From Progress Virginia:
RICHMOND, Va. – By a vote of 40-0, the Virginia Senate today passed Senator Janet Howell’s SB77, the Student Loan Borrowers’ Bill of Rights.
The legislation will add student loan servicers like Navient to the list of financial entities regulated by the state’s Bureau of Financial Institutions. Specifically, the bill prohibits loan servicers from misapplying loan payments, misrepresenting or omitting material information about the terms or conditions of the loan, and providing inaccurate information to credit bureaus.
The House version of the bill, sponsored by Delegate Marcus Simon and Delegate Marcia Price, has already cleared the House.
Navient has been sued by the by the Consumer Financial Protection Bureau, the American Federation of Teachers, and five states for failing to correctly apply payments to borrowers’ accounts, reporting loans incorrectly to credit bureaus, deceiving borrowers about cosigner release requirements, and pushing borrowers who are struggling into forbearance instead of into income-driven repayment plans.
“In Virginia, we have something called the Bureau of Financial Institutions, which regulates financial providers like banks, credit unions, mortgage lenders and even payday lenders,” said Senator Howell. “Virtually every other type of debt is regulated in Virginia, except student loan debt. This lack of regulation is egregious given that we have over 1 million borrowers in Virginia who are collectively carrying over $41 billion in student loan debt. Student loan debt is also unique in that it can’t be discharged in a bankruptcy. Now we can’t change the federal bankruptcy laws, but we can regulate these student loan servicers to ensure we’re protecting our borrowers from shady practices.”
“As a real estate attorney, I’ve directly seen how student loan debt is preventing millennials from buying homes,” said Delegate Simon. “The student loan crisis is bad for the economy, bad for borrowers, and bad for everyone. We’ve been trying to pass this bill for five years. It is a good day for Virginians who have sought to better their lives through education.”
“As a Virginian with student loan debt myself, I personally can attest to why this bill is important,” said Delegate Price. “We are in a student debt crisis. All borrowers, including first generation college students and borrowers from communities of color, deserve accurate information about their loans. We want Virginians to invest in their education and should they need a loan to do so, we want it to be in a fair and transparent process.”
“Progress Virginia has been advocating for this long-overdue legislation for years,” said Anna Scholl, executive director of Progress Virginia. “We all know higher education is the key to the American Dream, but that dream remains out of reach for millions of Americans saddled by student loan debt. The Student Loan Borrowers’ Bill of Rights will help Virginians make more informed decisions about their loans so that they can get out of debt faster.”
“My first experience with Navient was when I was 18 years old,” said Katlyn Weiser, who is preparing to graduate from George Mason University. “I was finishing my freshman year in college when my neighbor suggested to me that I begin thinking about my future repayment plan. First of all, I had never heard of a loan servicer. Given my status as a first-generation college student, I was essentially on my own in navigating these confusing, and what I would soon learn to be, predatory waters. The agent I spoke to immediately recommended forbearance, another word in which I hadn’t heard of. It sounds great in theory, especially to an 18 year old. There is a way that I won’t have to pay those loans right out of college? Yes, sign me up. Luckily for me, I would come to learn that forbearance was not the best option. But unfortunately, for a lot of students in my situation, they trust their servicer and find themselves trapped in this devastating situation.”
“Borrowers should be able to turn to their loan servicers to understand the terms of their loans, but I could not have navigated that process without the support of my union,” said Alexa Severo, a second-grade teacher at Sugarland Elementary in Sterling who holds degrees from Christopher Newport University and George Mason University. “When servicers aren’t transparent, low-income and first generation college students, whose parents may not have the knowledge or experience to help navigate the system, disproportionately suffer. This legislation will help people like me get the information they need to make the best decisions about their loans so that they can get out of debt faster.”
“For too long, student loan servicers have been largely unregulated, and borrowers have been paying the price,” said Jared Calfee, executive director of Virginia21. “Students of all ages and backgrounds can have their future compromised by crippling debt, and when their loans are mismanaged, the negative impact can be permanent.”
“This legislation will help prioritize the interests of educators over loan servicers,” said Tina Williams, president of Fairfax County Federation of Teachers. “Educators in Virginia face many barriers to entering the field and women and people of color are some of the first to be targeted by loan servicers. This bill will balance the playing field to help our public schools recruit and retain a diverse and equitable pool of educators.”
“It is crucial that Virginia properly regulate student loan servicers who can make or break the financial future of over a million Virginians,” said Jay Speer, executive director of the Virginia Poverty Law Center.
“As Betsy DeVos and the Trump Administration prioritize the profits of student loan companies at every turn, over one million Virginians struggling to repay their student loans have been left to fend for themselves,” said Seth Frotman, executive director of the Student Borrower Protection Center. “Virginia student loan borrowers deserve a Borrowers’ Bill of Rights.”
A coalition of groups who advocated for the bill in January released a report on the state of student loan debt in Virginia. The report noted that more than one million Virginians owe over $41 billion in student loan debt.
Video of the Jan. 27 press conference on the legislation is posted to the Progress Virginia Facebook page.