AUGUSTA — Earlier this month, lawmakers in the Legislature came together to pass my bill establishing a “student loan bill of rights,” which puts in place basic consumer protection policies for student loan borrowers. I’m hopeful the governor will sign this bill into law and we can take a positive step toward addressing the student debt crisis.

The reality is that student loan debt has become one of the defining problems facing a generation of students and graduates, both in Maine and across the country. Over the past few years, outstanding debt in the U.S. has reached $1.4 trillion, surpassing credit card and other common forms of debt. I represent Sagadahoc County, where the median student loan debt is about $17,735, according to a recent Urban Institute study, compared with the state median of $16,700 and the national median of $16,995.

ABOUT THE AUTHOR Eloise Vitelli is a Democratic state senator from Arrowsic.

It is an issue that affects both Maine people and the economy. It impacts how young people plan for the future, as more Mainers put off purchasing a home, starting a family and saving for retirement. Research from the National Association of Realtors shows how this trend is adversely affecting the housing market. Fewer people are able to afford a down payment because of the high monthly costs of paying off student debts.

The threat of overwhelming student debt also prevents individuals from pursuing any form of higher education, whether it is a traditional four-year college or a skill-building and training program. At a time when our workforce is experiencing significant shortages, Maine ought to be making it easier for people to enroll in school to develop the appropriate skills for the jobs available. Barriers to higher education actually harm our economy.

What’s worse is that the practices we are seeing from student loan servicers – which are middlemen between borrowers and lenders, managing borrowers’ accounts, processing monthly payments and communicating directly with borrowers – exacerbate an existing problem. Many servicers intentionally mislead and obscure information necessary to lower payments, while others illegally mess around with interest rates. These are just some examples of bad behavior by student loan companies. I have heard stories from Mainers all across the state about how their student loan servicers have employed deceptive tactics in an effect to extort more money and keep them in debt.

For example, a Portland woman found that her monthly loan payments shot up dramatically because of a technical error on the part of the student loan servicer. Now, every November, to keep her monthly payments based on her income, she has to unenroll from auto-pay and then re-enroll in January.

Another woman, from Jackman, began consolidating her loans to qualify for a forgiveness program but then learned that this move would erase the six years’ worth of payments she had already made.

Mainers should not have to jump through hoops just to pay their bills from student loan servicers, which intentionally make it difficult. Part of the problem is that these large national companies are removed from the people they serve, making them very difficult to regulate.

Many of the practices exhibited by student-lending institutions are reminiscent of the housing crisis. This is an opportunity to show that we have learned from previous mistakes and will protect borrowers from unethical lending-industry practices.

My bill, L.D. 1507, An Act to Establish a Student Loan Bill of Rights to License and Regulate Student Loan Servicers, offers basic consumer protections to borrowers of all ages. It makes a series of changes within the Maine Bureau of Consumer Credit Protection to identify prohibited tactics, monitor student loan servicers and provide appropriate consequences for violators. It’s that simple.

Mainers deserve basic protections to prevent being taking advantage of by large, unregulated financial institutions. Many states already are moving or have moved to safeguard consumers against predatory lending practices, including Massachusetts, Connecticut and Illinois.

If we are serious about attracting young people to our state and keeping them here, we need to address the student debt crisis that’s already holding back a whole generation of adults. This legislation is an opportunity to do some good for Maine students – of all ages – and their families by protecting them from predatory lending practices so they can fully participate in our communities and economy.

— Special to the Press Herald

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