Stone Introduces Student Loan Borrower Bill of Rights
SACRAMENTO—Assemblymember Mark Stone (D-Monterey Bay) has introduced Assembly Bill 376 which establishes a Student Borrower Bill of Rights, ensuring that individuals with student loan debt are given reliable information, quality customer service, and meaningful access to repayment and forgiveness programs. This groundbreaking legislation will make California the first in the nation to offer student loan borrowers the same comprehensive protections that consumers with mortgages and credit cards take for granted.
In 2016, the California Legislature passed AB 2251 (Stone) which created the first comprehensive regulatory program for student loan servicing in the United States. After a student loan is taken out, loan servicing companies are the ones that communicate with borrowers about payments, account information, refinancing options, and other issues surrounding their loans. California’s student loan servicing program gives the Department of Business Oversight the ability to oversee servicing companies to ensure that they comply with the limited federal and state servicing standards on the books today.
Since then, the federal government has significantly stepped back from their duty to protect consumers. In 2017, Secretary of Education Betsy DeVos rescinded the earlier memo detailing increased borrower protections - and in 2018, the Consumer Financial Protection Bureau closed the office investigating student loan abuses and fraud. And on the heels of Washington’s withdraw, the State of California sued Navient, then the largest student loan company in America, for widespread abuses affecting borrowers at every stage of repayment.
“We have seen the federal government refuse to protect student borrowers and California has led the charge to fulfill this role,” said Stone, “California will keep pushing increased consumer protections because we understand that student loans not only affect the lives of borrowers, but have radiating negative effects throughout the economy. Establishing clear servicing standards will ensure that California borrowers are treated fairly and have the best chance possible at paying off their debt.”
Assemblymember Stone’s Student Borrower Bill of Rights will:
- End abusive practices by the student loan industry.
- Create new “rules of the road” for student loan companies.
- Create special protections for military families, teachers and other public service workers, disabled borrowers, and older Americans.
- Create a new Student Borrower Advocate in California.
- Demand transparency from the student loan industry.
Together, these new consumer protections will give individual borrowers, the California Attorney General and the Department of Business Oversight strong new tools to stand up for student loan borrowers, ensuring that California continues to lead the nation in the fight to end the student debt crisis.
The bill’s sponsors echo Assemblymember Stone’s call for increased consumer protections:
"Time and again, California has stepped up when Washington has fallen down. Now, as the federal government turns its back on student loan borrowers, California can once again lead the nation by fighting for borrowers’ rights," said Seth Frotman, Executive Director of the Student Borrower Protection Center and former student loan ombudsman the Consumer Financial Protection Bureau. "For the millions of Californians trapped in a broken student loan system, Assemblymember Stone's Student Borrower Bill of Rights brings real accountability to a student loan industry ripping off borrowers at every turn."
“Too many students in California are walking away from their higher education pursuits with the crushing burden of student loan debt, some without even acquiring degrees,” said Tom Steyer, President of NextGen America. “Students shouldn’t have to enter the workforce with debt that threatens their economic security, and student loan servicers must act with the best interest of student loan borrowers in mind. That’s why AB 376 is so important – it provides student borrowers with clear rights and ensures they get a fair shake.”
“Student loan servicers play a critical role in the success, or failure, of borrowers’ efforts to repay their debt. They should have to follow basic rules of the road, so that borrowers receive fair and consistent treatment and can access repayment plans or other benefits they're supposed to have by law,” stated Suzanne Martindale, Senior Policy Counsel for the West Coast Office at Consumer Reports.