With new rules in place to protect student loan borrowers from unfair lending practices, State Senator Eric Lesser on Wednesday urged the Banking Division to reduce the burden of proof that the proposed regulations would place on the bank. Attorney General Maura Healey’s office to file a complaint. against a student loan company.
Lesser, who helped pass legislation on the Student Loan Borrowers Bill of Rights, testified before Banking Commissioner Mary Gallagher about the division’s emergency regulations filed July 1 in under the new law.
The Longmeadow Democrat suggested the regulations went too far in requiring borrowers to prove their loan officer “knowingly or recklessly” had engaged in unfair practices before a claim could be brought.
“This is an unreasonable burden to place on the attorney general’s office, which is responsible for seeking protections from student loan officers, and could result in the abandonment or failure to pursue many meritorious opportunities. execution, âLesser said.
Winston Berkman-Breen, deputy director of advocacy at the Student Borrower Protection Center, recommended that the rules either omit a standard of proof or be reduced to “negligence.” âThat’s a higher bar than necessary for a financial services provider,â Berkman-Breen said of the âknowingly or recklesslyâ standard.
Governor Charlie Baker signed the new law in January 2021 requiring authorization to operate student loan services and giving regulators new tools to protect student borrowers from unfair lending practices.
Supporters have said the timing of the new law’s coming into force is especially important with the break in federal student loan payments put in place during the COVID-19 pandemic that will expire on October 1.
Thousands of student borrowers are also likely to have their loan transferred to another service company after one of the country’s largest lending agencies – the Pennsylvania Higher Education Assistance Authority and its subsidiary FedLoan Servicing – announced its intention. to terminate his contract with the US Department of Education.
“The purpose of this law is to help level the playing field between student loan managers and student loan borrowers by giving regulators powerful new tools to protect borrowers,” Lesser said, urging the Division of Student Loans. banks to make the new rules “as strong and as solid as possible”. wide as possible. ”