Sen. Lamont Bagby

Prohibits any person from acting as a qualified education loan servicer without first obtaining a license from the State Corporation Commission (SCC) and establishes procedures pertaining to such licenses. Banks, credit unions, and nonprofit institutions of higher education are exempt from the licensing provisions. The servicing of a qualified education loan encompasses (i) receiving any scheduled periodic payments from a qualified education loan borrower pursuant to the terms of a qualified education loan; (ii) applying the payments of principal and interest and such other payments, with respect to the amounts received from a qualified education loan borrower, as may be required pursuant to the terms of a qualified education loan; and (iii) performing other administrative services with respect to a qualified education loan. Qualified education loan servicers are prohibited from, among other things, (a) misrepresenting the amount, nature, or terms of any fee or payment due or claimed to be due on a qualified education loan, the terms and conditions of the loan agreement, or the borrower's obligations under the loan; (b) knowingly misapplying or recklessly applying loan payments to the outstanding balance of a qualified education loan; and (c) failing to report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the loan servicer regularly reports information to such a credit bureau. Violations are subject to a civil penalty not exceeding $2,500. The bill has a delayed effective date of January 1, 2019, but provides that applications shall be accepted, and investigations commenced, by the SCC beginning October 1, 2018.

Creates in the state treasury the First Chance Trust Fund (Trust Fund), consisting of (i) any appropriated funds, gifts, donations, grants, bequests, or other funds received on its behalf; (ii) payments required to be withheld by the Department of Corrections on any public contract that exceeds $5,000,000 annually in an amount equal to one percent of the total annual value of such public contract; and (iii) any payments permitted to be withheld by any other agency of the Commonwealth on any public contract that exceeds $5,000,000 annually in an amount no greater than one percent of the total annual value of such public contract. The bill establishes, and requires the Board of Corrections to administer, the First Chance Program (the Program) whereby moneys from the Trust Fund are utilized to award (a) a scholarship to attend a public institution of higher education in the Commonwealth to any student who attends a public high school that is located in a region of the Commonwealth that has a high school dropout rate, poverty rate, or incarceration rate that is higher than the relevant average rate in the Commonwealth or (b) a grant to any private, nonprofit social services organization that is located in a region of the Commonwealth that has a high school dropout rate, poverty rate, or incarceration rate that is higher than the relevant average rate in the Commonwealth. The bill requires the Board of Corrections to report annually to the Chairmen of the House Committee on Appropriations, the House Committee on Courts of Justice, the Senate Committee on Courts of Justice, and the Senate Committee on Finance on the revenues of and expenditures from the Trust Fund in the prior fiscal year and the number, amount, type, and recipients of scholarships and grants made pursuant to the Program in the prior fiscal year.