Vitelli introduces Student Loan Bill of Rights to prevent predatory lending practices in Maine

AUGUSTA — A bill introduced by Sen. Eloise Vitelli, D-Arrowsic, would protect Maine student loan borrowers from predatory lending practices. LD 995, “An Act To Establish a Student Loan Bill of Rights To License and Regulate Student Loan Servicers,” received a public hearing before the Legislature’s Health Coverage, Insurance and Financial Services Committee on Tuesday.

Senator Eloise Vitelli, with Seth Frotman of the Student Borrower Protection Center and Diane Standaert of the Center for Responsible Lending.

“Federal and private student loan borrowers of all ages report difficulty getting the information they need — accurate, timely, honest information, that enables them to responsibly repay their loans and satisfy their obligations,” said Sen. Vitelli.

The student debt crisis is one of the central challenges holding back Maine people and the economy. Data indicates that the student debt burden has led to fewer young people purchasing homes and saving for retirement. This crisis has also added up for seniors. In 2017, an estimated 21,000 Maine seniors had student loan debt, an increase of 46 percent from 2012. Predatory practices of student loan servicers only exacerbate this crisis.

“Mainers of all ages have come to me to share their stories about problems with unscrupulous student loan companies,” said Sen. Vitelli. “It’s clear to me that Maine needs to make sure these companies have proper oversight to help protect borrowers.”

Sen. Vitelli’s Student Loan Bill of Rights would establish a system for the state to oversee student loan servicers who do business in Maine. The bill creates a registration procedure for lenders, requires lenders to comply with federal law and identifies prohibited acts for lenders — including misleading student loan borrowers and fraud. It also allows state officials to investigate student loan servicers.

Maine already oversees other loan servicers, including mortgage lenders and payday lenders.

“Too many borrowers in Maine are suffering needlessly because they cannot access the programs designed to protect them and that services are paid to help them with,” said Seth Frotman, who previously served as the Student Loan Ombudsman at the Consumer Financial Protection Bureau and now serves as executive director of the Student Borrower Protection Center. “These are teachers who cannot access teacher loan forgiveness. These are servicemembers who cannot access military consumer protections. These are nurses, cops and social workers who cannot access the protections they were promised through service to our communities.”

“All across the country student loan companies are taking advantage of working people trying to secure a better future for themselves and their families. That is despicable,” said Senate President Troy Jackson, D-Allagash. “Student loan companies are changing the rules as folks pay off their debt, preventing families from getting out of debt and finding stable ground. This bill is about giving all Mainers a fair shake.”

LD 995 faces further action before the committee and votes before the Maine House and Senate.