Yesterday the California Assembly passed the “Student Loan Borrower Bill of Rights” that will attempt to create a detailed set of rules protecting individuals who have student debt.
The bill sponsored by the Student Borrower Protection Center (SBPC) is designed to re-institute consumer protections that have been derailed at the federal level under the current administration. The SBPC was founded in part by former Consumer Financial Protection Bureau, Seth Frontman.
Bill of Rights for Student Loan Borrowers
The “Student Borrower Bill of Rights” hopes to create the first comprehensive, industrywide ‘rules of the road’ for the student loan industry that would:
• Ban “abusive” student loan servicing practices that take unreasonable advantage of borrowers’ confusion over loan repayment options;
• Create minimum loan servicing standards to ensure fair application of payments, improved record-keeping on borrower accounts, and proper staff training so borrowers are informed of more affordable payment options;
• Establish a Student Loan Advocate to review borrower complaints, gather data, and issue reports to the state legislature; and
• Grant the Department of Business Oversight additional “market monitoring” authorities to collect better data about the student loan servicing industry.
Removing Bad Actors
The Certified Student Loan Advisors Board of Standards (CSLA BOS) welcomes the bill and supports the efforts of the SBPC. Student loan borrowers have been targeted by unethical practices of companies looking to exploit the complex nature of student loan repayment. Additionally, we commend the state of California for paving the way for borrowers to experience a system that is more tightly regulated by clear standards.
Removing the bad actors, eliminating predatory lending, and elevating the servicing standards for loan servicers will help reduce the impact student debt is having in California and throughout the U.S.
As noted by Consumer Reports, a co-issuing organization of the bill, “Multiple investigations have shown that loan servicers routinely lose paperwork, misapply payments, provide borrowers inaccurate information, and even steer them into more costly repayment options with virtually no accountability.
At a time when the U.S. Department of Education has refused to set loan servicing standards to help borrowers, it’s critical for states like California to lead the way and address these longstanding abuses.”
The CSLA BOS looks forward to working with the state of California and the SBPC to be part of the solution for student loan borrowers. This “Bill of Rights” will go a long way toward protecting borrowers.
CSLA Programs Help Financial Professionals
The CSLA BOS continues to provide education programs to financial advisors and tax professionals about how to help clients with student loan repayment. The training focus, among other areas, is to help clients incorporate student loan repayment into a larger financial plan that includes personal and financial goals.
Certified Student Loan Professionals (CSLP) who provide financial advice to student loan borrowers are required to operate in regulated fields of finance or accounting. They agree to ethical standards and business conduct and complete extensive training on loan repayment and annual continuing education. The advice CSLPs provide to student loan borrowers will be an important part of improving the broken financial aid system. California takes a major step towards protecting student loan borrowers
Get our Financial Advisor Guide to Student Loans
Find out more about how you can avoid critical mistakes and liability. Get our guide to the student loan market and how you can address it through the knowledge gained in the CSLP Course.