Title 808 | Chapter 016 | Regulation 010
SUPERSEDED
This document is no longer current.
PUBLIC PROTECTION CABINET
Kentucky Department of Financial Institutions
Student Education Loan Servicers
(New Administrative Regulation)
808 KAR 16:010.Licensing, registration, renewals and fees.
Section 1.
Definitions.(1)
"Applicant" is defined by KRS 286.12-010(2).(2)
"Commissioner" is defined by KRS 286.1-010(1).(3)
"Department" is defined by KRS 286.1-010(2).(4)
"Federal student education loan" is defined by KRS 286.12-020(1).(5)
"Student education loan servicer" and "servicer" are defined by KRS 286.12-010(13).Section 2.
Initial Application and Notice.(1)
A person providing notice to the commissioner as a federal student education loan servicer doing business in Kentucky prior to December 31, 2022, shall submit:(a)
A completed NMLS Company Form available online at http://mortgage.nationwidelicensingsystem.org; and(b)
A completed NMLS Individual Form available online at http://mortgage.nationwidelicensingsystem.org;(2)
Non-federal student education loan servicers, federal student education loan servicers that also service non-federal student education loans, and federal student education loan servicers that begin conducting business in Kentucky after December 31, 2022, shall submit:(a)
A completed NMLS Company Form available online at http://mortgage.nationwidelicensingsystem.org; and(b)
A completed NMLS Individual Form available online at http://mortgage.nationwidelicensingsystem.org;(c)
All documents required on the New Application Checklist available online at http://mortgage.nationwidelicensingsystem.org;(d)
Either:1.
An audited financial statement prepared by a certified public accountant (CPA), in accordance with generally accepted accounting principles (GAAP), verifying a minimum net worth of at least two hundred and fifty thousand dollars ($250,000); or2.
The following CPA prepared financial statements, if such request is made by the applicant and is deemed reasonable by the Commissioner based on the size, structure, and complexity of the applicant:a.
A Reviewed financial statement; orb.
A Compiled financial statement;(e)
An Electronic Surety Bond online at http://mortgage.nationwidelicensingsystem.org, which shall:1.
Include the name of the principal insured, which shall match the full legal name of applicant;2.
Be to the benefit of the department; and3.
Be in an amount of the lessor of:a.
One hundred thousand dollars ($100,000.00); orb.
.01% (.0001) of the amount of the Kentucky servicing portfolio; and(f)
A nonrefundable investigation fee of five thousand dollars ($5,000.00).Section 3.
Renewal Applications - All Licensees.(1)
A licensee applying for an annual renewal of a student education loan servicer license, on or before December 31st, shall:(a)
Submit required updates and attestations verifying that all information in the licensee's record, maintained in the NMLS operated by the State Regulatory Registry, LLC, is correct and available online at http://mortgage.nationwidelicensingsystem.org; and(b)
Pay the annual assessment fee to be established by commissioner's order pursuant to KRS 286.12-070(2). The minimum assessment fee shall be five thousand dollars ($5,000) and the maximum assessment fee shall be twenty thousand dollars ($20,000).(2)
A licensee applying to reinstate a student education loan servicer license after December 31st shall:(a)
Submit all fees and materials required by subsection (1) of this section; and(b)
Pay a late filing fee in the amount of one thousand dollars ($1,000) on or before January 31st of the following year that the renewal application was due.(3)
The commissioner shall not accept an application for renewal or reinstatement when the application, fees, or any required information is not received on or before January 31st of the following year that the renewal application was due. Failure to complete the renewal or reinstatement application of a license shall cause the license to automatically expire as of February 1st by operation of law.Section 4.
