Senate approves Vitelli’s bill to curtail predatory student loan practices

AUGUSTA — The Maine Senate approved a bill from Sen. Eloise Vitelli, D-Arrowsic, that would protect Mainers from predatory student loan practices in an initial vote of 20-15 on Thursday.

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,” which strengthens consumer protection laws when it comes to student debt.

“Student loan debt has become one of the defining problems facing a generation of students and graduates in Maine and across the country,” said Sen. Vitelli. “If we’re serious about retaining and attracting young people in our state, we need to address the student debt crisis that’s already holding back a whole generation of young adult. This bill provides one flank in the attack against crippling college debt.”

This legislation 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 lenders, which requires they submit an application to the Superintendent Maine BCCP for approval; it requires lenders to comply with federal law and identifies prohibited acts for lenders — including misleading student loan borrowers and fraud; and finally, it allows the Superintendent to investigate student loan servicers to ensure compliance with the law.

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.

Too many borrowers are faced with flat-out rejection when they seek refinancing or forgiveness through current programs. As a result, high payments and high-interest rates are crushing borrowers and leaving them no choice but to default or continue paying unsustainable amounts of money from their monthly budget. More than 3,800 complaints have been submitted to the CFPB, documenting refusals from lenders to refinance or consolidate loans.

LD 1507 will now go to the floor of the House for a vote.

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