SACRAMENTO—Assemblymember Mark Stone (D-Monterey Bay) has introduced the Student Loan Borrowers’ Bill of Rights to protect borrowers from unfair or confusing loan practices that can create crushing, insurmountable debt for students and create a drag on the economy. Assembly Bill 2251, sponsored by Attorney General Kamala Harris, requires loan servicers to provide reliable information about loan repayment options, quality customer service and fair treatment, and meaningful access to federal affordable repayment and loan forgiveness benefits.
“Students pursue higher education to develop skills that help them go into careers and achieve financial independence. But to finance that education many students must take out loans, which do not always have clear terms, consumer-friendly service, or access to federal repayment and forgiveness options,” said Stone. “The Student Borrowers’ Bill of Rights will create a consumer-friendly standard that provides new protections for student loan borrowers.”
“Students in California, and nationwide, suffer from a lack of transparency and oversight in the student loan industry,” said Attorney General Harris. “I am proud to sponsor the Student Borrowers’ Bill of Rights alongside Assemblymember Stone to build on the legacy we achieved for homeowners and create strong student loan servicing standards to protect our students with mounting debt as they pursue higher education.”
In the United States, more than 40 million people owe some amount of educational loan debt, with over 4 million of the borrowers in California. Nationally, the debt currently exceeds $1.2 trillion dollars, with $112 billion owed in California.
“More California students every year need loans to help pay for college, but they can’t count on getting complete, accurate, and actionable information from their loan servicers. This bill starts an important conversation about how California can help make sure that students get the help they need to stay in good standing on their loans whenever possible,” said Debbie Cochrane, Research Director of the Institute for College Access & Success.
Under existing federal law, there are no consistent, market-wide standards for student education loan servicing. As a result, students may borrow loans from servicers who discourage payment plans that are consumer friendly, fail to respond to questions or payment processing errors, and fail to provide sufficient information regarding payments, benefits, interest rates, and other charges. The Student Loan Borrowers’ Bill of Rights creates a much-needed standard for California student loan borrowers.
The measure requires that student borrowers possess explicit information about the terms of their loans and options for payment plans and requires servicers to adhere to this new California standard.