Student Loan Borrower’s Bill Of Rights Would Reform Disclosure And Servicing Standards

(Michael)

In recent weeks, legislators have introduced a range of bills aimed at addressing student loans and revamping the laws governing those debts. Today, that push continued with the reintroduction of a bill that would ensure student borrowers are treated fairly and understand the range of options at their disposal.

The Student Loan Borrower’s Bill of Rights – which was first introduced last year, but failed to move forward – was introduced today by Senators Dick Durbin of Illinois, Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island.

The bill, intended to provide reform disclosure and servicing standards for student loans, comes just weeks after President Obama introduced his own Student Aid Bill of Rights.

That measure establishes two centralized websites allowing borrowers to view their loan information more easily, while creating mandates for servicers to more clearly disclose changes to the debt and provide fair, affordable payment requirements.

“More must be done to help the nearly 40 million Americans holding some $1.2 trillion in student loan debt,” Dick Durbin says in a statement. “The Student Loan Borrower Bill of Rights will ensure that all borrowers have basic rights and protections as they repay their student loans and more repayment options if they find that, despite their best efforts, they are unable to make their monthly payments in full.”

Under the newly introduced bill, federal and private student loan borrowers would be given six basic rights, the legislation’s authors say in a statement [PDF].

Rights afforded by the proposed measure include:

• The right to have options such as alternative payment plans to avoid default.

• The right to be informed about key terms and conditions of the loan and any repayment options to ensure changing plans won’t cost more.

• The right to know your loan’s servicer and who to reach out to when there is a problem.

• The right to consistency when it comes to how monthly payments are applied. Lenders and servicers should also honor promotions and promises that are advertised or offered.

• The right to fairness, like grace periods when loans are transferred or debt cancellation when the borrower dies or becomes disabled.

• The right to accountability, including timely resolution of errors and certification of private loans.

The Student Loan Borrower’s Bill of Rights also puts a special emphasis on servicemember and veteran borrowers by requiring loan servicers to provide each borrower with a liaison specifically trained in the benefits available to military borrowers.

Recent legislation intended to alleviate the burden felt by student loan borrowers include measures that would allow borrowers to discharge private student loans in bankruptcy and would allow loan interest rates to be refinanced.

Durbin, Warren, Reed: Bill Would Put Student Loan Borrower Bill of Rights Into Law [Sen. Dick Durbin]