OLYMPIA – Students paying off college debt will have additional consumer protections against scams and other harmful business practices if a bill approved by the state House of Representatives on Wednesday becomes law.
The Washington Student Education Loan Bill of Rights, sponsored by Rep. Monica Stonier (D-Vancouver) would prohibit harmful business practices by student loan servicing companies and third-party loan modification companies such as cutting off communication with a borrower, reporting inaccurate information to credit bureaus, and encouraging borrowers to waive their legal rights.
“Some bad actors have received attention for not providing quality service to borrowers,” said Stonier. “Student borrowers expect a level of customer service that helps them repay their loans. With the passage of this bill, we can protect our students in Washington state.”
“Student borrowers expect a level of customer service that helps them repay their loans. With the passage of this bill, we can protect our students in Washington state.”
According to the state Attorney General’s office, hundreds of complaints have been filed against student loan servicing companies and third-party loan modification companies over questionable operating procedures and debt readjustment scams that prey on students struggling to make their loan payments.
More than half of Washington students have student debt after leaving college. Navigating the repayment process can be difficult and in some cases, student loan services are steering borrowers toward decisions that are not in the borrower’s best interest.
HB 1440 would improve fairness, transparency, and accountability in the student loan system.
The legislation would also create a Student Education Loan Ombuds within the Washington State Student Achievement Council. The ombuds would be responsible for fielding complaints from student borrowers and helping borrowers better understand their rights and responsibilities under their loan agreement.
HB 1440 was approved by a vote of 71-27 and now goes to the Senate for consideration.