Change of address, name, control, or agent for service-All Licensees.(1)
A licensee that intends to change its address, name, or agent for service of process shall notify the commissioner in writing at least:(a)
Ten (10) days prior to the change of address or name; and(b)
Five (5) days prior to the change of agent for service of process.(2)
A licensee that intends to file for a change of control, as defined by KRS 286.12-010(6), shall notify the commissioner in writing thirty (30) days prior to the effective date of the change of control and shall submit:(a)
For an existing licensee acquiring another licensee, a change of control fee of one thousand dollars ($1,000); or(b)
For all non-licensed entities, a change of control fee of five thousand dollars ($5,000).(3)
A licensee changing its address, name, control, or agent for service of process shall update this information in NMLS within the same time periods set forth in this section.Section 5.
Annual Report - All Licensees. Each licensee shall file an annual report electronically with the commissioner, on Form SLSCR-Student Loan Servicer Call Report, on or before November 1st of each year.Section 6.
Electronic Submission of Filings and Fees through the Nationwide Multistate Licensing System Operated by the State Regulatory Registry, LLC.(1)
A person applying for licensure, registration, renewal, or reinstatement pursuant to Sections 2, 3, and 4 of this administrative regulation shall electronically submit the following to NMLS, at http://mortgage.nationwidelicensingsystem.org, as part of the nationwide multi-state licensing system:(a)
All forms, updates, attestations, reports, and documentation required by Sections 2, 3, and 4 of this administrative regulation, as applicable; and(b)
All fees referenced in this administrative regulation.(2)
Any fees assessed by NMLS, to process the electronic submissions referenced in subsection (1) and (2) of this section shall be paid by the applicant.Section 7.
Incorporation by Reference.(1)
"SLSCR-Student Loan Servicer Call Report", January 2023, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Financial Institutions, 500 Mero St 2SW19, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 5 p.m. This material may also be obtained from the department's Web site at http://www.kfi.ky.gov.JUSTIN BURSE, Acting Commissioner
RAY PERRY, Secretary
APPROVED BY AGENCY: January 13, 2023
FILED WITH LRC: January 13, 2023 at 11:50 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on March 28, 2023, at 2:00 p.m., at 500 Mero Street, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through March 31, 2023. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Catherine Falconer, Counsel, 500 Mero Street, 2SW19, Frankfort, Kentucky 40601, Phone: 502-782-9052, Fax: 502-573-8787, Email: Catherine.Falconer@ky.gov and Marni Gibson, Acting Deputy Commissioner, Dept. of Financial Institutions, Mero Street, 2SW19, Frankfort, Kentucky 40601, Phone: 502-782-9053, Fax: 502-573-8787, Email: Marni.Gibson@ky.gov
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Catherine Falconer
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes licensing and registration requirements for student education loan servicers and procedures for using the Nationwide Multistate Licensing System, (NMLS).
(b) The necessity of this administrative regulation:
KRS 286.12 was a new statute enacted in the 2021-2022 legislative session. These regulations set forth the requirements and procedures for student loan servicers to file for licensing and registration, to provide notice of required fees, and to incorporate forms utilized by the Department to process applications.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the requirements of KRS 286.12-030 by providing notice of the procedure for filing an application for a license. This administrative regulation conforms to the requirements of KRS 286.12-040 by providing guidance related to the required information to be submitted to the Department for approval of an application and submissions for a change of control request. This administrative regulation conforms to the requirements of KRS 286.12-060 for notice and requirements related to the submission of information and reports necessary for the Department to complete an application review or renewal for regulatory oversight. This administrative regulation conforms to the requirements of KRS 286.12-070 to provide notice of the calculation of assessment fees and requirements to the servicer related to submission of reports for renewals of licenses.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist the Department in maintaining oversight of the student loans servicers industry by requiring licensure for servicers and by monitoring activities related to customer accounts of Kentucky citizens.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
This is a new regulation
(b) The necessity of the amendment to this administrative regulation:
N/A
(c) How the amendment conforms to the content of the authorizing statutes:
N/A
(d) How the amendment will assist in the effective administration of the statutes:
N/A
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
This regulation effects all student loan servicers that have accounts for Kentucky citizens. The exact number of individuals and businesses affected by this regulation will fluctuate depending upon the number of servicers and status of the loans in a given year. Currently there are 74 entities licensed in NMLS as student education loan servicers that would be affected by this administrative regulation.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
