The Senate Finance Committee this week took testimony on legislation sponsored by Sen. Dawn Euer (D-Dist. 13, Newport, Jamestown) to protect student loan borrowers and establish oversight of student loan servicers operating in Rhode Island.
The legislation (2019-S 0737), titled the Student Loan Bill of Rights, sets standards for student loan servicing, both prohibiting predatory behavior and providing best practices for protecting consumers’ rights. It requires that student loan servicers register with the state and allows state regulators to examine servicers’ business practices. Additionally, the legislation allows the Attorney General and Department of Business Regulation to penalize servicers who violate borrower rights and to seek restitution on behalf of borrowers in Rhode Island. It would also require better communication from lenders to borrowers about any transfer of their loan to another institution and about any alternative repayment or forgiveness program for which the borrower may qualify.
Borrowers in Rhode Island report being double-charged or incorrectly marked as delinquent in payment, with loan servicers taking months, or ever years, to correct mistakes. Additionally, many student loan borrowers eligible for the national “Public Service Loan Forgiveness” program have received incorrect and contradictory information from their loan servicers, leading to improper denials of loan forgiveness.
“The heavy burden of student debt is challenging enough for the majority of college graduates. Incompetent, inefficient or even deceitful loan servicers should not be allowed to exacerbate their struggles. Student loan servicers must be held accountable to ensure that they are providing honest, reliable information and services to their borrowers,” said Senator Euer.
The bill is backed by both General Treasurer Seth Magaziner and Attorney General Peter F. Neronha and has been incorporated into Gov. Gina M. Raimondo’s 2020 budget proposal.
More than 133,000 Rhode Islanders, including 16,000 senior citizens, have a combined $4.5 billion in student loan debt. Over $470 million of Rhode Islanders’ student loan debt is delinquent.
House Health, Education and Welfare Chairman Joseph M. McNamara has introduced the legislation (2019-H 5936) in the House.