BOSTON – The Massachusetts State Senate voted on Wednesday to pass the “Student Loan Bill of Rights,” giving greater protections to student loan borrowers in disputes with companies servicing their loans.
The bill, S.2380, An Act establishing a student loan bill of rights, requires student loan servicers to be licensed companies with the state Division of Banks, and empowers state officials to investigate the servicers and take action against those that violate the state’s banking and consumer protection laws.
The bill also supports the ongoing work of Attorney General Maura Healey’s Student Loan Assistance Unit by establishing a Student Loan Ombudsman in the Attorney General’s Office, who will lead efforts respond to complaints from student loan borrowers and help them understand their rights.
“Each year, young people in our district and across this country put themselves into tens of thousands of dollars or more of debt to further their education. This legislation takes important steps to protect students during the borrowing process, offering greater information at the state level and ensuring that lenders maintain transparent and fair practices,” said Senator Pat Jehlen (D-Somerville).
Under the bill, student loan servicers would have to apply for licenses from the state, which the Commissioner of Banks could revoke if the servicer is engaged in abusive practices such as overcharging students or steering them into costlier repayment plans to make higher profits.
Student loan servicers that break state licensing requirements or take advantage of students could be fined and forced to repay student borrowers under the bill.
The bill now goes to the State House of Representatives.