person a postsecondary education debt that is being used to refinance an existing postsecondary education debt.  If a postsecondary education debt creditor offers any borrower flexible repayment options in connection with a postsecondary education debt, those flexible repayment options are to be made available to all borrowers of the postsecondary education debt creditor.

The bill requires postsecondary education debt creditors to publish the criteria used to determine borrower interest rates in all places where the interest rate is published, if the postsecondary education debt creditor does not offer the same interest rate to all borrowers.

      The bill provides that a postsecondary education debt creditor may not:

offer any postsecondary education debt that is not in conformity with the bill, or that is in violation of any other State or federal law;

engage in any unfair, deceptive, or abusive act or practice;

or make, advertise, print, display, publish, distribute, electronically transmit, telecast, or broadcast, in any manner, any statement or representation which is false, misleading, or deceptive.        The bill provides that a postsecondary education debt creditor or debt collector attempting to collect a postsecondary education debt is to provide certain documentation related to the debt in the first debt collection communication with the borrower and at any other time the borrower requests the documentation.  The bill also prohibits postsecondary education debt creditors or debt collector from collecting or attempting to collect a postsecondary education debt unless the postsecondary education debt creditor or debt collector possesses certain information and documentation related to the debt.

      Following a payment default on postsecondary education debt by a borrower, and before a postsecondary education debt creditor may accelerate the maturity of the postsecondary education debt or commence a legal action against the borrower, a postsecondary education debt creditor is required to provide to the borrower a notice of intention to accelerate the postsecondary education debt.  The postsecondary education debt creditor must provide the notice at least 30 days, but not more than 180 days, in advance of the action, and must provide a copy of the notice to the department at the same time it is provided to the borrower.

      The bill provides that an action to enter a default judgment against a borrower must be commenced within six years of the date the borrower failed to make a payment.  The bill requires a postsecondary education debt creditor seeking to commence legal action against a borrower to attach certain documentation and information to a complaint filed in a court of competent jurisdiction.  If a postsecondary education debt creditor fails to comply with the filing requirements of the bill, a borrower may bring an action, including a counterclaim, against the postsecondary education debt creditor to recover or obtain certain relief and damages.

      The bill also provides that a borrower or cosigner who suffers damage as a result of a violation may bring an action in a court of competent jurisdiction to recover certain relief and damages.