Durbin Introduces Student Loan Borrower Bill of Rights
Legislation Will Reform Disclosure and Servicing Standards for Both Federal and Private Student Loans
[CHICAGO] – U.S. Senator Dick Durbin (D-IL) today announced that when the Senate reconvenes next week he and U.S. Senators Elizabeth Warren (D-MA) and Barbara Boxer (D-CA) will introduce legislation to ensure struggling student loan borrowers understand the full range of repayment options and resources available to them and are treated fairly by the financial institutions servicing their loans.
“Student loan debt has tripled over the last decade with more than 40 million borrowers owing about $1.1 trillion on their student loans and student loan debt now surpasses credit card debt. This generation’s college graduates begin their adult lives with $25,000 or more in debt weighing them down,” Durbin said. “With student loan debt far outpacing the rise in starting salaries, many of these borrowers find they are unable to make their monthly payments. When lenders refuse to work with them on a repayment plan, they begin a downward spiral that is difficult to turn around. That debt keeps them from being able to purchase homes, cars or other goods which fuel our economy. That’s why, when I return to Washington next week, I will introduce the Student Loan Borrower Bill of Rights to help those struggling with loan debt. Every borrower should have basic protections when it comes to their student loans.”
A recent report by the Consumer Financial Protection Bureau revealed that servicing standards are in need of reform to ensure borrowers are informed and can access basic information about their loans. Though many students hold federal student loans with strong consumer protections, a growing number take out private loans that carry no limits on interest rates and offer few, if any, alternative repayment plans. In some cases, even federal student loan borrowers are unaware of options like income-based repayment and public service loan forgiveness. Payments are sometimes misallocated to loans with lower interest rates, preventing borrowers from paying loans off quickly, and borrowers report significant challenges in resolving errors on their accounts in a timely manner.
“Borrowers are already struggling to make ends meet as they graduate with debt that surpasses their annual wages,” Durbin said. “These borrowers and their families should not have to face additional costs because they cannot resolve errors quickly or gain access to programs meant to help them. My bill will ensure that all borrowers will have access to these basic rights and protections.”
Durbin’s bill provides six basic rights for all federal and private student loan borrowers:
- 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 bill places a special focus 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.