Kentucky Student Loan Servicer Bond

Communicate With UsIM or Email

Bond Penalty: $100,000

Effective July, 2023 all student loan servicers operating in the State of Kentucky must meet significant licensing requirements and mus file a Kentucky student loan servicer surety bond. HB 494, titled the “Student Education Loan Servicing, Licensing, and Protection Act of 2022,” applies to servicers of private and federal student loans. A surety bond is a tripartite agreement among an obligee (Kentucky Department of Financial Institutions), the principal (the student loan servicer), and the surety company (an insurer that provides the bond). The surety bond serves as a financial guarantee that the servicer will fulfill its obligations ethically and responsibly. The primary purpose of the Kentucky Student Loan Servicer Surety Bond is to provide a safety net for borrowers and the state in the event that a student loan servicer engages in unethical or illegal activities. If the servicer fails to uphold its duties, the bond ensures that affected parties have a way to seek compensation for damages.

The Kentucky student loan servicer bond must be issued in the amount of one hundred thousand dollars ($100,000), and written by a surety licensed to conduct business in the state. Per the new statute, . . .

"(b) Maintain the minimum net worth requirements prescribed by the 8 commissioner in administrative regulation or order, which may include the 9 following: 10
1. Applicable reserves consisting of high-quality investments; and 11
2. A surety bond;"

Separate surety bonds are NOT required for entities that service both private (state) and federal loans. The bond must be posted electronically through the NMLS portal. A helpful checklist and the process for opening an account and affiliating the applicant's preferred surety company are provided on the NMLS site.

Kentucky surety bond leader, Surety One, Inc. is a specialist in the bonding needs of loan servicers and intermediaries. We offer both the surety bonds and fidelity bonds needed by servicers in all fifty states, Puerto Rico and the U.S. Virgin Islands. Questions about this surety bond? Call us at (800) 373-2804, email us at or click here for live chat. A Kentucky student loan servicer surety bond is quick, easy and delivered in hours.

Surety bond application review and quoting are free of charge. There is no obligation to purchase.