Lawmakers push for student loan borrowers' protections
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Sen. Eric Lesser of Longmeadow.
With new rules being put in place to protect student loan borrowers from unfair lending practices, state Sen. Eric Lesser urged the Division of Banks on Wednesday to reduce the burden of proof that proposed regulations would put on Attorney General Maura Healey's office to bring a claim against a student loan company.
Lesser, who helped pass a "Student Loan Borrower Bill of Rights" law, testified in front of Banking Commissioner Mary Gallagher about the division's emergency regulations filed July 1 as part of the new law.
The Longmeadow Democrat suggested that the regulations go too far in requiring borrowers to prove that their loan servicer "knowingly or recklessly" engaged in unfair practices before a claim could be brought.
"This is an unreasonable burden to place on the attorney general’s office, who is charged with seeking protections from student loan servicers, and could lead to many meritorious opportunities for enforcement being dropped or not pursued at all," Lesser said.
Winston Berkman-Breen, deputy director of advocacy at the Student Borrower Protection Center, recommended that the rules either omit a standard of proof or be reduced to "negligence." "This is a higher bar than necessary for a financial service provider," Berkman-Breen said about the "knowingly or recklessly" standard.
Gov. Charlie Baker signed the new law in January 2021 requiring the licensure of student loan servicers and giving regulators new tools to protect student borrowers from unfair lending practices.
Supporters said the timing of the new law taking effect is particularly important with the pause on federal student loan payments put in place during the COVID-19 pandemic set to expire on Oct. 1.
Thousands of student borrowers are also likely to see their loan transferred to another servicing company after one of the nation's largest loan servicers - Pennsylvania Higher Education Assistance Authority and its subsidiary FedLoan Servicing - announced plans to end its contract with the U.S. Department of Education.
"The purpose of this law is to help level the playing field between student loan servicers and student loan borrowers by giving regulators powerful new tools to protect borrowers," Lesser said, urging the Division of Banks to make the new rules "as strong and as broad as possible."
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