January 6, 2021
“Loan servicers like Navient Solutions, AES/PHEAA, Nelnet, and ACS Education Services are supposed to work in good faith to help students manage their debt. But far too often, these loan servicers 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,” said Bahar Akman Imboden, Managing Director of the Hildreth Institute. “The burden of student debt falls disproportionately on women, who collectively hold two thirds of all student debt, and on people of color, exacerbating existing income and wealth gaps. Thanks to this legislation, Massachusetts will join the more than ten other states that have passed a Student Loan Bill of Rights to ensure that borrowers know their rights; are protected by strong consumer guidelines; and understand the resources and tools available to assist them.”
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.
“The coronavirus pandemic has crippled our economy and exacerbated the struggle countless families face due to overwhelming debt. More than 800,000 people in our Commonwealth alone collectively owe more than $40 billion in student loans, and protections to ensure oversight and fair practices in collecting this debt have been nonexistent of late,” said Senator Eric P. Lesser, Senate Chair of the Joint Committee on Economic Development and Emerging Technologies and lead Senate negotiator for the economic development conference committee. “The passage of An Act enabling partnerships for growth codifies those desperately needed protections here in Massachusetts through the establishment of a Student Loan Borrower Bill of Rights and new Student Loan Ombudsman. We have fought tirelessly alongside MassPIRG, the Student Borrower Protection Center, the Hildreth Institute, PHENOM, colleagues in the Legislature, and other stakeholders since 2017 to put these guidelines in place, and thanks to everyone’s hard work we can now begin to rebalance the scales in an unfair system that has burdened an entire generation with debt.”
“Student debt has grown faster in Massachusetts than in 49 other states since 2001,” said State Representative Natalie Higgins, lead sponsor of the Student Loan Bill of Rights in the House. “These new protections will be available to the nearly one million student loan borrowers across our state.”
In August, 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 the Student Loan Borrower Bill of Rights.
“The Student Loan Borrower Bill of Rights will protect borrowers from unfair, predatory, and deceptive lending and loan servicing companies,” said Deirdre Cummings, Legislative Director of MASSPIRG. “We hope the Governor will sign the bill.”
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.”