Education Minnesota and its allies have been working on legislation that would protect and support those who take on education debt for years, and this year that effort turned into a new law—the Student Borrower Bill of Rights.
“Student loan borrowers like me need someone on our side to protect us from abuses by loan servicers and lenders,” said Sarah Rother, a Chaska educator during a 2019 legislative hearing on the bill. “We need to have a student loan watchdog making sure those who take out student loans have standard consumer protections from misinformation, customer service failures and discriminatory practices.”
The SBBOR will require student loan servicers such as Navient and FedLoan Servicing, the multi-million dollar corporations who serve as intermediaries between borrowers and lenders, to operate in Minnesota under common-sense rules that are being adopted by other states and that we hope will be adopted nationally.
Student borrowers will now have basic protections in place, such as:
Loan servicers will be required to communicate information about loans and repayment in a timely and accurate fashion. Borrowers will now be notified if and when a loan is transferred and to whom.
Borrowers must now be evaluated for repayment options that take income into account, making it easier for people to afford payments while staying on track and protecting their credit. Loan servicers will be required to determine if a borrower could benefit from forgiveness options.
Borrowers will be subject to an additional variety of consumer protections that level the playing field and make it possible for people with student debt to not just repay their loans but do so in a way that does not hurt their chances at home ownership, planning a wedding or starting a family—all decisions that borrowers are putting off because of the crushing weight of education debt.
Student loan servicers have been sued by the American Federation of Teachers, Consumer Finance Protection Bureau and states all over the country for taking advantage of borrowers and making it for systematic and widespread misinformation and deceptive practices that will now be unlawful in Minnesota.
The SBBOR was part of the commerce bill passed this legislative session. The SBBOR had bipartisan support and was authored by Rep. Zack Stephenson and Sen. Zach Duckworth. Stephenson has led on this effort the last three sessions, making sure there was awareness of the challenges Minnesotans face in paying back loans and receiving loan forgiveness.
Minnesota becomes the fifteenth state in the nation to pass a borrower’s bill of rights.
Minnesota is also ranked fifth in the nation for the amount of student debt we carry per-person at $37,492 for state college students, according to the Student Borrower Protection Center. Minnesota’s outstanding debt burden is $29.1 billion.
As this legislation was passed, more information has been reported as to why it is so important.
A report issued in June by the national Consumer Finance Protection Bureau outlined ongoing unfair, deceptive and abusive acts that loan servicers commit that prevent borrowers from accessing information that allow them to access loan forgiveness for 10 years of public service from a long-standing federal program, Public Service Loan Forgiveness.
For example, many essential workers that have been critical to our well-being during the COVID-19 pandemic are public employees. Under federal law, many should have been presented with information on how to access Public Service Loan Forgiveness.
The report found that servicers engaged in a deceptive act or practice by advising some borrowers they could not become eligible for this program, denying relief to too many. The SBBOR will now help provide relief should such deceptive practices take place in Minnesota.
This legislation was born from Education Minnesota’s Degrees, Not Debt program and the stories of educators like Rother and Verlena Bradley, an elementary teacher in Saint Paul.
“I have had to deal with unaccountable and abusive loan servicers,” Bradley said in a 2019 legislative hearing about the bill. “When I try to call loan servicers to get my questions answered, sometimes I’m on hold for more than 30 minutes only to be talked down to by a so-called customer service representative and not get my issue resolved. I’ve been misled into taking out student loans with high interest rates with little to no information on the terms of the loan. Then I found out companies were selling my loans to each other, making it difficult to find out who I owe.”
Education Minnesota’s Degrees, Not Debt program now includes trainings on MEA Online that members can take at their own pace. Education Minnesota staff can assist members in navigating their loans, what forgiveness options may be available and how to work through the forgiveness process.