Legislation sponsored by Sen. Dawn Euer and Rep. Joseph M. McNamara to protect student loan borrowers and establish oversight of student loan servicers operating in Rhode Island was ceremonially signed by Gov. Gina M. Raimondo today.
“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, chairman of the House Committee on Health, Education and Welfare. “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 a 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 (2019-S 0737A, 2019-H 5936A), titled the Student Loan Bill of Rights and backed by General Treasurer Seth Magaziner and Attorney General Peter F. Neronha, 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.
“We’ve worked hard to reduce the cost of college for Rhode Islanders. We also need to ensure that those who graduate with debt are treated fairly by lenders,” said Governor Raimondo in a press release. “The Student Loan Bill of Rights safeguards students by creating clear, strict, and transparent regulations for loan agencies, and it ensures that loan agencies are held accountable for their actions.”
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.
“There is a growing student debt crisis in the country and in Rhode Island. There are borrowers who do everything right and still fall victim to predatory and deceptive practices by the corporations that service their loans,” said Treasurer Magaziner in a press release. “Today, the Rhode Island General Assembly passed our common-sense legislation that will hold servicers accountable and provide an important resource for Rhode Islanders who are paying off student loans.”
Said Attorney General Neronha in the 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.”
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