Student Loan Bill of Rights with Sen. Eric Lesser | Connecting Point | Mar. 18, 2019
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Student Loan Bill of Rights with Sen. Eric Lesser | Connecting Point | Mar. 18, 2019


LOAN DEBT IS CRUSHING COLLEGE
STUDENTS EVERYWHERE, SADDLING THEM WITH A FINANCIAL BURDEN
THAT CAN EASILY EXCEED $100,000 BEFORE THEY EVEN INTERVIEW FOR
THEIR FIRST JOB. MASSACHUSETTS STATE SENATOR ERIC
LESSER, OF LONGMEADOW, HAS PROPOSED A “STUDENT LOAN BILL OF
RIGHTS” TO DEAL WITH THIS ISSUE — AND HE SAT DOWN WITH ME
TO DISCUSS.>>WE INTRODUCED THE BILL — IT
WAS A SIMILAR BILL WE INTRODUCED LAST YEAR TO CREATE A STUDENT
LOAN BILL OF RIGHTS. BASICALLY IT WOULD BE IN TWO
PARTS. FIRST IT WOULD CREATE A STUDENT
LOAN OMBUDSMAN IN STATE GOVERNMENT. ONE PERSON IN STATE GOVERNMENT
RESPONSIBLE FOR FIELDING COMPLAINTS ABOUT LOAN SERVICERS
FROM STUDENTS AND FROM THEIR FAMILIES AND ALSO VERY
IMPORTANTLY EMPOWERED TO FOLLOW UP AND INVESTIGATE ABUSES. RIGHT NOW IN THE STATE
GOVERNMENT IT’S VERY HARD TO KNOW EXACTLY WHERE TO TURN. IF YOU’RE A STUDENT OR A FAMILY
MEMBER EXPERIENCING, YOU KNOW, LATE NIGHT COLLECTION CALLS OR
HAVE QUESTIONS ABOUT INTEREST RATES OR HOW TO NAVIGATE ALL OF
THOSE ISSUES. IT’S VERY HARD TO KNOW WHERE TO
TURN. SO WE WOULD COORDINATE THIS
UNDER ONE PERSON EMPOWERED WITH SHARING THAT INFORMATION WITH
STUDENTS AND FOLLOWING UP WITH COMPLAINTS OR TIPS THEY MIGHT
GET ABOUT SERVICERS THAT MIGHT NOT BE FOLLOWING THE RULES. THE SECOND HALF OF THE BILL IS
ALSO VERY IMPORTANT. IT WOULD CREATE A NEW LICENSING
REGIME. IN MASSACHUSETTS YOU NEED A
LICENSE TO CUT HAIR OR SELL CAR OR SELL INSURANCE. ONE THING YOU DON’T NEED A
LICENSE FOR IS TO SERVICE STUDENT LOANS AND THIS IS A HUGE
ENTRY AND FOR MANY PEOPLE IT’S THE MOST IMPORTANT FINANCIAL
DECISION THEY’LL EVER MAKE IN THEIR LIFE GOING COMPLETELY
UNREGULATED ON A STATE LEVEL. IT WOULD CREATE A NEW LICENSING
STRUCTURE SO THAT WE WOULD BE EMPOWERED IF A SERVICE
STATIONER, FOR EXAMPLE, WAS CONTINUALLY VIOLATING THE RULES
OR ABUSING PEOPLE OR NOT TELLING PEOPLE ABOUT THEIR RIGHTS, WE
COULD YANK THAT LICENSE OR EVEN KICK THEM OUT OF THE STATE.>>CAN YOU BE A LITTLE SPECIFIC
ON SOME OF THE ABUSES OR PREDATORY PRACTICES THAT YOU’RE
TALKING ABOUT, YOU KNOW, WHAT KIND OF THINGS HAVE YOU BEEN
HEARING FROM PEOPLE WHO ARE TRYING TO PAY BACK THESE LOANS?>>YEAH, THEY’RE REALLY AWFUL
EXAMPLE. SHE HAD BEEN A GRADUATE OF MOUNT
IDA COLLEGE ACTUALLY AND HAD BEEN WORKING AND WAS DOING WHAT
SHE HAD SUPPOSED TO DO. SHE HAD GONE GOTTEN AN EDUCATION
