Sen. Dawn Euer and Rep. Joseph M. McNamara are introducing legislation backed by General Treasurer Seth Magaziner and Attorney General Peter F. Neronha to protect student loan borrowers and establish oversight of student loan servicers operating in Rhode Island.
The sponsors joined Treasurer Magaziner, Attorney General Neronha, Commissioner of Postsecondary Education Brenda Dann-Messier and Department of Business Regulation Director Liz Tanner at an event today to announce the legislation.
“By several measures, student loan debt has increased greatly in the last 10 years,” said Representative McNamara (D-Dist. 19, Warwick, Cranston) in a press release received from the Rhode Island General Assembly’s press office. “It has surpassed the amount households owe on auto loans, home equity loans and credit cards. This legislation will help to address the crisis by establishing oversight of the student loan process and prohibiting predatory practices.”
Said Senator Euer (D-Dist. 13, Newport, Jamestown) in the press release, “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.”
The legislation, 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.
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.
“Too many Rhode Islanders are vulnerable to deceptive and predatory practices by their student loan servicers, who make it hard for borrowers to keep their loan payments affordable,” said Treasurer Magaziner in the press release. “Too often, borrowers aren’t receiving accurate information about their loan, which can result in higher interest, leave them in debt longer, and make them more likely to default. This legislation will hold student loan servicers accountable and help Rhode Islanders choose the options that are best for them.”
Said Attorney General Neronha in the press release, “If and when borrowers have issues with their loans or loan servicers, this legislation provides them with a place to go to address those issues. While our primary focus will be on helping Rhode Islanders get the information they need to solve their student loan problems, my office will be ready, on behalf of mistreated borrowers, to investigate and enforce violations of the student loan standards outlined in this bill.”
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.