All industry participants are required to be licensed or to qualify for an exemption from licensure. Regulated entities will need to submit applications with the corresponding required information and fees in order for DFI to review and make a determination of their license application or renewal. The applications for licensure, and renewal for licensure, require the submission of specific reports and information into the national database system, NMLS, which compiles licensure information for all fifty states.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The costs for servicers would be part of their regular internal record keeping and administrative activities. Servicers will be required to file appropriate forms and records with the Department, submit an investigative fee of $5,000.00 for a new application, submit a renewal fee of no less than $5,000.00 and no more than $20,000.00, and maintain a bond, if applicable.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Individuals will have the benefit of the entities regulatory compliance with specific areas of student loan account management including accurate record keeping for accounts, maintaining communication with account servicers and borrowers, and added protections of notice and information sharing for changes in account status of account holder information including participation in government loan forgiveness or payment adjustment programs. Servicers will have notice of requirements and procedures to comply with the statute and regulations that apply universally to all servicers operating in Kentucky. The regulation establishes requirements and procedures related to the national database for submission of records, payments, and information related to account activities and customer service.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
Initially, there is no additional costs to the Department to implement the new regulations. The Department will utilize current staff to process these applications and maintain reviews of submissions through the national database.
(b) On a continuing basis:
The Department anticipates needing dedicated staff to conduct regulatory functions in subsequent years. At that time, the anticipated costs to the Department will include a one-time expense for employee equipment of approximately $20,000.00, thereafter approximately $482,000.00 per year for salary, benefits, and travel costs.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Revenue will be generated through submission of registration, renewal, and other fees to the Department.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
This new regulation sets the fees that student education loan servicers will be assessed at renewal at no less than $5,000.00 and no more than $20,000.00. The fee will be based on the volume of loans that are serviced by each servicer. Fees assessed will provide the Department with the revenue to implement the regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This regulation establishes the procedure for filing for licensure and renewals and the accompanying fees associated with the applications. The regulation establishes a late filing fee and a change of control fee. The statute allows for assessment fee adjustments every five years.
(9) TIERING: Is tiering applied?
Tiering was not applied. It was not deemed necessary or relevant to the registration application process or for submission to the NMLS.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Department of Financial Institutions.
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 286.12-030, 286.12-040, 286.12-060, 286.12-070, and KRS 286.1-011, 286.1-020.
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
This administrative regulation is expected to be revenue neutral. The fees mandated by this administrative regulation will be used to perform the Department’s regulatory duties.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
This administrative regulation is expected to be revenue neutral. The fees mandated by this administrative regulation will be used to perform the department’s regulatory duties.
(c) How much will it cost to administer this program for the first year?
Initially, there is no additional costs to the Department to implement the new regulations. The Department will utilize current staff to process these applications and maintain reviews of submissions through the national database.
(d) How much will it cost to administer this program for subsequent years?
The Department anticipates needing dedicated staff to conduct regulatory functions in subsequent years. At that time, the anticipated costs to the Department will include a one-time expense for employee equipment of approximately $20,000.00, thereafter approximately $482,000.00 per year for salary, benefits, and travel costs.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation:
This regulation relates to the procedures and submission of registration documents. Costs for application for licensure are provided by statutory guidance.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
This regulation is not expected to provide any cost savings to the regulated entities the first year.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
This regulation is not expected to provide cost savings to the regulated entities in subsequent years.
(c) How much will it cost the regulated entities for the first year?
It will cost regulated entities $5,000.00 for the first year due to the investigative fee for new applications, as well nominal processing fees charged by NMLS.
(d) How much will it cost the regulated entities for subsequent years?
These costs cannot be specifically determined at this time. It will cost regulated entities no less than $5,000 and no more than $20,000 in fees in subsequent years due to the renewal assessment, which is based on loan servicing volume, as well as nominal processing fees charged by NMLS.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
Expenditures (+/-):
Other Explanation:
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)] This regulation will not have a major economic impact on the student loan servicer industry.