AND OUT WORKING AND SHE LOST HER JOB TEMPORARILY AND WENT 6
MONTHS WITHOUT A JOB AND COULDN’T KEEP UP FOR THE LOAN
PAYMENTS FOR THAT SMALL PERIOD WHILE UNEMPLOYED. HER LOAN WENT FROM A $5,000
BALANCE TO A $20,000 BALANCE. SHE WAS NEVER NOTIFIED, FOR
EXAMPLE, OF INCOME BASED REPAYMENT SHE COULD HAVE BEEN
ELIGIBLE FOR –>>AND THAT WOULD HAVE BEEN
THROUGH A FEDERAL PROGRAM.>>SEE, THIS IS THE ISSUE. THERE ARE ALREADY FEDERAL LAWS
ON THE BOOKS, FOR EXAMPLE, INCOME-BASED REPAYMENT PLANS IF
YOU’RE IN PUBLIC SERVICE, IF YOU’RE A TEACHER, FIREFIGHTER,
POLICE OFFICER DOING SOME TYPE OF PUBLIC SERVICE WORK, YOU CAN
BE ELIGIBLE FOR PUBLIC SERVICE LOAN FORGIVENESS BUT THESE RULES
ARE NOT WORTH MUCH IF THE SERVICER WHO IS IN CHARGE OF
SENDING YOU YOUR BILL DOESN’T LET YOU KNOW WHAT YOUR RIGHTS
ARE. IN THIS CASE SHE WOULD CALL AND
THEY WOULDN’T PICK UP THE PHONES OR EXPLAIN HER OPTIONS WERE. AT ONE POINT THEY CLAIMED SHE
HAD NEVER MADE ANY PAYMENTS AT ALL. SHE HAD NO RECOURSE AND SHE HAD
TO HIRE A PUBLIC LAWYER THAT COST $5,000 AND GOT THAT BALANCE
DOWN TO $7,000. IT TOOK MORE THAN —
>>AND SHE STARTED OFF WITH A $5,000 LOAN.>>THAT HAD BEEN SKYROCKETED TO
20,000. SHE THEN ENDED UP GETTING IT
BACK DOWN TO 7,000 BUT THAT WAS AFTER $5,000 IN ADDITIONAL LEGAL
EXPENSES. THAT IS UNCONSCIONABLE AND,
UNFORTUNATELY, IS NOT UNCOMMON. WE ARE HEARING THIS OVER AND
OVER AGAIN. JUST IN THE STATE OF
MASSACHUSETTS ALONE, YOU HAVE NEARLY 900,000 STUDENT LOAN
BORROWERS OWING COLLECTIVELY OVER $33 BILLION. THE SCALE OF THIS IS IMMENSE.>>AND I KNOW THAT ONE OF THE
REPORTS THAT I THINK YOU HAD BEEN PART OF THE STUDENT
BORROWER PROTECTION THAT 100,000 STUDENT BORROWERS ARE
DELINQUENT.>>SO YOU HAVE ALMOST $900,000
PEOPLE WITH PENDING LOANS. 100,000 ARE DELINQUENT AND THAT
NUMBER IS BEING ADDED TO EVIDENCE. THE LOAN BALANCE JUST IN
MASSACHUSETTS GOES UP BY A BILLION DOLLARS A YEAR. IT GOES UP $100 BILLION A YEAR
NATIONALLY SO THIS IS A TICKING TIME BOMB IN OUR ECONOMY.>>SO THE FEDERAL RESERVE
RELEASED A REPORT TALKING ABOUT HOW THIS IS AFFECTING, YOU KNOW,
THE ECONOMY, SPECIFICALLY, THE HOUSING MARKET —
>>YES.>>FOR YOUNG ADULTS FROM 24 TO
32 YEARS OLD. THAT’S A BIG HIT THAT THEY’RE
TAKING DELAYING BUYING A HOME. CAN YOU TALK A LITTLE BIT ABOUT
THAT.>>SO THE FEDERAL RESERVE PUT
OUT A STUDY THAT SAID FOR EVERY $3,000 IN STUDENT LOAN DEBT ON
AVERAGE, THAT DELAYS A PERSON FROM BUYING THEIR FIRST HOME FOR
UP TO A YEAR. IF YOU THINK ABOUT THAT, THE
AVERAGE STUDENT LOAN DEBT JUST IN MASSACHUSETTS IS OVER $30,000
