PROVIDENCE, R.I. (WPRI) – The push to protect consumers who have student loan debt continues to gain traction at the state house.
On Tuesday, the Senate Finance Committee heard testimony on the proposed Student Loan Borrowers Bill of Rights, which is now part of Governor Gina Raimondo’s budget plan.
Kara Humm faithfully paid her student loans for ten years and believed the remaining balance would be forgiven in January of this year through the public service loan forgiveness program.
A few years ago, the public defender discovered dozens of her payments didn’t qualify for the program.
“There’s just no end in sight and there’s no one you can talk to,” Humm told Call 12 for Action.
Humm is one of 133,000 Rhode Islanders facing a combined $4.5 billion in student loan debt, according to R.I. General Treasurer Seth Magaziner, who is championing the proposed Student Loan Borrowers Bill of Rights.
“Abuses by the loan servicers are widespread,” Magaziner said. “It [the bill] establishes standards for student loan servicing and it gives a place for people to go if their servicer messes something up.”
“I think it would just hold these companies accountable,” Humm added.
Last month, the House Finance Committee held the bill for further study. There was no testimony against it, but the R.I. Bankers Association requested an amendment to exempt federal and state-chartered banks from the legislation.
The Student Loan Servicing Alliance did not respond to a request for a comment on this report but previously told Eyewitness News the group wants to work with states to better educate borrowers.
Separately, federal lawmakers are also considering legislation that would revamp the student loan industry.
Among the proposed changes, the Student Loan Borrower Bill of Rights Act of 2019 would require improved disclosures to borrowers when a loan is sold or transferred and if the borrower is eligible for an alternative repayment plan.
The legislation would also standardize the application of loan payments and limit when borrowers can face late fees.
“Too often students and parents don’t realize the implications of a loan,” said U.S. Sen. Jack Reed, a co-sponsor of the legislation. “This bill is a step toward fixing that situation by creating strong consumer protections and support for borrowers when they deal with powerful financial institutions.”
Sen. Elizabeth Warren is also a co-sponsor of the bill.
Sen. Sheldon Whitehouse introduced another bill that would ensure public servants receive credit for all payments toward loan forgiveness, even if their loans ended up in the wrong repayment plans.
Nationwide, 40 million Americans are facing $1.5 trillion in student loan debt.