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Massachusetts Senate Passes Much Needed Consumer Protections for Student Loan Borrowers
MASSPIRG praised the Senate’s passage today of a vital consumer protection bill, SB 2380, An Act Establishing a Student Loan Bill of Rights, filed by Senator Eric Lesser (Longmeadow).
The bill protects student loan borrowers from unfair, predatory, and deceptive practices of student lending and loan servicing companies. The support for the bill was overwhelming, passing with unanimous support, 36-0.
With the cost of college tuition skyrocketing, more students and families are driven to seek student loans to pay for it,” said Theresa Soldan, a student at Salem State University and Statewide Board Chair of MASSPIRG Students. Data collected by the Institute for College Access (TICAS) shows that in Massachusetts last year, nearly two-thirds of students in an undergraduate program graduated with student debt. This debt amounted to almost thirty-thousand dollars per student on average, representing an astonishing 75% increase since 2004. Massachusetts students have the 11th highest average student debt in the nation, according to TICAS.
"It is critical that we protect our students and student loan borrowers from predatory and unscrupulous loan servicers, said Deirdre Cummings, Legislative Director for MASSPIRG. “The need for state oversight could not be more urgent.”
MASSPIRG praised the senate for passing such an important bill. Student loan servicers have taken advantage of student borrowers by using predatory lending methods that are illegal or unfair - charging exorbitant fees, misrepresenting their products to students, or misleading them into opting for more expensive options. Then, when students can’t pay, they threaten, coerce or harass the borrowers. According to the CFPB, almost two-thirds of the nearly 1,200 complaints filed by student borrowers since the beginning of the year were related to problems with loan servicing.
SB.2380 will protect student borrowers by licensing student loan servicers, holding them accountable for deceptive practices under state law. The bill empowers the Division of Banks and the Office of Attorney general to take action against servicers when they violate the law and establishes a Student Loan Ombudsman office who will resolve disputes, collect and review student loan servicing practices, and inform and protect borrowers.
Similar bills have passed in Connecticut, Washington and Illinois and have been filed in a dozen of other states.
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