MD Enacts Provisions for Debt Settlement Services Concerning Student Loan Debt
Maryland recently enacted provisions to amend the Maryland Debt Settlement Services Act to add requirements and prohibitions concerning debt settlement services providers engaged in student education loan debt relief. These new debt settlement service requirements became effective on October 1, 2022.
Among other matters, the amendment requires that debt settlement services providers engaged in student education loan debt relief provide a specific statement—enumerated in the text of the amendment—in the debt settlement services agreement, which among other things, states that the debt settlement services provider is a private company that is not affiliated with the U.S. Department of Education and that a borrower can apply for consolidation and other repayment plans through the U.S. Department of Education. Additionally, any advertisement for debt settlement services for student education loan debt relief must provide a disclosure with the same required statements.
In addition, debt settlement services providers engaged in student education loan debt relief are prohibited from (i) advising that a consumer stop making payments or communicating with the consumer’s student loan servicer; or (ii) obtaining a consumer’s student aid information in violation of federal law.