Vitelli’s Student Loan Bill of Rights takes effect

A new law from Sen. Eloise Vitelli, D-Arrowsic, became effective yesterday, Jan. 1. LD 995, “An Act To Establish a Student Loan Bill of Rights To License and Regulate Student Loan Servicers,”  protects Maine student loan borrowers from predatory lending practices.

“It is unacceptable and unconscionable that before this law, student loan borrowers in Maine who were honestly and earnestly trying to pay down their student loan debt could be blocked, misled, manipulated, or lied to by their loan servicers,” said Sen. Vitelli. “This new law provides Mainers necessary – and overdue – protections from unscrupulous loan servicers.”

Sen. Vitelli’s Student Loan Bill of Rights establishes a system for the state to oversee student loan servicers who do business in Maine. The law 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.

“We are already seeing high levels of compliance with the registration provisions of the law,” said Will Lund, Superintendent of the Bureau of Consumer Credit Protection. “A large percentage of student loan servicers are engaged in the application process. In addition, student borrowers and co-signers are quickly becoming aware of our agency’s consumer protection role.”

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

According to a recent study by the credit agency Experian, student loan debt in Maine rose 94 percent from $3.1 billion in 2008 to $6 billion in 2018.

LD 995 passed unanimously in the Legislature and was signed by Gov. Janet Mills on June 20, 2019.