State Sen. Sarah McBride (D-Wilmington) introduces legislation to establish a Student Loan Borrower Bill of Rights.
McBride’s bill would make Delaware the 19th state to give student loan borrowers an official bill of rights. During the Senate Education Committee hearing, she noted Delaware is home to nearly 130,000 student borrowers with an average debt burden of about $37,000.
She says several federal regulations protect borrowers from predatory practices, but they do not apply to private student loans, which make up roughly 10% of the market.
Not only would the bill prohibit unfair and deceptive practices from loan servicers, but it would create the Office of the Student Loan Ombudsperson within the Department of Justice to investigate complaints from borrowers.
“Investing in the ombudsperson’s office and enhancing consumer protections for student borrowers, especially in this private loan space, will yield immediate benefits – easing financial burdens on borrowers, reducing default rates and enhancing consumer protection.”
McBride explains the bill of rights would also provide long-term benefits for the state's economy.
“This investment will foster economic growth as graduates will be less burdened by excessive student debt and contribute more to our local economy, start businesses, invest in their homes. It’s also an opportunity to attract more people to our state by providing them ample protection and support.”
McBride says the bill will require student loan servicers to report non-identifying information about student loans to the office annually, providing data to help policy makers better understand student loan debt in Delaware.
The bill cleared the Senate Education committee and heads to the Finance Committee.
