The Massachusetts Student Loan Bill of Rights is intended to protect student loan borrowers from being cheated.

In April, the Massachusetts state Senate approved a “Student Loan Bill of Rights.” The bill is aimed at protecting borrowers from being taken advantage of by student loan servicers. But if the bill is signed into law, Massachusetts officials might have a legal battle on their hands.

That’s because the federal government doesn’t want states attempting to regulate student loan servicers. According to Secretary of Education Betsy DeVos, this undermines the federal government’s authority as well as their ability to create a streamlined federal loan program. 

In 2015, the Obama administration put several regulations in place to attempt to protect consumers. However, the Trump administration doesn’t want to regulate the student loan industry and has worked to dismantle many of these regulations.

Senator Eric Lesser, lead sponsor of the bill in Massachusetts, told MarketWatch, “in Massachusetts, we’re going to protect our citizens and we’re going to protect our student loan borrowers.” He said he was motivated to sponsor the bill because he believes society should invest in students and give them the tools they need to be successful.

He added that state officials are not only expecting a legal battle, they also welcome it, he told the Valley Advocate. Lesser isn’t alone on this sentiment; Massachusetts Attorney General Maura Healey issued a press release saying that dealing with abuses in the student loan industry should be a priority.  

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Bill S.2380 would require student loan servicers to register with the state’s Division of Banks. Guidelines would be put in place, and state officials would have the ability to take action against companies that violate any regulations.

If a student loan servicer is found to be overcharging borrowers or misleading them on their repayment options, the state could revoke their license. The company would also be required to issue refunds to borrowers who have been overcharged. (Here’s a list of the student loan companies with the most complaints.)

The bill would also establish a Student Loan Ombudsman in the Attorney General’s Office. This person would work to address borrower complaints and educate borrowers on their rights.

However, bill S.2380 has a few more hurdles to get past before it is signed into law. The next step is for the bill to be approved by the House of Representatives. From there, it will go to Governor Charlie Baker’s desk. Lesser is hopeful that the governor will recognize the importance of the bill and sign it into law.

Lesser added that one in five Massachusetts has outstanding student loan debt, which is an increase of 75 percent. “This is really a crisis. It’s an issue that’s reached a boiling point,” Lesser told the Valley Advocate.

At this time, borrowers who have issues with their servicer can also contact the Federal Student Aid Ombudsman Group with the Department of Education to help resolve problems with their federal student loans.