If you’re a student loan borrower in the State of California, you’re getting closer to have a bill of rights. This bill is called AB376, or “Student Borrower Bill of Rights” and was passed by the California assembly on Tuesday. This is really the first set of rules being passed through a state’s legislature protecting students who hold loan debt.
It was passed 59-15 and has to get through the Senate and a final floor vote before it’s officially law. According to the Policy Director of the Student Borrower Protection Center, Mike Pierce, the bill must be passed by September 13th in order to reach Governor Newson’s desk to be signed into law.
While the bill is set to give students who borrow money for college some protection, it’s also a shot at President Trump. The vote “demonstrates California’s ongoing commitment to protecting student loan borrowers in the face of resistance from the Trump Administration… [which] has dismantled protections for student loan borrowers,” Seth Frotman, the former top student loan official at the federal Consumer Financial Protection Bureau.
“Student loan borrowers defaulting every 28 seconds, I urge the California State Senate to act quickly and advance this critical legislation,” continued Frotman. More states are looking to follow suit as Trump continues to dismantle any protections students have against fraud and this growing student loan debt crisis.
Rules of Bills
There are several ways this new bill hopes to help students. It will:
-Ban loan servicing practices it deems are ‘abusive’.
-Prevent loan servicers from taking advantage of borrowers by confusing them on purpose.
-Keep the repayment system fair.
-Improve record-keeping standards.
-Better staff training.
-Forces servicers to be honest about better and more affordably repayment options.
-Creates an advocate for the students where complaints can be lodged against lenders.
“Ultimately, (this bill) hopes to create the first comprehensive, industrywide ‘rules of the road’ for the student loan industry, offering student loan borrowers the same kinds of strong, enforceable protections available to consumers with mortgages and credit cards,” the SBPC explained.
“Unlike consumers with mortgages and credit cards, student loan borrowers currently have few protections when interacting with their loan servicers,” Consumer Reports, which also co-sponsored the bill, said in a press release. “Student loan servicers are generally prohibited from engaging in unfair or deceptive practices, like any other business in California, but they are not currently subject to industry-specific standards.”
In California alone, over 3.7 million people have student loan debt. They owe close to $125 billion. In the U.S. as a whole, 44 million students owe $1.53 trillion. This is a number that continues to grow and doesn’t look to be slowing down anytime soon. Look for more states to pass these types of rules to help students where the federal government fails to get involved.
