This week, the Massachusetts State Senate unanimously passed the Student Loan Bill of Rights – powerful legislation that would enshrine new state-level protections for student loan borrowers in the Commonwealth. I was proud to testify at the State House last year in support of the bill, and I am thrilled to see it pass the State Senate with bipartisan support.
The bill still has to pass the House and be signed by Governor Baker before it becomes law. But this is a major first step. If it becomes law, the legislation could do a lot to protect student loan borrowers. Here’s how:
- Student loan servicers such as Navient and FedLoan Servicing would be required to register with the state and pay a licensing fee.
- Student loan servicers that are subject to oversight would be prohibited from engaging in unfair, deceptive, or abusive practices. This type of conduct by servicers is rampant and has been well-documented.
- Student loan borrowers would be given the right to file a lawsuit against student loan servicers who violate the provisions of the legislation.
- The bill also creates an “Ombudsman” position to oversee compliance, coordinate with the Massachusetts Attorney General’s Office, collect data on servicing, and educate the public on student loan-related issues.
Several other states – such as Illinois and Connecticut – have passed similar bills in light of the U.S. Dept. of Education’s recent rollback of consumer protections and attacks on the federal Consumer Financial Protection Bureau. Some student loan servicers – with backing from the Dept. of Education – intend to challenge these state-level protections, and the courts may have to sort out the disputes. But as more states pass these protections, it will become increasingly more difficult for student loan servicers to get away with misconduct.