For Immediate Release:
March 3, 2020
Contact:
Matthew Nocella, 202.724.8105 - mnocella@dccouncil.us
Councilmember Grosso introduces bill to strengthen protections for student loan borrowers
Washington, D.C. – Today, Councilmember David Grosso introduced legislation to protect student loan borrowers from abusive practices by lenders and improve the work of the District’s Student Loan Ombudsperson, which Grosso created through legislation in 2017.
“A college education is an important requirement for entry into many jobs and professions, and student loans make college accessible to students from all income levels–but at a cost,” said Grosso. “On average, repayment rates often negatively affect first-generation college students, along with Black and Latinx students who are more likely to fall behind on loan payments and are less likely to pay off their student loans over time. D.C. needs to act to ensure our residents who carry student loan debt are protected.”
Student loan debt has reached crisis level in the United States, with $1.5 trillion worth of debt already accrued nationally. In the District, the average student loan balance is approximately $56,000 while the national rate for the average student borrower is approximately $37,000 of student debt. Due to the gradual increase of school tuition rates, the rise of student loan borrowers is also set to increase, leaving vulnerable populations susceptible to these lenders.
The Student Loan Borrower Bill of Rights Amendment Act of 2020 establishes a Student Loan Bill of Rights that provides borrowers with affirmative protections when submitting written inquiries to their servicers, when splitting single payments across multiple loans, and when their loans are sold or transferred to another servicer. It also prohibits unfair, deceptive, or abusive acts and practices by student loan lenders.
“Because the District of Columbia already prohibits debt collectors, auto lenders, and other loan-based companies from misleading or causing harm to borrowers, this bill would hold student loans lenders accountable to the same standards,” said Grosso.
Grosso also hopes to improve the effectiveness of the District’s Student Loan Ombudsperson by moving it from the Department of Insurance, Securities and Banking to the Office of the Attorney General.
“The Attorney General’s office has been providing many of the same functions of the student loan ombudsperson, including handling complaints, creating and distributing student loan repayment resources, and engaging in community outreach. Moving the student loan ombudsperson to the AG’s office would streamline the complaint referral process when enforcement action is needed while also capitalizing on the existing subject matter expertise of the staff,” said Grosso.
Attorney General Karl A. Racine agrees.
“Nearly a quarter of District residents are under the strain of student loan debt, with a median balance that is 44 percent higher than the national average,” said Attorney General Racine. “Former students struggling to pay off their debt are acutely vulnerable to predatory student loan servicers that make it harder to access debt repayment options—and drive too many residents, especially those in communities East of the River, into delinquency. The Office of the Attorney General strongly supports Councilmember Grosso’s proposal to strengthen protections for student borrowers, and we take this opportunity to remind debt collectors and servicers that our lawyers are ready to defend residents against unlawful practices.”
The Student Borrower Protection Center, nonprofit organization focused on alleviating the burden of student debt for millions of Americans, also endorsed the legislation.
"The District of Columbia is ground zero in the student loan crisis. From breakdowns that deny teachers and public service workers their right to relief, to the enormous disparities devastating borrowers of color, predatory student loan companies are wreaking havoc on the financial lives of some of the most vulnerable residents,” said Seth Frotman, the organization’s Executive Director and former Consumer Financial Protection Bureau Student Loan Ombudsman. “As the Trump Administration chooses to stand with unscrupulous student loan companies, it is more important than ever that the District pass critical new protections for its residents.”
“I would like to thank the Student Borrower Protection Center for their continued advocacy and partnership with my office on this and many other initiatives to protect D.C.’s student loan borrowers, Attorney General Karl Racine for his support and his office’s consumer protection work, and Councilmembers Anita Bonds, Elissa Silverman, Robert White, Brianne Nadeau, and Mary for joining me as co-introducers of this legislation,” said Grosso.
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