Surety Bond Requirements for Student Loan Servicers in Massachusetts
Anyone servicing federal or private student loans for Massachusetts borrowers needs a Student Loan Servicer License from the Massachusetts Division of Banks, and a $25,000 surety bond as part of that license, filed through the Nationwide Multistate Licensing System (NMLS).
How Much Does a Massachusetts Student Loan Servicer Bond Cost?
With Bryant Surety Bonds, you can expect a starting rate of 0.75% of your bond amount, which comes to $188 a year for the $25,000 bond. Your personal credit history is the main factor in the underwriting process. Other financial or legal factors could potentially influence your quote as well.
You can see our surety bond cost page for more on how sureties price this type of bonds.
| License Type | Bond Amount | Starting Cost/Year |
|---|---|---|
| Student Loan Servicer License | $25,000 | $188 |
A weak credit history won't automatically keep you from getting bonded. Our bad credit bond program has bonded plenty of applicants that other sureties declined.
Apply through our online application, free and with no obligation to buy.
Why Do You Need a Student Loan Servicer Bond in Massachusetts?
Your bond financially guarantees your compliance with Massachusetts's student loan servicing law. If a borrower is harmed by your noncompliance, or the Division assesses fees or penalties against you, a valid claim against your bond gets paid by your surety, up to the bond's full amount. You're then responsible for reimbursing the surety.
If surety bonds are new to you, our what is a surety bond page covers the fundamentals.
How to Get Bonded
Bryant Surety Bonds gets you bonded in three steps.
- Complete our online application. It only takes a few minutes.
- Review your quote and pay. We shop your application to 20+ A-rated carriers and issue the bond once you accept a rate.
- NMLS filing is handled for you. We submit your Electronic Surety Bond (ESB) directly to your NMLS record.
Once you've approved your quote, you'll grant us authority as your surety inside NMLS. The Division won't accept your bond until that step is done.
How Do You Renew Your Bond?
The Massachusetts Division of Banks sets its own renewal deadlines, so confirm your exact renewal date with the Division rather than assuming a fixed cycle.
We'll reach out with a reminder once we have your renewal date on file, and our agents can look for ways to bring your bond cost down at the same time.
How To Apply for a Student Loan Servicer License in Massachusetts?
The process generally involves:
- Setting up or updating your NMLS account and filing the Company Form (MU1).
- Assembling your documentation: formation paperwork, a business plan detailing the types of loans you'll service, and a certificate of good standing.
- Submitting an audited financial statement demonstrating a positive net worth, along with two consecutive years showing sustained profitability, or a written explanation if you can't.
- Appointing an on-site Location Manager at your main office as your qualifying individual.
- Completing background checks and credit reports for owners with 10% or more interest, executive officers, and your Location Manager.
- Authorizing your surety in NMLS so we can file your Electronic Surety Bond directly to your record.
- Covering the required fees (below).
Full documentation guidance is available on the NMLS website.
Massachusetts Student Loan Servicer Licensing Fees
| Fee | Amount |
|---|---|
| Investigation fee | $300 |
| License registration fee | $1,000 |
| NMLS processing fee | $120 |
Background checks and credit reports come with their own NMLS fees. See the NMLS System Fees page for current pricing.
Multistate Licensing and Bonding
Each state sets its own surety bond amount and requirements. Unfortunately, your license and bond don’t carry over between states. For example, Nevada ties its bond to your servicing volume and can require a bond amount of up to $250,000, a very different structure from Massachusetts's flat $25,000.
Bryant Surety Bonds is licensed in all 50 states and can be the single point of contact regardless of where you want to operate. This speeds up the process and cuts down your costs.
Get Bonded With Bryant Surety Bonds
Bryant Surety Bonds holds Massachusetts license number 2094592.
Have questions about getting bonded in Massachusetts? Give us a call at 866.450.3412.
FAQ
Is there a separate license path for companies that only service federal student loans?
Yes. Massachusetts issues an Automatic Federal Student Loan Servicer license, which requires the same $25,000 surety bond for companies servicing exclusively under a contract with the U.S. Secretary of Education.
Does holding this license mean you also need a debt collector or third-party loan servicer license?
No. Massachusetts exempts you from those separate licensing and registration requirements, as long as you're acting exclusively as a student loan servicer and not otherwise engaging in debt collection or third-party loan servicing.
What happens when you stop servicing loans in Massachusetts?
You must notify the Commissioner no later than 15 days after ceasing to engage in the business of student loan servicing.
