At the end of 2016, there were 44 million Americans with $1.3 trillion in student loan debt. In Massachusetts, the average amount of debt per student is $31,466, seventh highest. As government grants and scholarships have not kept pace with the ballooning costs of attending college, students struggling to pay back their loans become prime targets by student loan servicers that are virtually unregulated in Massachusetts. Abusive debt collection practices add insult to injury for students burdened debt that threatens their long-term economic security. Borrowers who are delinquent on payments or in default on a student loan are especially at risk, which was about 25% of all borrowers in 2015 according to the Consumer Financial Protection Bureau.
My legislation establishing a student loan bill of rights provides strong protections and education for our student borrowers, while holding student loan servicers accountable to higher standards of practice. While legal action against student loan servicer misconduct has been widespread on both the state and federal level, we must establish a protective state framework surrounding debt repayment by student borrowers. This Bill of Rights protects borrowers by: establishing a Student Loan Ombudsman in the Division of Banks to educate students about their rights as borrowers, field complaints about loan servicers, and analyze student loan data for potential regulatory or legislative changes while making all data available through public record; requiring that student loan servicers be licensed in Massachusetts and operate under state-mandated standards of conduct; and giving the Bank Commissioner access to all records and evidence from student loan servicers to conduct investigations and enforce any violation of standards of conduct for the purposes of initial licensing, license renewal, suspension, revocation, or termination.