PUBLIC PROTECTION CABINET
Kentucky Department of Financial Institutions
Student Education Loan Servicers
(New Administrative Regulation)
808 KAR 16:010.Licensing, registration, renewals and fees.
Section 1.
Definitions.(1)
"Applicant" is defined by KRS 286.12-010(2).(2)
"Commissioner" is defined by KRS 286.1-010(1).(3)
"Department" is defined by KRS 286.1-010(2).(4)
"Federal student education loan" is defined by KRS 286.12-020(1).(5)
"Student education loan servicer" and "servicer" are defined by KRS 286.12-010(13).Section 2.
Initial Application and Notice.(1)
A person providing notice to the commissioner as a federal student education loan servicer doing business in Kentucky prior to December 31, 2022, shall submit:(a)
A completed NMLS Company Form available online at http://mortgage.nationwidelicensingsystem.org; and(b)
A completed NMLS Individual Form available online at http://mortgage.nationwidelicensingsystem.org;(2)
Non-federal student education loan servicers, federal student education loan servicers that also service non-federal student education loans, and federal student education loan servicers that begin conducting business in Kentucky after December 31, 2022, shall submit:(a)
A completed NMLS Company Form available online at http://mortgage.nationwidelicensingsystem.org; and(b)
A completed NMLS Individual Form available online at http://mortgage.nationwidelicensingsystem.org;(c)
All documents required on the New Application Checklist available online at http://mortgage.nationwidelicensingsystem.org;(d)
Either:1.
An audited financial statement prepared by a certified public accountant (CPA), in accordance with generally accepted accounting principles (GAAP), verifying a minimum net worth of at least two hundred and fifty thousand dollars ($250,000); or2.
The following CPA prepared financial statements, if such request is made by the applicant and is deemed reasonable by the Commissioner based on the size, structure, and complexity of the applicant:a.
A Reviewed financial statement; orb.
A Compiled financial statement;(e)
An Electronic Surety Bond online at http://mortgage.nationwidelicensingsystem.org, which shall:1.
Include the name of the principal insured, which shall match the full legal name of applicant;2.
Be to the benefit of the department; and3.
Be in an amount of the lessor of:a.
One hundred thousand dollars ($100,000.00); orb.
.01% (.0001) of the amount of the Kentucky servicing portfolio; and(f)
A nonrefundable investigation fee of five thousand dollars ($5,000.00).Section 3.
Renewal Applications - All Licensees.(1)
A licensee applying for an annual renewal of a student education loan servicer license, on or before December 31st, shall:(a)
Submit required updates and attestations verifying that all information in the licensee's record, maintained in the NMLS operated by the State Regulatory Registry, LLC, is correct and available online at http://mortgage.nationwidelicensingsystem.org; and(b)
Pay the annual assessment fee to be established by commissioner's order pursuant to KRS 286.12-070(2). The minimum assessment fee shall be five thousand dollars ($5,000) and the maximum assessment fee shall be twenty thousand dollars ($20,000).(2)
A licensee applying to reinstate a student education loan servicer license after December 31st shall:(a)
Submit all fees and materials required by subsection (1) of this section; and(b)
Pay a late filing fee in the amount of one thousand dollars ($1,000) on or before January 31st of the following year that the renewal application was due.(3)
The commissioner shall not accept an application for renewal or reinstatement when the application, fees, or any required information is not received on or before January 31st of the following year that the renewal application was due. Failure to complete the renewal or reinstatement application of a license shall cause the license to automatically expire as of February 1st by operation of law.Section 4.
Change of address, name, control, or agent for service-All Licensees.(1)
A licensee that intends to change its address, name, or agent for service of process shall notify the commissioner in writing at least:(a)
Ten (10) days prior to the change of address or name; and(b)
Five (5) days prior to the change of agent for service of process.(2)
A licensee that intends to file for a change of control, as defined by KRS 286.12-010(6), shall notify the commissioner in writing thirty (30) days prior to the effective date of the change of control and shall submit:(a)
For an existing licensee acquiring another licensee, a change of control fee of one thousand dollars ($1,000); or(b)
For all non-licensed entities, a change of control fee of five thousand dollars ($5,000).(3)
A licensee changing its address, name, control, or agent for service of process shall update this information in NMLS within the same time periods set forth in this section.Section 5.
