Now, a bipartisan group of state House lawmakers are proposing a "Student Borrowers' Bill of Rights" to crack down on deceptive or abusive practices by the companies that service those loans.
Sponsor Rep. Rachel Hunt, D-Mecklenburg, says 1.3 million North Carolinians owe a total of $48 billion in student loan debt. The average debt amount is $36,200. Students carrying debt often have to delay retirement savings or major purchases, creating a drag on their economic future.
And when the companies that service the loans give borrowers incorrect or incomplete information or steer them to the most expensive options, Hunt said, it makes the problem worse. Current state laws don't offer much protection in these situations.
"Student borrowers often end up paying more than they need to. They also fall behind in their payments, and that affects their credit scores, and they actually owe more than they did when they first got the loans," Hunt said. "These are primarily borrowers of color, rural borrowers and low-income borrowers who experience the most hardship when paying back their student loans."
The bill would require the state Commissioner of Banks to license and regulate student loan servicers.
It would set out the duties of those companies and spell out prohibited conduct. It would also create an ombudsman in the Commissioner of Banks' office who could field complaints from borrowers about misinformation, paperwork slowdowns and other problems.
Rochelle Sparko with the Center for Responsible Lending told the committee that a dozen other states have already passed similar legislation.
"All of us know people struggling to pay student loan debt. The most impacted are those who've had to take on the most debt because they've had no family wealth to help them through college," Sparko said.
The bill passed the committee with no debate on a unanimous vote. Its next stop is the House Banking committee.
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