Over 50 state & nationwide civil rights, increased schooling, & client advocacy organizations, together with the heads of state universities and group faculties, are calling on the Massachusetts state legislature to go a scholar loan borrower “bill of rights.”
Massachusetts is the most recent state contemplating a legislative measure to codify authorized protections for scholar loan debtors. California’s state legislature has taken up the same measure this month, as nicely. And a number of other different states — together with Illinois, Connecticut, and Washington — have already enacted a invoice of rights for scholar loan debtors. The idea of a singular set of client safety legal guidelines geared fully in the direction of individuals with scholar debt is gaining traction throughout the nation, and advocates hope that this patchwork of state legal guidelines could be the impetus for uniform, nationwide, federally-mandated client protections.
“Even before the current COVID-19 pandemic, student loan borrowers struggled with a predatory student loan servicing industry that knowingly misleads borrowers to increase its profits,” the coalition of organizations wrote in a letter to the Massachusetts state legislature. “With the increased financial instability brought by the present pandemic-induced economic crisis, it is more important than ever that borrowers know their rights, [and] are protected by strong consumer guidelines… In tumultuous times, taking action to defend students defrauded or deceived by student loan companies is more critical than ever.”
Scholar loan servicing is extensively seen as problematic. A number of state attorneys normal have introduced lawsuits in opposition to main federal scholar loan servicers alleging widespread misconduct. A brand new report launched this month confirmed that scholar loan servicers proceed to have substantial issues administering federal loan applications similar to Public Service loan Forgiveness. And even the U.S. Division of Schooling’s personal inspector normal discovered vital issues with scholar loan servicing, together with an absence of acceptable oversight by the federal authorities.
The proposed Scholar loan Borrower Invoice of Rights in Massachusetts (known as H.3977 within the state home of representatives, and S.2874 within the state senate model), would do the next:
- Ban abusive or misleading scholar loan servicing practices, similar to wrongfully steering debtors into forbearances and away from aid applications like income-driven reimbursement or Public Service loan Forgiveness, and offering recourse for debtors harmed by these practices.
- Codify minimal servicing requirements for corporations that deal with scholar loan accounts.
- Set up a Scholar Borrower Ombudsman chargeable for reviewing and appearing on complaints submitted by debtors.
- Present public schooling initiatives to assist college students and debtors navigate scholar loan reimbursement and default points.
Critics of state-based “bills of rights” for scholar loan debtors query the power and authority of states to control scholar loan servicers who are sometimes contracted with the federal authorities, citing supremacy of federal legislation over state legislation. Nevertheless, a number of latest court docket selections have affirmed the power of states to control federal scholar loan servicers beneath state client safety statutes.
Signatories on the letter to the Massachusetts legislature in assist of the invoice embody the Scholar loan Borrower Safety Heart, the Massachusetts Trainer’s Affiliation, Veterans Schooling Success, and Shopper Studies, in addition to the heads of the College of Massachusetts and area people faculties.
The invoice is at the moment in a convention committee, and the letter urges the committee to launch the invoice favorably to proceed in the direction of passage.
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