California Inches Closer to Having a Law to Protect Student Borrowers
On Tuesday, the California assembly passed a bill that seeks to protect people holding student debt in the U.S.
“The Student Borrower Bill of Rights,” introduced by Mark Stone, who represents the 29th California Assembly District, was passed by an initial vote of 59 to 15, Yahoo Finance reported.
If the bill passes through state Senate committees and eventually a final floor vote, California will become the first state in the nation that offers student loan borrowers the same comprehensive protections that consumers with mortgages and credit cards enjoy.
“We have seen the federal government refuse to protect student borrowers and California has led the charge to fulfill this role,” Stone said in a statement while introducing the bill in March.
The bill follows a study conducted by the American Financial Benefits Center (AFBC) in 2018, wherein researchers found that seven candidates in California who were running for Congress that year owed at least $10,000 in student loans. Eric Swalwell, representing California’s 15th congressional district, had a student loan burden of $100,000 and does not own a home because he has not been able to pay off his debts.
The bill ensures that individuals with student loan debt are given reliable information, quality customer service, and meaningful access to repayment and forgiveness programs, and seeks to end abusive practices by the student loan industry.
To elicit transparency from the student loan industry, the bill also creates new rules for student loan companies, a new Student Borrower Advocate in California and creates special protections for military families, teachers and other public service workers, disabled borrowers, and older Americans.
“Time and again, California has stepped up when Washington has fallen down,” Seth Frotman, executive director of the Student Borrower Protection Center, said after the introduction of the bill in the assembly. “Now, as the federal government turns its back on student loan borrowers, California can once again lead the nation by fighting for borrowers’ rights.”
Frotman was referring to a new set of rules proposed by Secretary of Education Betsy DeVos in 2018, which critics say would make it practically impossible for students who have been defrauded by higher education programs to cancel their debts.
In December, a federal judge even ruled against the Department of Education for delaying the implementation of key Borrower Defense Regulations, aimed at providing relief to debt-ridden students defrauded by higher education programs.
While ruling in favor of 19 states and two former students, the judge alleged DeVos of “improperly” postponing the Obama-era regulations which governed the “borrower defense to repayment.”