50 Student and Consumer Rights Organizations Call for Passage of Student Loan Borrower Bill of Rights
For Immediate Release
August 27, 2020
Contact: Andrew Farnitano, 925-917-1354, andrew@crawfordstrategies.com
Student Borrower Protections Under Consideration in Economic Development Bill Conference Committee
BOSTON - Yesterday, representatives from fifty student and consumer rights organizations, including leaders from Massachusetts' public colleges, sent a letter to members of the state legislature's economic development bill conference committee in support of the establishment of a Student Loan Borrower Bill of Rights.
"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," reads the letter. "With the increased financial instability brought by the present pandemic-induced economic crisis, it is more important than ever that borrowers know their rights; are protected by strong consumer guidelines; and understand the resources and tools available to assist them."
Language establishing these student loan borrower protections was included in the Senate version of the economic development bill, titled “An Act Enabling Partnerships for Growth,” passed last month, but not included in the House version. A six-legislator conference committee is now negotiating over compromise legislation. The letter, signed by campus leaders from the UMass system and the state's community colleges and dozens of student and consumer rights organizations, highlights the fact that student borrower protections are a racial justice issue.
"Low-income, first-generation, and Black/Brown borrowers - whose communities have a high incidence of COVID-19 - also bear a disproportionately heavy burden with loan repayment and greater risk of loan default," reads the letter. "According to a recent study, a typical White borrower pays off 94 percent of their debt 20 years after starting college, while a typical Black borrower still owes 95 percent of their balance. With soaring unemployment, and renewed attention to the economic toll of systemic racism, it is critical that borrowers have the ability to protect their financial futures."
More than a million student loan borrowers in Massachusetts struggle with a predatory student loan servicing industry, but unlike mortgages or credit cards, student loans come with little to no consumer protections to give borrowers a chance to reduce their debt burdens. Multiple investigations show that loan servicers consistently work against borrowers’ best interests by steering students into options that can add more interest to their loans, pushing some borrowers into default, and, even in the midst of the current pandemic, by not properly implementing federal payment relief options.
The Student Loan Borrower Bill of Rights would require student loan borrowers to be licensed at the state level, prohibit servicers from engaging in predatory, unfair, and unlawful practices, and establish a Student Loan Ombudsman in the Attorney General's office to resolve complaints and help borrowers navigate their repayment options.
A fact sheet on the legislation, prepared by the Hildreth Institute, the Student Borrower Protection Center, and ZeroDebt Massachusetts, highlights several complaints submitted by MA student loan borrowers to the federal Consumer Financial Protection Bureau in recent years.
“I successfully reapplied for my Income Based Repayment, and thought that I was all set to stay on my Income Based Repayment plan," reads one Massachusetts complaint. "For a reason unbeknownst to me, I have been removed from that plan and told to reapply, and so my accrued interest has been immediately capitalized, and I have been moved to a flat payment where the payment amount is so high and causes a financial hardship. This is the second time this has happened. The first time this happened, the customer service representative put me into forbearance and told me that they never received my income documentation that I had sent. It then took Navient 3 months to get me back on the plan. This time, I have not been able to speak to customer service, and do not want to go into forbearance, so I will have to make this payment while trying to get back on the plan. But I will have had the interest capitalized, which adds to the hardship.”
“I have spent over a year attempting to certify employment for Public Service Loan Forgiveness," reads another Massachusetts complaint. "After submitting the form three times, and having my employer send a letter to [the servicer], they continue to claim that my form is not complete and they can not certify my employment. I have contacted [the servicer] dozens of times in an attempt to resolve the problem, yet have not received appropriate assistance or a solution to my problem. It is unacceptable for a simple 2 page form to consume hours worth of my time because of a servicer‘s inability to comply with student loan policies and procedures."
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Hildreth Institute is a non-profit, nonpartisan organization dedicated to restoring the promise of higher education as an engine of upward mobility for all. We believe that all students should be able to obtain a high-quality, zero-debt postsecondary education. At Hildreth Institute, we fight for zero-debt college because we believe that student loans are not the right financial aid tool for our students or their families. We need to move to a zero-debt system that makes high-quality college affordable to all, without leaving students mired in debt.
See the letter we sent on Friday, Jan. 8th, 2020: HERE
See our Factsheet: HERE