Aiming to rein in student loan industry, Virginia House passes ‘borrowers bill of rights’
Legislation aimed at forcing student loan service companies to be more transparent and forthcoming in their dealings with borrowers cleared the House of Delegates with bipartisan support Monday.
The bill creates a “borrower’s bill of rights” and would subject the student loan industry to rules in line with what are currently in place for banks, credit unions and mortgage lenders, says its patron, Del. Marcus Simon, D-Fairfax.
“Right now student loan borrowers are unregulated at the state level despite being the second largest source of debt in the United States,” Simon said.
The rules would explicitly prohibit a wide range of bad behavior on the part of companies that serve as a go-between for students and federal or private financing companies, including:
- making false statements or omitting material facts,
- misapplying payments,
- defrauding or misleading, and
- refusing to correct credit reports.
The bill allows the Virginia Attorney General’s Office and the Bureau of Financial Institutions to investigate and pursue complaints, establishing a civil penalty of $2,500 per violation and allowing borrowers to recoup a maximum of $500 in damages per violation, which Simon said might not sound like a lot, but could quickly add up because violations are often repeated on a monthly basis.
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