More than 50 state and national civil rights, higher education, and consumer organizations, including heads of state universities and community colleges, are calling on the Massachusetts state legislature to pass a student loan Borrower’s “bill of rights”.

Massachusetts is the latest state to consider legislation to codify legal protections for student loan borrowers. The California State Legislature has taken a similar measure this month too. And several other states – including Illinois, Connecticut, and Washington – have already passed a bill of rights for student loan borrowers. The concept of a single set of consumer protection laws that focus entirely on indebtedness for students is gaining ground across the country, and advocates hope this patchwork of state laws can be the impetus for consumer protections. Consumers uniform, national and federally mandated.

“Even before the current COVID-19 pandemic, student loan borrowers have battled a predatory student loan services industry that knowingly misleads borrowers to increase profits,” the coalition of organizations wrote in a statement. communicated. letter to the Massachusetts State Legislature. “With the increased financial instability brought on by the current pandemic-induced economic crisis, it is more important than ever that borrowers know their rights, [and] are protected by strict consumer guidelines … In these turbulent times, taking action to defend students defrauded or deceived by student loan companies is more critical than ever.

The service of student loans is widely seen as problematic. Several state attorneys general have sued top federal student loan officers, alleging widespread misconduct. A new report released this month confirmed that student loan managers continue to have significant problems administering federal loan programs such as Public service loan remission. And even the United States Department of Education’s own Inspector General found important issues with the student loan service, including a lack of proper oversight by the federal government.

The Massachusetts Student Loan Borrower Rights Bill (called H.3977 in the State House of Representatives and S.2874 in the State Senate version) would do the following:

• Prohibit abusive or deceptive student loan management practices, such as falsely directing borrowers to forbear and excluding them from assistance programs such as income-tested or public service loan forgiveness, and offer recourse to borrowers harmed by these practices.
• Codify minimum service standards for businesses that manage student loan accounts.
• Establish a student borrower ombudsperson to review and process complaints submitted by borrowers.
• Provide public education initiatives to help students and borrowers deal with student loan repayment and default issues.

Critics of state “bills of rights” for student loan borrowers question the ability and authority of states to regulate student loan services that are often under contract with the federal government, citing the rule of law federal state law. however, several recent court decisions affirmed the ability of states to regulate federal student loan services under state consumer protection laws.

The signatories of the letter to the Massachusetts legislature in support of the bill include the Student Loan Borrower Protection Center, the Massachusetts Teacher’s Association, Veterans Education Success and Consumer Reports, as well as officials from the University of Massachusetts and local community colleges.

The bill is currently in conference committee and the letter urges the committee to publish the bill favorably for passage.

Further reading

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