Legislators introduce “Student Loan Borrower Bill of Rights”

Tuesday, March 24, 2015

Following President Obama's call for student loan reform earlier this month, a range of bills have been introduced to help address the issues plaguing student borrowers. Today, U.S. Senators Jack Reed (D-RI), Dick Durbin (D-IL) and Elizabeth Warren (D-MA) reintroduced the Student Loan Borrower Bill of Rights (S 840). The bill aims to help struggling student loan borrowers better understand the guidance and resources available to them by setting servicing standards across the industry. This reform will be particularly helpful for borrowers with private student loans, which typically lack the protections that federal loans offer.

"The Student Loan Borrower Bill of Rights will ensure that all borrowers have basic rights and protections as they repay their student loans, and more repayment options if they find that, despite their best efforts, they are unable to make their monthly payments in full,” said Senator Durbin.

“Student loan borrowers should receive clear and accurate information about their loans and repayment options,” said Senator Warren. “Since last year, nearly a million more borrowers have fallen behind on their student loan payments and total student loan debt in this country continues to grow. I’m joining Senators Durbin and Reed in introducing the Student Loan Borrower Bill of Rights to help strengthen protections for student borrowers and to improve accountability for servicers.”

Under the bill, federal and private student loan borrowers would receive six basic rights, and servicemembers and veterans would receive additional resources – a personal liaison that will be trained in advising the borrowers on the resources available to students that served in the military.

The six Student Loan Borrowers' rights are:
1. The right to have options such as alternative payment plans to avoid default.
2. 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.
3. The right to know your loan’s servicer and who to reach out to when there is a problem.
4. 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.
5. The right to fairness, like grace periods when loans are transferred or debt cancellation when the borrower dies or becomes disabled.
6. The right to accountability, including timely resolution of errors and certification of private loans.