Student Loan Borrowers Bill of Rights Could Happen in Your State
A bill of rights for student loan borrowers may come up in your state.
Here’s what you need to know – and what it means for your student loans.
As student loan borrowers wait for the prospect of a large-scale student loan cancellation, there is a growing trend that could help provide student loan relief. it’s called a student loan borrower’s bill of rights. States like California, Colorado, Connecticut, District of Columbia, Illinois, Maine, Massachusetts, Maryland, New Jersey, New York, Rhode Island, Virginia, and Washington have policies in place to help student borrowers. This can be especially important for student loan borrowers, as federal student loan payments are expected to resume as of October 1. Here’s how they work and what they mean for your student loans:
Student loans: borrower’s bill of rights
A student loan borrower’s bill of rights helps protect student loan borrowers from deceptive or fraudulent practices and helps ensure that student loan borrowers are fairly affected when dealing with their student loan repayments. In 2020, Governor Gavin Newsom signed a law to establish a bill of rights for student loan borrowers. This happened a year after New York City passed the Student Loan Servicing Act. Here is an example of the California Student Loan Borrowers Bill of Rights and the New York Student Loan Borrowers Bill of Rights:
California Student Loan Borrower Bill of Rights
In California, student loan borrowers have the following rights, among others:
- prohibits abusive practices by student loan officers;
- prohibits unfair or deceptive practices, as well as the misrepresentation or omission of important information;
- ensures student loan payments are processed accurately and on time
- caps late fees at 6% of the overdue amount;
- requires student loan services to process income-based repayment plans accurately and quickly;
- expand procedures for processing written requests from student loan borrowers; and
- creates a position of Student Loans Ombudsman to represent the interests of student borrowers and help resolve consumer complaints.
New York Student Loan Borrower Bill of Rights
In New York, student loan borrowers have the following rights, among others:
- entitlement to a detailed financial aid letter from New York schools;
- clear and precise information about your student loans, including all the conditions;
- information on available student loan repayment plans;
- student loan services that treat student loan borrowers with respect and do not engage in deceptive practices of providing false information;
- accurate reporting of student loan payments to credit bureaus; and
- rapid responses to your complaints
How to Complain About Your Student Loans
If you need to make a complaint about your student loans or your student loan manager, make sure it’s in writing. You can contact one or more of the following:
- Your lender
- Your student loan manager
- Your state attorney general
- The US Department of Education
- Consumer Financial Protection Bureau (CFPB)
- Federal Trade Commission (FTC)
- State Department of Education or Department of Financial Services
Student loans: towards a federal charter of rights for student loan borrowers
Expect more states to implement a bill of rights for student loan borrowers. What does this mean for your student loans? A student loan borrower’s bill of rights means you’ll have more protections as student loan borrowers and you can expect student loan departments to be held accountable if they engage in unfair practices. or misleading. The goal is to make the process of borrowing and repaying student loans easier and smoother for borrowers. Many borrowers and student loan advocates have also called for a federal bill of rights for student loan borrowers. Senator Elizabeth Warren (D-MA), Senator Dick Durbin (D-IL) and other members of Congress have proposed legislation to establish a bill of rights for student loan borrowers. For example, The Student Loan Borrowers Bill of Rights Act, 2019 would have required student loan managers to implement uniform service and disclosure standards for private and federal student loans by amending the The Truth in the Loan Law. This legislation, if passed, would limit late fees on student loans, improve private loan protection, improve the speedy resolution of student loan service errors, and improve disclosures when your student loan is sold, among other benefits. .
Student loans: next steps
Student loan payments will resume from October 1, unless President Joe Biden postpones student loan payments and extends the federal moratorium on student loan payments. By suspending student loan payments for eight months, Biden has given student loan officers more time to train their employees and implement improved standards of performance and customer service. That said, Warren says student loan borrowers are not prepared to restart student loan payments. What impact will this have on student loan borrowers? According to a recent survey, 90% of student loan borrowers say they are not ready to resume student loan payments. The US Department of Education wants to ensure a smooth transition to student loan payments, which means student loan services must be prepared if student loan payments start again on October 1. For now, in addition to the US Department of Education, states have also been leading the charge of overseeing student loan services and providing additional protection to student loan borrowers. Biden has championed more protections for student loan borrowers and pledged to strengthen the CFPB. The US Department of Education, with the hiring of Richard Cordray, will step up oversight of student loan officers to ensure student loan borrowers get a fair reward when it comes to their student loans . State attorneys general will also continue to regulate student loan managers. For example, Massachusetts Attorney General Maura Healey has filed several lawsuits against student loan managers such as Navient and FedLoan Servicing (who announced they would end their federal student loan servicing contract) to keep them. responsible for unfair practices towards student loan borrowers.
If you have student loans, make sure you have a solid plan for paying off your student loans. Here are some potential options to consider: