§ 5-20-205. Cosigner Release

1. A lender shall not impose any restriction that permanently bars a private education loan borrower from qualifying for cosigner release, including restricting the number of times a private education loan borrower may apply for Cosigner release.
2. A lender shall not impose any negative consequences on a private education loan borrower or cosigner during the sixty days following the issuance of the notice required pursuant to section 5-20-204 (3) or until the lender makes a final determination about a private education loan borrower’s cosigner release application, whichever occurs later. As used in this subsection (2), “negative consequences” includes the imposition of additional eligibility criteria, negative credit reporting, lost eligibility for cosigner release, late fees, interest capitalization, or other financial injury.
3. For any private education loan issued on or after June 29, 2021, a lender shall not require proof of more than twelve consecutive, on-time payments as part of the criteria for cosigner release. A private education loan borrower who has paid the equivalent of twelve months of principal and interest payments within any twelve-month period is deemed to have satisfied the consecutive, on-time payment requirement even if the private education loan borrower has not made payments monthly during the twelve-month period. If a private education loan borrower or cosigner requests a change in terms that restarts the count of consecutive, on-time payments required for cosigner release, the lender shall notify the private education loan borrower and cosigner in writing of the impact of the change and provide the private education loan borrower or cosigner the right to withdraw or reverse the request to avoid that impact.
4. A private education loan borrower may request an appeal of a lender’s determination to deny a request for cosigner release, and the lender shall permit the private education loan borrower to submit additional documentation evidencing the private education loan borrower’s ability, willingness, and stability to meet the payment obligations. The private education loan borrower may request that another employee of the lender review the cosigner release determination.
5. A lender shall establish and maintain a comprehensive record management system reasonably designed to ensure the accuracy, integrity, and completeness of information about cosigner release applications and to ensure compliance with applicable state and federal laws, including the “Equal Credit Opportunity Act,” 15 U.S.C. sec. 1691 et seq., as amended, and the “Fair Credit Reporting Act,” 15 U.S.C. sec. 1681 et seq., as amended. This system must include the number of cosigner release applications received, the approval and denial rate, and the primary reasons for any denial.

Source: L. 2021: Entire part added, (SB 21-057), ch. 378, p. 2521, § 5, effective June 29.