PROVIDENCE – Gov. Gina M. Raimondo and other Rhode Island officials gathered Monday at the State House Library for a ceremonial signing of the state’s first Student Loan Bill of Rights.
It protects Rhode Islanders through new consumer protections and oversight of student-loan servicing practices.
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The legislation requires student-loan servicers, which track payments and handle debt collections, among other tasks, to register with the state. It also allows state regulators to examine their business practices.
Additionally, it allows the state attorney general and the state Department of Business Regulation to penalize and seek restitution from student-loan servicers who do not heed the new protections. It empowers the attorney general to mediate complaints on behalf of borrowers and enforce violations of the law under the Deceptive Trade Practices Act, the state’s primary consumer protection law.
More than 133,000 Rhode Islanders have a combined $4.5 billion in student-loan debt, according to state officials. They said borrowers have reported being double-charged or incorrectly marked as delinquent in payments, with loan servicers taking months, or even years, to correct mistakes.
Borrowers also are being pushed into repayment schemes that are in the best financial interest of the loan servicer, without regard for whether it is in the best interest of the borrower, officials added.
“We’ve worked hard to reduce the cost of college for Rhode Islanders. We also need to ensure that those who graduate with debt are treated fairly by lenders,” Raimondo said. “The Student Loan Bill of Rights safeguards students by creating clear, strict and transparent regulations for loan agencies, and it ensures that loan agencies are held accountable for their actions.”
General Treasurer Seth Magaziner, Attorney General Peter F. Neronha, legislative leaders and students joined the governor Monday.
“Too many Rhode Islanders who have invested in their education are affected by negligent or deceptive practices by student-loan debt servicers,” Magaziner said. “This law sets standards for the industry to ensure that student-loan borrowers in Rhode Island are treated fairly. It also gives the state tools to investigate borrower complaints and to hold servicers accountable for their actions.”
Neronha said: “Rhode Islanders who took out student loans to pay for college should be protected from loan servicers that put profits ahead of helping people navigate the complicated system. We developed this Student Loan Bill of Rights to create new protections for borrowers and allow the attorney general to enforce them. My Consumer Protection team will be on the front lines, educating borrowers about their new rights, as well as how to submit complaints, so our office can get borrowers the help they need and hold loan servicers accountable.”
In July, Raimondo approved the bill, sponsored by Sen. Dawn Euer, D-Newport, and Rep. Joseph M. McNamara, D-Warwick.
“By several measures, student-loan debt has increased greatly in the last 10 years,” said McNamara, chairman of the House Committee on Health, Education and Welfare. “It has surpassed the amount households owe on auto loans, home-equity loans and credit cards. This legislation will help to address the crisis by establishing oversight of the student-loan process and prohibiting predatory practices.”
Euer said: “The heavy burden of student debt is challenging enough for the majority of college graduates. Incompetent, inefficient, or even deceitful loan servicers should not be allowed to exacerbate their struggles. Student-loan servicers must be held accountable to ensure that they are providing honest, reliable information and services to their borrowers.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
