PROVIDENCE, R.I. (WPRI) — A bill that would create a “student loan bill of rights” to protect borrowers in Rhode Island is now heading to the governor’s desk.
The bill – sponsored by Sen. Dawn Euer and Rep. Joseph McNamara – would require loan servicing companies to register with the state and be scrutinized by regulators. The companies would have to follow certain guidelines, including informing lenders of all their repayment options.
“By several measures, student loan debt has increased greatly in the last 10 years,” McNamara said. “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.”
More than 133,000 Rhode Islanders, including 16,000 senior citizens, have a combined $4.5 billion in student loan debt, according to Treasurer Seth Magaziner, who backs the bill with Attorney General Peter Neronha.
Magaziner said many Rhode Islanders are being double-charged or incorrectly marked as delinquent in payment, with loan servicers taking months, or years, to correct the mistake.
“There is a growing student debt crisis in the country and in Rhode Island,” Magaziner said. “There are borrowers who do everything right and still fall victim to predatory and deceptive practices by the corporations that service their loans.”
Many student loan borrowers are also eligible for the national “Public Service Loan Forgiveness” program but have received incorrect and contradictory information from their loan servicers leading to improper denials of loan forgiveness.
“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,” Neronha said. “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.”