Last year, Kentucky enacted the Student Education Loan Servicing, Licensing, and Protection Act of 2022 (the “Act”), which requires student loan services to be licensed in Kentucky. The Act took effect on July 13, 2023 (the “Effective Date”).
On the Effective Date, the Kentucky Department of Financial Institutions (“DFI”) released its new application checklist and made a license application available through the Nationwide Multistate Licensing System & Registry (“NMLS”). The license authorizes entities to engage in private and non-private student loan servicing. Significantly, licensees are permitted to service federal student loans, as well, without obtaining an additional license.
To obtain a license, an applicant must submit a Company application through the NMLS, along with certain supplementary information, including, but not limited to, the following:
- A financial statement illustrating a company net worth of $250,000;
- The identity of a qualifying individual with a minimum of 2 years of experience in the student education loan industry and a resume evidencing his or her experience;
- An electronic surety bond in the amount of $100,000;
- A business plan that outlines marketing strategies, products, target markets, fee schedule, and operating structure the applicant intends to employ; and
- A personal financial statement for each (i) direct owner that owns 10% or more of the applicant, (ii) indirect owner that owns 10% or more of the applicant, and (ii) executive officer.
Entities that are required to be licensed are encouraged to consult the full text of the Act and the new application checklist, which can be found here. Because the Act has taken effect, all such entities should promptly apply for a license in order to maintain in compliance.