Gov. LePage vetoes Vitelli bill to curtail predatory lending practices

AUGUSTA — On Monday, Gov. LePage vetoed a bill from Sen. Eloise Vitelli, D-Arrowsic, that sought to protect Mainers from predatory student loan practices.

“Mainers should not have to jump through hoops just to pay their bills from student loan servicers, which intentionally make it difficult,” said Sen. Vitelli. “Many of the practices exhibited by student-lending institutions are reminiscent of the housing crisis. This is an opportunity to show that we have learned from previous mistakes and will protect borrowers from unethical lending-industry practices. I hope that my colleagues will join me in voting to override this veto.”

LD 1507, “An Act to Establish a Student Loan Bill of Rights To License and Regulate Student Loan Servicers,” creates a “Student Loan Bill of Rights,” a statute that makes several changes within the Maine Bureau of Consumer Credit Protection (BCCP). The amended version of the bill does three things: it creates a registration procedure for loan services, which requires they submit an application to the Superintendent Maine BCCP for approval; it identifies prohibited acts, including misleading student loan borrowers and fraud, and requires loan servicers comply with federal law; and finally, it allows the Superintendent to investigate student loan servicers to ensure compliance with the law.

“The questionable practices we are seeing from student loan servicers take the existing student debt problem and make it worse,” said Sen. Vitelli. “I believe Mainers deserve basic protections to prevent being taken advantage of by large, unregulated financial institutions.”

According to the federal Consumer Financial Protection Bureau (CFPB), more than 40 million borrowers have student loan debt nationwide, with a total volume of over $1.4 trillion of outstanding debt. In Maine, the average student debt load is nearly $30,000, with many Mainers owing far more than that. Predatory lending is only exacerbating this debt crisis.

LD 1507 will now return to both the Senate and House for a veto override vote when the legislature meets tomorrow, May 2. The bill received substantial bipartisan support when it passed through both chambers earlier this month. It will require two-thirds support from each legislative body to overturn the veto.

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