DC Lawmakers Consider Extending Consumer Protection To Student Loan Borrowers

DC lawmakers say student loan debt is treated differently from any other debt, with predatory lenders targeting younger borrowers who are often unaware of their options or terms to look for.

Council members hear from the public and experts on how to craft legislation to protect borrowers.

Experts and members of the public testified before the Economic and Commercial Development Commission and the Judicial and Public Security Commission on the Student Loan Borrowers Bill of Rights Act 2021, introduced in March.

“This event really changes my family’s life. The burden of student debt can be emotionally debilitating. I am even more and more moved just reading you, ”said Jane Anderson, a resident of Ward 7, reading her testimony to council members.

The DC public school worker said she had to rely on loans to get her graduate business degree and over time accumulated $ 70,000 in interest on the loan. In Anderson’s case, a city student loans ombudsman was successful in defending her.

“My student loan balance of $ 211,000 has been written off,” she said with relief.

Board member Christina Henderson stressed that the purpose of the Student Loan Borrowers Bill of Rights is to prohibit unfair, deceptive or abusive practices by lenders; require notification of the borrower if loans are transferred or sold; and extend existing protections from consumers to borrowers.

The bill would provide for automatic licensing of federal student loan officers, which would eliminate the problem of preemption. Similar legislation has been implemented in several states, according to the DC attorney general’s office.

“The way it’s worded isn’t just to protect those who go to community colleges or public schools or four-year institutions, but it’s also to capture this very real and profitable for-profit market. full growth that a lot of people don’t think about, ”said Henderson.

Ward 6 resident McKenzie Kuhl testified that she held two jobs and did whatever she could to pay off private loans after graduating in 2019 to cover her $ 70,000 in student loan debt. She said she can barely make ends meet with monthly payments exceeding $ 900.

“I thought it was something everyone had to do, which is just a complete lie. So I just went with it. I had no idea of ​​the postgraduate implications this would have on me, and I know other students who have experienced the situation even worse, ”said Kuhl.

Council member Charles Allen sympathized with the borrowers, saying his family must also make decisions based on their student loan obligations.

“I’m not sure I can think of a year when I won’t make a student payment, neither for myself, nor for my wife, nor for my children. I do not know. I don’t see when this will ever end. And it can be incredibly intimidating and overwhelming, ”Allen said.

Anderson and Kuhl both found relief working for free with DISB’s student loans ombudsman. Commissioner Karima Woods, who heads the District of Columbia’s Department of Insurance, Securities and Banking, said the student loan mediator program aims to help residents of the city’s most underserved communities overcome financial challenges and educate them about borrowing before starting their degree programs. .

The program also helps borrowers to apply for loan forgiveness based on their circumstances.

“In FY20, the Ombudsman resolved $ 3.7 million in resident complaints and controversies and in FY21, the Ombudsman investigated 33 complaints, for a total of 2 , $ 56 million. These complaints are mostly about federal loans, and the main concern of residents was changing federal student loan repayments based on change and income, ”said Woods.

When student loan payments were put on hold during the pandemic, many borrowers were confused about when payments would resume and took issue with lenders’ lack of communication.

“We have received almost 2,000 complaints from residents of the district regarding the student loan service. We received hundreds of complaints during the student loan payment hiatus alone. So this is a time when borrowers are learning that they are required to make payments, so it shows that there is absolutely a need, ”Ashley Harrington of Federal Student Aid told lawmakers.