SO YOU’RE TALKING ABOUT MORE THAN A DECADE IN DELAYED
PURCHASES OF HOME. THINK ABOUT WHAT THAT DOES TO
THE ECONOMY, WHAT THAT DOES FOR PEOPLE’S WE THOUGHT CREATION FOR
THEIR OWN FAMILIES. MOST FAMILIES — THEY BUILD
THEIR WE THOUGHT THROUGH OWNING THEIR OWN HOMES. IF YOU’RE DELAYING THAT BECAUSE
OF STUDENT LOAN PAYMENTS YOU’RE PUSHING THAT OUT. IT’S POISONING THE REST OF OUR
ECONOMY.>>DO YOU THINK AS PARENTS YOU
NEED TO THINK DIFFERENTLY ABOUT THIS?>>WE HAVE TO HAVE A BIG SERIOUS
CONVERSATION IN THIS COUNTRY ABOUT HIGHER EDUCATION AND IN
THIS STATE I THINK WE’RE FACING A WRECKONING AS THE COSTS GOES
UP. WE TALKED ABOUT THIS ON MANY
SHOWS I’M A BIG CHAMPION OF OUR MANUFACTURING INDUSTRY HERE IN
WESTERN MASS BECAUSE THAT’S A LUCRATIVE CAREER YOU CAN HAVE
WITHOUT A 4-YEAR COLLEGE DEGREE, WITHOUT $100,000 OR MORE IN
STUDENT LOAN DEBT SO WE HAVE — WE ABSOLUTELY HAVE TO
HAVE A MUCH BROADER CONVERSATION AND I’M A BIG PROPONENT MUCH
AROUND VOCATIONAL EDUCATION, AROUND CTE EDUCATION, A MORE
SPECIALIZED INDIVIDUALIZED LEARNING, AROUND OUR COMMUNITY
COLLEGES WHO ARE PROVIDING IMMENSE VALUE FOR A FRACTION OF
THE COST OF THE PRIVATE SCHOOLS. WE HAVE TO EMPOWER THAT, WE HAVE
TO GET MORE MONEY IN OUR HIGHER ED INSTITUTIONS BUT WE ALSO NEED
TO PUSH FOR REFORMS IN MAKING SURE THEY’RE OPERATING
EFFICIENTLY AND THEY’RE NOT INCREASING COSTS. SO ALL OF THAT ABSOLUTELY NEEDS
TO HAPPEN BUT WHAT WE DO HAVE ALSO IS WE HAVE A PREDATORY
LENDING CRISIS, QUITE FRANKLY, ON OUR HANDS WHICH IS YOU HAVE
NOW HUNDREDS OF THOUSANDS OF PEOPLE IN MASSACHUSETTS,
MILLIONS NATIONALLY WHO HAVE THESE MASSIVE DEBT BURDENS
HANGING OVER THEIR HEAD AND SERVICERS AND LOAN COMPANIES
THAT ARE DOING THE WRONG THING AND ARE NOT — NOT DOING WHAT
THEY’RE SUPPOSED TO AND STATES RIGHT NOW ARE TURNING THE OTHER
WAY. I THINK THE OTHER IMPORTANT
ELEMENT THAT REALLY BRINGS URGENCY TO THIS. WE’VE SEN A COMPLETE BREAKDOWN
OF ENFORCEMENT OF FEDERAL CONSUMER PROTECTION LAWS. SINCE THE TRUMP ADMINISTRATION
APPOINTMENTS HAVE TAKEN OVER AT THE CFPV, THERE’S NOT BEEN A
SINGLE SUBSTANTIVE ENFORCEMENT AGAINST THE STUDENT LOAN
SERVICERS SO IN THE ABSENCE OF THAT FEDERAL ACTION, WE NEED
STATES TO STEP IN AND FILL THE GAP. IN MASSACHUSETTS THIS IS VERY
URGENT FOR US BECAUSE OUR ECONOMY IS VERY DEPENDENT ON THE
HIGHER EDUCATION SECTOR AND ON HAVING HIGH NUMBERS OF HIGHLY
EDUCATED WORKERS. PEOPLE WON’T BE ABLE TO GO GET
AN EDUCATION IF THEY’RE UNDER DEBT LOADS.

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