BOSTON — The Massachusetts Senate passed a student loan “bill of rights” Wednesday aimed at reducing predatory lending practices in the commonwealth.
“This bill touches almost everyone in the state,” said Sen. Eric P. Lesser, D-Longmeadow, who filed the bill that passed in a 36-0 vote. He said the legislation will provide state-level protections for student borrowers in response to a rollback of federal safeguards last year.
“We’ve heard these really awful stories of people being taken advantage of,” Lesser said.
One of those stories came from a fellow legislator and supporter of the bill, Rep. Natalie Higgins, D-Leominster, who described a time when, to her surprise, a lending company removed $1,000 more than she expected from her bank account, making her nearly miss payments for other bills.
But Higgins said she was lucky. She was able to resolve her problem because of knowledge and experience she has that others don’t. She knew where to turn.
One part of the student loan bill tries to help others do that by creating a student loan ombudsman within the office of the attorney general. Lesser described the office as a “one-stop shop for students to know where they can turn when they need help with their student loan.”
The idea is that someone in a situation like Higgins’ could get help, whether they’re trying to understand the terms of their loan or want to file a formal complaint.
The bill would also require student loan servicers to obtain a license to operate in the state.
“In the Commonwealth of Massachusetts, you need a license to sell a car, you need a license to cut hair, you need a license to perform manicures and pedicures, but apparently in Massachusetts you don’t need a license to lord over a student with $125,000 in pending loan balances and to really control what for a lot of people is the most important and most consequential financial decision,” Lesser said.
The consequences of student loan debt include delayed home ownership, delayed marriage and family-building, and deterrence from public service jobs.
Additionally, the new law would prohibit “unfair methods of competition or unfair or deceptive acts or practices” by student loan servicers, and allow the state to revoke licenses and impose fines on lenders that violate consumer protection and banking laws.
Christine Lytwynec writes for the Gazette from the Boston University Statehouse Program.