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Student Loan Borrower Bill of Rights

The student loan market currently sits at $1.7 trillion—larger than the markets for car loans or credit cards, and second only to mortgages. Student loan borrowers each owe, on average, more than $30,000 in student loan debt. This unprecedented level of debt has a huge impact on the financial futures of residents of every state in the country. 

When borrowers struggle to repay student loan debt, it can impact their ability to buy homes, start businesses, build wealth, and save for retirement. But the impact is even broader—student debt drives income, wealth, and racial inequality in communities across the country. 

It is painfully clear that the federal government has failed to control the student debt crisis. Last year, more than one million student loan borrowers defaulted on a federal student loan. That’s one default every 26 seconds, despite programs in place that should make it nearly impossible to default on a federal student loan. People deserve to have their government leaders—the ones that that know their community, their concerns, and their life experiences—looking out for them.

Since 2014, a dozen states—California, Colorado, Connecticut, District of Columbia, Illinois, Maryland, Maine, New Jersey, New York, Rhode Island, Virginia, and Washington—have passed legislation to establish a Student Loan Borrower Bill of Rights. At least another dozen additional states are on track to pass similar legislation by the end of 2021.

A Student Loan Borrower Bill of Rights offers critical protections seen in near every other consumer finance market:

Set Standards

The law should be clear: student loan companies cannot pad corporate profits at the expense of borrowers. States need to set standards for handling the millions of student loan bills that come due each year, protecting borrowers when paperwork gets botched, when payments get lost, or when loan companies change. These safeguards exist for homeowners with mortgages and consumers with credit cards, but student loan borrowers lack the same basic protections.

Ban Abusive Practices

States need to create new, enforceable rights for all student loan borrowers, including borrowers who have been the victims of industry abuses. State law should ban abusive practices, ensuring these companies never take unreasonable advantage of borrowers who reach out to their student loan company for help. To hold these companies accountable, individual borrowers, regulators, and law enforcement officials should be able to enforce borrowers’ rights under state law.

Demand Transparency

Student loan companies thrive in the shadows, leaving borrowers, regulators, and law enforcement officials without the data they need to scrutinize individual companies’ practices and spot emerging risks. By shining light on the system through regular supervision, states can gain new insight—including when and why student loan borrowers default and where industry has systematically denied borrowers’ rights to affordable student loan payments. Transparency will also help honest companies compete on a level playing field for the first time.

The SBPC is teaming up with those willing to fight to protect borrowers by providing technical expertise, outreach strategy and support, and research exposing the predatory practices that plague the student loan market.

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