Chairs Feeney and Chan, Vice Chairs Welch and Livingstone, and members of the Joint Committee on Consumer Protection and Professional Licensure:
My name is Dr. Bahar Akman Imboden, and I am the managing director of the Hildreth Institute, a non-profit organization working towards restoring higher education’s promise of upward mobility.
I am here to share with you a couple highlights from an issue paper, which I have distributed to the committee, on Why Massachusetts Needs its Own Student Loan Bill of Rights.
As you are no doubt aware, with increasing college costs, students’ debt burdens have been growing steadily. While borrowers are already struggling to manage and repay this debt, loan servicing agencies have been, at best, incompetent, and at worst, predatory, knowingly misleading borrowers to increase their own profits.
Navient, one of the largest servicing agencies for instance, openly admitted in a lawsuit that they feel no obligation to act in the interest of the consumer.
The Obama administration had sought to increase oversight of the servicing
industry by establishing clear rules and guidelines for loan servicers to improve customer services, enhance consumer protection, and increase servicers’ accountability.
Regrettably, one of the first decisions made by the Secretary of Education, Betsy DeVos, was to repeal the Obama directives and to order the Consumer Financial Protection Bureau to back off on overseeing the loan servicing industry. In fact, the Student Borrower Protection Center (SBPC) has shown that since President Trump’s appointees assumed control of the CFPB, the agency has not taken a single substantive action to stand up for student loan borrowers.
This situation is alarming and worrisome. According to the Federal Student Aid (FSA) Office’s own reporting, 92 percent of the complaint calls it received included at least one instance of a loan servicer failing to inform a borrower about all available repayment options. Sixty-one percent of the oversight reports included examples of loan servicers not following agency guidelines or adhering the law.
In the face of federal refusal to regulate the loan servicing industry, states have no choice but to enact their own Student Loan Bills of Rights to protect their student loan borrowers from profit-seeking predatory actors. Ten states have already done so, with New York, Maine, Maryland, Colorado, and Nevada joining them in 2019. Other states, such as California, New Jersey, and Rhode Island, are steps away from passing their own Student Loan Bill of Rights.
We stand here today to say: it’s now time for Massachusetts to stand up
and protect its own student loan borrowers!