Annual Report - All Licensees. Each licensee shall file an annual report electronically with the commissioner, on Form SLSCR-Student Loan Servicer Call Report, on or before November 1st of each year.Section 6.
Electronic Submission of Filings and Fees through the Nationwide Multistate Licensing System Operated by the State Regulatory Registry, LLC.(1)
A person applying for licensure, registration, renewal, or reinstatement pursuant to Sections 2, 3, and 4 of this administrative regulation shall electronically submit the following to NMLS, at http://mortgage.nationwidelicensingsystem.org, as part of the nationwide multi-state licensing system:(a)
All forms, updates, attestations, reports, and documentation required by Sections 2, 3, and 4 of this administrative regulation, as applicable; and(b)
All fees referenced in this administrative regulation.(2)
Any fees assessed by NMLS, to process the electronic submissions referenced in subsection (1) and (2) of this section shall be paid by the applicant.Section 7.
Incorporation by Reference.(1)
"SLSCR-Student Loan Servicer Call Report", January 2023, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Financial Institutions, 500 Mero St 2SW19, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 5 p.m. This material may also be obtained from the department's Web site at http://www.kfi.ky.gov.JUSTIN BURSE, Acting Commissioner
RAY PERRY, Secretary
APPROVED BY AGENCY: January 13, 2023
FILED WITH LRC: January 13, 2023 at 11:50 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on March 28, 2023, at 2:00 p.m., at 500 Mero Street, Frankfort, Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through March 31, 2023. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Catherine Falconer, Counsel, 500 Mero Street, 2SW19, Frankfort, Kentucky 40601, Phone: 502-782-9052, Fax: 502-573-8787, Email: Catherine.Falconer@ky.gov and Marni Gibson, Acting Deputy Commissioner, Dept. of Financial Institutions, Mero Street, 2SW19, Frankfort, Kentucky 40601, Phone: 502-782-9053, Fax: 502-573-8787, Email: Marni.Gibson@ky.gov
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Catherine Falconer
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes licensing and registration requirements for student education loan servicers and procedures for using the Nationwide Multistate Licensing System, (NMLS).
(b) The necessity of this administrative regulation:
KRS 286.12 was a new statute enacted in the 2021-2022 legislative session. These regulations set forth the requirements and procedures for student loan servicers to file for licensing and registration, to provide notice of required fees, and to incorporate forms utilized by the Department to process applications.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the requirements of KRS 286.12-030 by providing notice of the procedure for filing an application for a license. This administrative regulation conforms to the requirements of KRS 286.12-040 by providing guidance related to the required information to be submitted to the Department for approval of an application and submissions for a change of control request. This administrative regulation conforms to the requirements of KRS 286.12-060 for notice and requirements related to the submission of information and reports necessary for the Department to complete an application review or renewal for regulatory oversight. This administrative regulation conforms to the requirements of KRS 286.12-070 to provide notice of the calculation of assessment fees and requirements to the servicer related to submission of reports for renewals of licenses.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist the Department in maintaining oversight of the student loans servicers industry by requiring licensure for servicers and by monitoring activities related to customer accounts of Kentucky citizens.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
This is a new regulation
(b) The necessity of the amendment to this administrative regulation:
N/A
(c) How the amendment conforms to the content of the authorizing statutes:
N/A
(d) How the amendment will assist in the effective administration of the statutes:
N/A
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
This regulation effects all student loan servicers that have accounts for Kentucky citizens. The exact number of individuals and businesses affected by this regulation will fluctuate depending upon the number of servicers and status of the loans in a given year. Currently there are 74 entities licensed in NMLS as student education loan servicers that would be affected by this administrative regulation.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
All industry participants are required to be licensed or to qualify for an exemption from licensure. Regulated entities will need to submit applications with the corresponding required information and fees in order for DFI to review and make a determination of their license application or renewal. The applications for licensure, and renewal for licensure, require the submission of specific reports and information into the national database system, NMLS, which compiles licensure information for all fifty states.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The costs for servicers would be part of their regular internal record keeping and administrative activities. Servicers will be required to file appropriate forms and records with the Department, submit an investigative fee of $5,000.00 for a new application, submit a renewal fee of no less than $5,000.00 and no more than $20,000.00, and maintain a bond, if applicable.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Individuals will have the benefit of the entities regulatory compliance with specific areas of student loan account management including accurate record keeping for accounts, maintaining communication with account servicers and borrowers, and added protections of notice and information sharing for changes in account status of account holder information including participation in government loan forgiveness or payment adjustment programs. Servicers will have notice of requirements and procedures to comply with the statute and regulations that apply universally to all servicers operating in Kentucky. The regulation establishes requirements and procedures related to the national database for submission of records, payments, and information related to account activities and customer service.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
Initially, there is no additional costs to the Department to implement the new regulations. The Department will utilize current staff to process these applications and maintain reviews of submissions through the national database.
(b) On a continuing basis:
The Department anticipates needing dedicated staff to conduct regulatory functions in subsequent years. At that time, the anticipated costs to the Department will include a one-time expense for employee equipment of approximately $20,000.00, thereafter approximately $482,000.00 per year for salary, benefits, and travel costs.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Revenue will be generated through submission of registration, renewal, and other fees to the Department.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
This new regulation sets the fees that student education loan servicers will be assessed at renewal at no less than $5,000.00 and no more than $20,000.00. The fee will be based on the volume of loans that are serviced by each servicer. Fees assessed will provide the Department with the revenue to implement the regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This regulation establishes the procedure for filing for licensure and renewals and the accompanying fees associated with the applications. The regulation establishes a late filing fee and a change of control fee. The statute allows for assessment fee adjustments every five years.
(9) TIERING: Is tiering applied?
Tiering was not applied. It was not deemed necessary or relevant to the registration application process or for submission to the NMLS.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Department of Financial Institutions.
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 286.12-030, 286.12-040, 286.12-060, 286.12-070, and KRS 286.1-011, 286.1-020.
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
This administrative regulation is expected to be revenue neutral. The fees mandated by this administrative regulation will be used to perform the Department’s regulatory duties.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
This administrative regulation is expected to be revenue neutral. The fees mandated by this administrative regulation will be used to perform the department’s regulatory duties.
(c) How much will it cost to administer this program for the first year?
Initially, there is no additional costs to the Department to implement the new regulations. The Department will utilize current staff to process these applications and maintain reviews of submissions through the national database.
(d) How much will it cost to administer this program for subsequent years?
The Department anticipates needing dedicated staff to conduct regulatory functions in subsequent years. At that time, the anticipated costs to the Department will include a one-time expense for employee equipment of approximately $20,000.00, thereafter approximately $482,000.00 per year for salary, benefits, and travel costs.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation:
This regulation relates to the procedures and submission of registration documents. Costs for application for licensure are provided by statutory guidance.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
This regulation is not expected to provide any cost savings to the regulated entities the first year.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
This regulation is not expected to provide cost savings to the regulated entities in subsequent years.
(c) How much will it cost the regulated entities for the first year?
It will cost regulated entities $5,000.00 for the first year due to the investigative fee for new applications, as well nominal processing fees charged by NMLS.
(d) How much will it cost the regulated entities for subsequent years?
These costs cannot be specifically determined at this time. It will cost regulated entities no less than $5,000 and no more than $20,000 in fees in subsequent years due to the renewal assessment, which is based on loan servicing volume, as well as nominal processing fees charged by NMLS.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
Expenditures (+/-):
Other Explanation:
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)] This regulation will not have a major economic impact on the student loan servicer industry.